Trend 1. Dumping in the logistics market
An intensification of the struggle for a client entails the emergence of price dumping in the freight market, since the amount of cargo is decreasing, and the transport is idle. Many companies will not survive long-term dumping.
Trend 2. Leaving the market of weak players. The COVID-19 crisis is a “perfect storm”
Small and some medium-sized players will have to leave the logistics services market in the near future. Here, as in Darwin’s theory, the fittest will survive. Anyone who has managed to save money over the past two “fat” years and have not burdened themselves with significant obligations will now definitely look at the opportunity to buy something, increase their park and market share. A series of bankruptcies, mergers and acquisitions will take place.
Trend 3. Development of collaborations, cooperation, unification of services
Players will begin to unite in communities to share each other’s services. Logistics and service companies are starting to collaborate, develop unique complex offers for customers and, as a result, strengthen their joint positions by combining their services.
Trend 4. Refusal to purchase. Increase in demand for repair and maintenance services of vehicle fleets
Refusal to renew the vehicle fleet due to the rise in exchange rates and the pandemic is observed in 90% of logistics companies. This means that the car park will become obsolete, and services related to the repair and maintenance of car parks will be in demand.
Trend 5. Increase in demand for the service “groupage cargo”
There is a tendency towards a decrease in the number of delivered cargoes and an increase in the number of groupage cargoes sent. Significant restrictions on air transportation will “shift” part of the demand from cargo owners for the transportation of groupage cargo. The development of outsourcing will teach market players to “fill” vehicles and group shipments on mutually beneficial terms. Particularly high demand is observed for groupage cargo from European countries.
Trend 6. Implementation of the latest IT technologies
Optimization and digitalization have been discussed for a long time, but only few people dared to make real and fundamental changes in the approach. During the COVID-19 pandemic, many companies decided to move all work on a “new track”. The IT revolution has begun in logistics. It is worth noting the use of IT platforms for logistics companies in order to exchange tariffs and rates.
Trend 7. Ordering shipments from a mobile device. The emergence of a separate industry “mobile carriers”
A highly automated supply chain is now in great demand. Cargo owners need a full range of services with access from their mobile device. The client gets the opportunity to order transportation on a digitalized logistics platform by clicking on a button in the mobile application. It is these systems that will be in demand in the future. For example, for individuals. Russian Post has launched a new service for sending parcels by phone number – the function is available to all users of the logistics operator’s mobile application. The sender only needs to enter the recipient’s phone number or select it from the phone book.
Trend 8. Development of domestic cargo transportation and logistics chains
Until recently, most of the transportation was aimed at exporting or importing goods, neglecting domestic markets. The crisis gave a powerful impetus to the development of the domestic product, the development of industries within the country. A significant decrease in cargo flows from other Asian countries and the threat of closing borders with China in the event of the next wave of a pandemic lead to the fact that some of the resources, goods, products that were previously purchased there, manufacturers will try to produce in their country. For example, the top 5 goods that are supplied to Russia from China – smartphones, garlic, professional sports equipment, chemical fertilizers, clothing and footwear – can be produced within the Russian Federation. Now I want to believe that for Russia this is a chance to close the logistics chain on itself.
There will be an increase in domestic production due to the closure of borders and, as a result, the development of internal logistics, reaching a new level of quality.
Trend 9. Development of outsourcing
The trend of transferring non-core processes and services to outsourcing will gain momentum. Although this trend has been actively developing since the 2000s, now it brings not only budget saving opportunities, but also significant time savings.
Trend 10. Contactless courier delivery
Contactless delivery – taking care of the health of senders and recipients. The winners will be those companies that can offer the safest way of delivering goods from a health point of view.
The end consumer is offered the widest range of goods with contactless home delivery. Buyers are ready to overpay 5-10% of the cost for goods with fast delivery (1-3 days) and be able to avoid being forced to visit crowded places.
Trend 11. Development of parcel delivery by “drones”. Development of “autopilot” deliveries
This trend came from Asia as a continuation of the idea of contactless delivery. During the pandemic in China, most parcels were delivered “to your home” in this way.
Trend 12. Transfer of the majority of employees on a permanent basis to remote work.
This will require optimization and automation of all business processes in a logistics company. Involving employees in the development of the company by creating platforms for the exchange of ideas will help create transparent and streamlined business processes in the organization.
Trend 13. Compliance with sanitary standards, disinfection of equipment, vehicles will become the norm and requirement on the part of recipients.
For safety reasons, logistics companies will have to continue to comply with sanitary standards.
Trend 14. Businesses have started to change vehicles to railways
Analysts say that due to the high volatility of rates for air and sea transport, volumes will be redistributed towards land transport, especially on the Asia-Europe routes. While borders are open to international freight shipments, stringent checks, quarantines, driver changes and other measures can slow down the speed of road transport. This opens up new prospects for rail transport. The cancellation of passenger trains made it possible to free up the timetable for the running of freight trains. It all depends on consumer demand.
Trend 15. Transfer of all global logistics events to the online format.
The trend for most events in the logistics sector in the online format will continue, because this format of meetings, negotiations, webinars, conferences has shown high efficiency. Offline events scheduled in 2020 will not gain more than 60% of the planned number of visitors. Many events will be canceled for this reason.
Trend 16. Logistics companies will have to have an “anti-crisis plan” in their pockets
The experience of the crisis during a pandemic will “spur” the management of logistics companies to have “plan B: anti-crisis package” and a financial safety cushion in their pockets.
Trend 17. Delivery of the “last mile” will be important.
The crisis will be relatively easy for the companies providing road deliveries and operators working on the last mile. The easiest way to overcome the crisis will be for companies without fixed assets, that is, forwarders. Additional financial burden (transport equipment is purchased mainly on lease) now can only aggravate the situation. Of course, if you have clients from the food, retail, FMCG, pharma segment in your portfolio, then there is a chance to even increase your operating results.