COVID-19 Effects on the Supply Chain

08/06/2020 by Christine Griffith

COVID-19 Effects on the Supply Chain

2020 isn’t what we expected. State shutdowns, consumer panic-buying, truckload volumes skyrocketing and then plummeting – the COVID-19 pandemic has created an increase in uncertainty for the supply chain. 

When It All Began

As COVID-19 began to spread, many governments responded with lockdowns. Nonessential businesses closed and consumers panic bought out paper products, soap, and disinfectants. Have you seen the 2020 toilet paper memes? With many businesses closed or down to a skeleton crew, this meant longer transportation times. To make do, alternative routes and modes were sought out, but even those became backlogged. Shipping networks were strained. 

Current Conditions

In the standard supply chain, raw materials are sent to factories to be manufactured into goods, then shipped to warehouses for storage, then to retailers or consumers. Currently there are raw material shortages and delays due to high product demand, shipping disruption due to a decreased workforce, and increased costs due to uncertainty.

Supply and demand has been thrown off course since consumer interest changed. Who knew going into 2020 that the most demanded items would be hand sanitizers, disinfectants, and toilet paper? Thankfully the panic buying of toilet paper has halted, but demand for items is still unbalanced. Retailers have had to increase their inventory levels in warehousing for items not selling while reducing their product variety for more storage space for high demanded items. 

Unlike typical years where suppliers could rely on the ebbs and flows of the seasons, like Back-to-School and upcoming holidays, COVID-19 has disrupted consumer predictions. Suppliers had no warning that lockdowns would happen or that buyer preferences and needs would change drastically.

Capacity

Air capacity is still tight because the lack of planes that offer deck space for moving goods. Many of the airlines parked their fleets when COVID-19 began spreading and used their available space to support the need for medical supplies. Even as airlines are operating and demand for medical supplies has decreased, Airlines.org shows that airlines remain down 75% year-over-year (YOY) levels, 

Truckload carriers are becoming more selective about the loads they haul and requesting higher rates to travel into COVID-19 hot spots. Not all carriers have had the same impact from COVID-19. Volumes have spiked or plummeted based upon mode or the kind of freight moved. Some carriers saw an increase in business while others had to close their doors. According to Mckinsey & Company, truckload saw an increase of 30 percent YOY when panic buying began, but quickly fell back down. It is now rising again as some markets open back up and people return to work. Railroad volumes have declined 20 percent and have yet to recover. Ocean shipping is also down 25 percent.

E-commerce Growing Faster Than Ever

We all knew e-commerce was going to grow over time, but the pandemic pushed a quicker adoption of it. When lockdowns began, many consumers had to shift their nongrocery purchases, and for some, their grocery purchases too. From January to March 2020, retail websites saw a six percent increase in global traffic. Even as places have reopened, consumers are still spending more time making their purchases online. From data collection in June at Bazaar Voice, page views are up 75 percent YOY and order count is up 57 percent. Whether because of COVID-19 or consumers finding online shopping easier, e-commerce is growing and something to consider if you are not already incorporating it into your business.

Looking for Direct-to-Consumer help for your frozen food business? Our parent company, Burris Logistics, can help you support your e-commerce needs.

Tips for Shippers

We’re currently five months into the pandemic and we have as much uncertainty about the future of the supply chain as when this first started. We can only take it day by day, month by month and do our best to be prepared for whatever happens next. In the meantime, there are things you can be doing to keep business moving forward. Here are some tips you may find useful.

Timely communication

Timely communication is always needed to run your best business, but even more so during this pandemic. Make sure you are properly and timely communicating with your carriers and transportation providers on any new sanitation procedures, requirements, changes in operating hours or upcoming closures. 

Keep the transparency

Be transparent with your audiences. They appreciate it more than you think. Transparency helps build trust in your relationships.

Stay informed

COVID-19 came quick and the future is still uncertain. Be sure to stay updated on current developments that may be related to your business. Some of the web partners we follow to stay informed include Freightwaves, Transport Topics, and Reuters.

Find support in a transportation partner

A third-party logistics company, like Trinity Logistics, can help you find creative ways to solve your logistics challenges. We’re experienced in complicated situations and stay knowledgeable on what is going on in the industry. We were quickly able to pivot when the pandemic hit, so we could continue to keep our customers’ businesses moving forward. We know that even in times of disruption, the shipping industry does not stop. 

If you’re ready to gain support in your logistics with Trinity Logistics, no matter the condition of the industry, let’s get connected.

Gain support with Trinity.