The After effect of Covid-19 on Global Logistic Markets & Trends

Already two years into the pandemic, many believe the supply chain worldwide will continue to be affected by the impacts of COVID-19 for months, or years, to come. According to KPMG, the pandemic has exposed weaknesses such as limited valuable data, poor risk management, and a. There has never been a greater need to focus on transforming the supply chain function.

Localized outbreaks of the pandemic, for a recent example, have become widespread in China, hitting Shanghai, Jilin, and Guangzhou especially hard. As of May 2022, 7,568 confirmed cases had been reported in the Chinese mainland, while the total number of locally affected asymptomatic coronavirus carriers was 1,603. At present, the epidemic situation in China remains dire as many cities have tightened epidemic prevention and control measures. This has dramatically affected the logistics and transportation industries, resulting in a year-on-year decline. According to Wind, Logistics Sentiment Index (LSI) is at a historic low. China’s LSI in April 2022 hit 43.8%, dropping 4.9% from the previous month, the lowest point since March 2020.

The pandemic is the latest and the most severe disruption that has affected value chains in recent times. The financial impact of these disruptions is significant. An MGI analysis found that over a decade, the average company can expect disruption to cause losses of a 7% of decline on average for a decade.

Exposure to shocks combined with vulnerabilities within companies has brought consequences. Shutdowns and stay-at-home restrictions, while necessary to protect public health, not only halted production but depressed incomes and discretionary spending. Therefore, it has deepened the economic fallout and ripple effects across industries. Its pronounced impact on some sectors is not a supply chain disruption but rather a collapse in demand. According to McKinsey Global Institute (MGI), the ultimate economic losses are still unknown, but they extend into the tens of trillions of dollars.

MGI analyzed 23 industry value chains to assess their exposure to specific shocks. The resulting index combines multiple factors. For example, heat waves affect some regions more than others. Labor-intensive value chains are at comparatively higher risk; those with the highest concentration of workers in non-climate-controlled settings are most exposed to disruption.

TAKE-HOME MESSAGE

In the post-pandemic world, Deloitte suggests that the most successful supply chains find a balance among these three imperatives: agility, efficiency, and resilience, according to Deloitte’s analysis. While costs remain a concern, the past two years have exposed the vulnerabilitiesใ Entering agility is the flip of disruption, is opportunity. As new ways of doing business emerge, companies that can anticipate these new ways and proactively respond will have a chance to build new businesses, enter new markets, and take advantage of new sources of supply. Agility requires new mindsets and approaches, it however offers substantial competitive advantages.

Article by: Asst. Prof. Suwan Juntiwasarakij, Ph.D., Senior Editor and MEGA Tech