LM Viewpoint: Safe assessments in complicated times

Leading off our News section, group news editor Jeff Berman confirms that fact in a survey fielded in mid-March. In it, 73% of respondents had already found that the situation was having an impact on their operations—and in most cases magnifying issues they were seeing in December and January.

That group reported seeing more of a slowdown of U.S.-bound imports; freight rate hikes; supplier shutdowns; uneven demand and difficulty adjusting costs to reflect reduced business volume; and an imbalance of airfreight coming out of Europe. Berman and our news staff will be offering continuous updates on any pertinent volume or market shifts as things unfold at logisticsmgmt.com.

“One certainty is that the role trucking is playing simply can’t be overstated, and that really comes to light when looking at data issued in late March by the American Transportation Research Institute [ATRI],” says Berman. “According to ATRI data, trucks are continuing to move—in many cases faster than normal—to respond to the demands from the pandemic.”

As contributing editor Karen Thuermer reports in her air cargo update (page 30), with the spread of the coronavirus, the current prospects for the airfreight industry are only going to become more bleak than they already were—at least in the near term.

“Even before the outbreak, the International Air Transport Association [IATA] data had reported that demand decreased by 3.3% in January 2020 compared to the same period in 2019,” says Thuermer. “These figures were their worst since 2012. In the meantime, freight performance was at its weakest since the global financial crisis in 2009 when airfreight markets contracted by 9.7%.”

There was early optimism bubbling due to the easing of U.S.-China trade tensions leading into 2020, and Thuermer reports that those more positive forecasts should return post-coronavirus.

Another safe assessment we can make at this stage: Investment in warehouse/DC software and automation will remain robust through 2020 and beyond. While our annual Warehouse and Distribution Center (DC) Equipment Survey was fielded in January and February, our research team contends that the emphasis on faster, more efficient e-commerce fulfillment will now be magnified.

“As we adjust to the new normal that’s coming in the near term, it’s clear that e-commerce fulfillment will remain vital,” says contributing editor Roberto Michel, who puts context around all of the findings starting on page 43. “That’s why I’m confident that, longer term, the survey’s overall direction—healthy investment in warehouse automation and logistics optimization—will hold true.”

According to Norm Saenz, managing director of supply chain strategy and logistics consulting firm St. Onge and a partner in our annual warehouse/DC equipment survey, the immediate impact of the pandemic is pushing many industries, such as grocery and food distributors as well as medical supply companies, to the limits of their capabilities, while others are experiencing a drastic slowdown in demand.

“Those retailers and many others are relying more than ever on e-commerce fulfillment capabilities,” says Saenz. “The surge in pent-up demand is going to have companies looking hard at automation, so they might need less square footage and better control on labor costs. I believe there’s going to be a lot of companies looking to revitalize their supply chains.”