Forecast of global logistics trend after Covid-19 (Part 1)

Forecast of global logistics trend after Covid-19 (Photo: Internet)

COVID-19 is forecast to have a more profound effect on global trade than any recent crisis.

However, actors in the economy will gain the upper hand of the breakout and take the lead if they come up with strategies and plans for recovery based on well-calculated scenarios. The ability to stabilize, control and recover early is now considered a new "strength" of an economy and every business in the context of the global crisis.

Although Covid-19 was a public health crisis on a global scale, this pandemic is having a direct impact on the overall economic, social and even political life. Observations show that actors in all sectors of the economy respond to challenges in different ways, and many innovation efforts are born. Crises are often the time to explode inventions and innovation movements.

Pandemics will most likely affect global trade far more than we have seen in other crises in the past. The degree of supply chain disruption will vary depending on the type of goods, trade routes and modes of transport, and of course are affected by the differences in disease situation in each geographical region.

Supply chain disruption due to the global trade crisis by Covid-19 (Photo: Internet)

On the positive side, the crisis provides opportunities for logistics and supply chain companies: entering new markets, innovating services and putting themselves ahead of the competition. are more severely affected by the epidemic ... The insights into the impact of the crisis become very important for companies as they move from the perspective of addressing urgent and emergency issues. level to level planning for return to market and adapt to a "new normal" condition.

Using the granular trade-flow model, companies can understand their position in the market and the risks on trade and commodity routes during a crisis. This approach should be combined with macroeconomic scenarios to develop and test crisis response strategies as well as subsequent developments of the disease (e.g. new outbreaks, changes of epidemics, anxiety, investment recession, changing consumer habits, fluctuations in demographics ... Therefore, shippers and logistics service providers for them to be forced to think about the most likely scenarios and change their production and business strategies to be able to survive the next "normal".

The McKinsey Global Institute estimates that global trade demand could drop by 13 to 22 percent in the second and third quarters of 2020. Meanwhile, the largest quarterly decline in trade volumes during the crisis. the global financial crisis in 2008 was just about 5%.

Estimates for global trade trends stem from nine scenarios, developed by two organizations, McKinsey (United States) and Oxford economics (Oxford University, United Kingdom), outlining models of children. different paths of the global economy, based on assumptions about the effectiveness of both economic and public health policy responses, as well as how businesses and households respond to initiatives. this. The detailed supply-and-demand model of goods indicates that the effect on global trade will be significantly greater than global GDP (estimated to decrease by 3 to 8% by 2020) and significantly longer. In the modeled scenarios, trade volume will take 15 to 48 months to recover to the level achieved in the fourth quarter of 2019 and the total global trade losses will be equivalent to around 8. % to 49% of total trade volume in 2019.

Commercial and logistics companies have begun to estimate the consequences of the disease for the whole 2020, with some road, air and sea transport companies reporting a sharp decline compared to the same period in 2019.

Phaata (Adapted from McKinsey)