Technology is affecting transportation modes through the roads, sky and water. Advancements in speed and efficiency may come at some cost.

The COVID-19 pandemic has hit global trade and investment at an unprecedented speed and scale. Multinational companies faced an initial supply shock, then a demand shock as more and more countries ordered people to stay at home. Governments, businesses and individual consumers suddenly struggled to procure basic products and materials, and were forced to confront the fragility of the modern supply chain. The urgent need to design smarter, stronger and more diverse supply chains has been one of the main lessons of this crisis.

Limited 5G network deployments had begun in some markets in 2019, with widespread rollout expected to take place through the 2020s. The 5G wireless technology promises to accelerate data speeds, improve quality, and reduce latency in the world’s mobile networks all of which means higher performance than today’s broadband wired networks.  “5G will be a game changer because it’s 100 times faster and will support 100 times more devices than current 4G networks,” according to the Cellular Telecommunications Industry Association.  This week we take a look at the specific impact on the Logistics industry.

Massive unemployment and a nearly desperate need to rebuild our infrastructure could entice the presidential administration to copy a plan designed by President Franklin D. Roosevelt in the 1930’s.  The New Deal was a series of programs and projects instituted during the Great Depression by President Franklin D. Roosevelt that aimed to restore prosperity to Americans. When Roosevelt took office in 1933, he acted swiftly to stabilize the economy and provide jobs and relief to those who were suffering. Over the next eight years, the government instituted a series of experimental New Deal projects and programs, such as the CCC, the WPA, the TVA, the SEC and others. Roosevelt’s New Deal fundamentally and permanently changed the U.S. federal government by expanding its size and scope—especially its role in the economy.  Although it took our entry into World War II to lift the U.S. economy out of the depression, the New Deal provided many jobs to willing Americans in a time of great need.  While I don’t believe we’re in as bad a shape as the 1930’s we are faced with a jobs crisis.  To add to the issue, the recent civil unrest has compounded many small businesses problems in getting re-opened. 

Let’s take a break from the Covid-9 effect on the Logistics industry.  Things are slowing opening back up.  Hopefully, the trend continues with no significant spikes in infection rates.  That being said let’s look at some industry trends we should all be aware of this year.

As retailers struggle with re-opening strategies it’s clear the new normal will be something we have never experienced.  Consumers in many areas of the world have tightened their wallets and eliminated discretionary spending because of lost jobs, lower wages and uncertainty about how long the COVID-19 pandemic will last.

Many states have reported a leveling-off of new Covid-19 cases. Clearly a good sign but we are by no means out of the woods yet. It is unlikely anyone alive today remembers the Spanish flu of 1918, but we may be able to learn some things to expect as we hope to return to some normalcy in the coming months. The administration is already talking about target dates to reopen the country in stages. The fallout from Covid -19 is painfully clear for many people. Let’s try to anticipate what challenges are ahead.

From a logistics and supply chain perspective, while things are still very early, it stands to reason that the impact on all things trade, shipping, and moving freight is already quite significant. There is also, of course, a high level of uncertainty that comes with a pandemic such as this one, in the form of how long it may last for, what should or could businesses be doing to get through this period, and what happens now or next? And what they all have in common is that they are all valid questions that come with a shortage of valid answers, at least so far, for the most part. The impact on supply chains more broadly will be a function of (a) how long businesses remain closed (b) the extent to which there’s an impact on downstream supply chains and (c) the extent to which precautionary measures are taken by corporations including logistics firms. We may be able to glean some information on what to expect during the recovery period by looking at the post Spanish flu recovery.

What Can We Learn From the Spanish Flu Recovery

The immediate effects of the pandemic; postponed weddings, canceled vacations, empty supermarket shelves, sinking housing prices, salary cuts, and layoffs suggest no one will come out of this period without losing something but we are only at the beginning. Predicting how bad things will get economically is difficult. A viral outbreak of this scale has only happened once before in the industrialized world: the 1918 influenza pandemic that hit the world in two seasonal waves, killing 50 million people worldwide and 675,000 in the US. That pandemic occurred during World War I, which makes it hard to compare to now, even setting aside all the other changes in the past century but we may be able to draw some loose parallels.

Many businesses, especially those in the service and entertainment industries, suffered double-digit losses in revenue. Society as a whole recovered from the 1918 influenza quickly, but individuals who were affected by the influenza had their lives changed forever. Given our highly mobile and connected society, any future influenza pandemic is likely to be more severe in its reach, and perhaps in its virulence.

Two months into this current outbreak, massive layoffs have started, American industries have demanded bailouts, and unemployment rates have surged. Economists at the Federal Reserve Bank of St. Louis are projecting total employment reductions of 47 million — an unemployment rate of 32.1%.

According to Forbes, every sector of the American economy is shrinking: Hotel chain Marriott International is furloughing tens of thousands of workers, Landry’s, the parent company of Del Frisco’s and Bubba Gump Shrimp, laid off 40,000 workers. Air Canada plans to lay off 5,100 members of its cabin crew. Shoe retailer DSW put 80% of its workers on a temporary unpaid leave of absence. This early carnage is understandable. How fast we recover will make all the difference to the U.S. economy.  Is this perhaps a wakeup call for domestic industry revitalization? There is a strong call to bring back the industrial revolution but are we too late?

What’s Ahead is Uncertain

As we look ahead, more information about corona virus will be learned about, to be sure, but things understandably are moving slowly. Freight transportation activity, processes and volumes are likely to be impacted to varying degrees, of course. For now, we assess and move forward as best as possible. Events like this on a global level can make for trying and difficult times, but, as has been the case before, one can expect supply chain networks to adapt and adjust and do what needs to be done to keep economies and freight flows moving forward. Land Link Traffic Systems is available for your supply chain needs.

This month industry analysts are reporting significant upticks in spot rates and demand due to restocking demand from grocery and home good retailers. Spot market load volumes and rates for van and reefer equipment saw mostly significant gains in March due to the ongoing corona-virus pandemic, according to data issued by Portland, Oregon-based freight marketplace platform and information provider DAT.

For the week of March 16-March 22, DAT reported the following annual differences:

The FMCSA is showing a united front with the White House’s emergency declaration regarding Coronavirus. The declaration will cease enforcement of some HOS rules and ease enforcement on others for truckers. FMCSA officials said that this marks the first time the organization has issued nationwide HOS relief. There are many first-time events happening during COVID-19 and these efforts are clearly necessary to keep food and critical supplies moving.

“Because of the decisive leadership of President Trump and Secretary Chao, this declaration will help America’s commercial drivers get these critical goods to impacted areas faster and more efficiently,” said FMCSA Acting Administrator Jim Mullen in a statement. “FMCSA is continuing to closely monitor the coronavirus outbreak and stands ready to use its authority to protect the health and safety of the American people.”

FMCSA officials said that this declaration provides for regulatory relief for commercial motor vehicle operations providing direct assistance supporting emergency relief efforts intended to meet immediate needs for: