By Dr Ambrish Kumar, Founder, LogYcode Tech Solutions
The COVID-19 outbreak that engulfed nations across the globe is forcing governments, national and international authorities to take unprecedented measures, such as the lockdown of cities and the restriction of people’s movement to check and control the spread of the pandemic. This, consequently, affected global trade and supply chains, which, in some industries, came to almost a standstill.
Most countries restricted or stopped international flights and air travel, which led to a slowdown of the movement of goods. Air freight capacity shrank as it was limited to the available and operational cargo aircraft and any passenger flights carrying cargo. The shipping sector was also hit as vessels are placed under quarantine for weeks before being allowed into ports. Shipping containers remain stuck at ports and, when in transit, at state borders.
At the same time, lockdowns prevent raw materials and manufactured goods to reach ports. Moreover, the demand for raw materials and most traded commodities has reduced as most countries now require medicine, pharmaceuticals, medical supplies and medical equipment. Shipping lines are, consequently, operating underloaded, which disrupts the balance of the ratio between revenue and operational costs. Furthermore, there is a severe shortage of manpower at air cargo facilities, terminals, shipping ports, inland container depots, warehouses, customs, government authorities and so on, owing to lockdowns which, again, hinder any scope of supply chain movement.
First- and last-mile transportation and intermodal connectivity of goods within the domestic segment of supply chains came to a standstill during lockdowns. This has affected the movement of supplies, which has increased the cost of commodities in a way that is directly proportional.
Furthermore, only essential commodities were permitted to move. The apparel, fashion, electronics and other sectors serving non-essential categories of goods were severely affected, owing to lesser or no demand during lockdown. India’s online retail industry is worth around $60-billion, of which essential commodities are only a small percentage.
There has also been a phenomenal reduction in the demand for consumable goods and products, and more demand for essential goods in trades between nations. The only trading commodities that we can assess in the months ahead are pharmaceuticals, vaccines, medical supplies, hospital items, perishables and food products.
Predictions of forthcoming market conditions and how much the growth rate of the global supply chain is affected are not feasible, owing to the uncertainty around the pandemic’s spread and the fact that regions are enforcing second lockdowns. The global supply chain management market was recorded to be worth $14.5-billion in 2018 and was expected to reach almost $24-billion by 2024. However, it is a certainty that growth rates will decline and achieving the targeted figures will be deferred by a couple of years.
In a nutshell: there is a deceleration of the movement of goods across nations, causing a considerable gap between demand and supply. Concerns are around delivery delays, delays in procuring goods, unexpected transit halts and a shortage of manpower.