How to Prepare for the Next Round of COVID: Trucking Logistics Industry
To have two case studies that examine, for the trucking logistics industry, how to prepare for the next round of COVID-19. An ideal response would have one case study on this topic surrounding the trucking industry in America, and the second case study, on the same topic, should examine cross-border challenges to Canada. Additionally, to have at least two sets of data (not related to the case studies) surrounding the topic to complement the research and to provide more color.
- In a normal year, according to Transport Canada, about 30,000 trucks cross the Canada/United States border every day, carrying an estimated one billion dollars in goods. Even during the pandemic, however, cross-border trucking traffic has remained relatively constant throughout the crisis, with weekly declines averaging between ten and thirty percent compared to last year.
- "The number of truck drivers entering Canada dropped 6% to 105,163 during the week of July 20-26 from 111,970 the same week last year, the Canada Border Services Agency said Tuesday. In the previous week, truck arrivals had also dropped by 6%." The data can be viewed in this visual. "It is the third consecutive drop since truck arrivals returned to normal during June 29-July 5 for the first time since Covid-19 struck earlier in 2020."
- As of the writing of this research, Canada and the U.S. have agreed to keep the border closed to all non-essential travel until Aug. 21 "to slow the spread of Covid-19, however, the restrictions, first introduced in late March, are not applicable to commercial vehicles."
- Effective July 30th, 2020, all Canada-U.S. ports of entry will be collecting personal contact information from truck drivers which will finish the roll out of a program meant to support contact tracing efforts in the fight against Covid-19.
- When this process was first implemented earlier in July, there were some delays and subsequent long lineups, but the personal information only needs to be collected once and does not need to be re-entered during any further border crossings.
- "New research from McKinsey considers how freight intensity might develop in the coming years and how that would affect the recovery of US freight and logistics. McKinsey took as their base case a macroeconomic outlook, derived from their report called "nine COVID-19 scenarios". To this they added an estimate of freight intensity in every US sector, analyzing historical trends and considering the structural factors that may affect their recovery."
- "The research produced two insights for freight and logistics companies. First, full recovery will take about three to five years, a rough patch in which companies will be severely tested. Second, the recovery will differ by transportation mode and commodity. Some products, such as nonmetallic minerals, ceramic, clay, cement, agriculture and food products, and pharmaceuticals, will likely return to growth faster and more firmly than other products. Companies that can adapt their portfolios to shippers in these sectors can accelerate their own reversal of fortune, shaving as much as two years off the time needed to return to 2019 volumes."
- "The recovery for a mode of transport as well as for individual carriers will depend on its commodity exposure, thus creating a range in performance among carriers (see this visual). In most scenarios, less-than-truckload (LTL) shipping and full-truckload (FTL) shipping are likely to recover faster than other modes due to their commodity-mix profiles (see this visual). Both trucking modes carry a heavy proportion of fast-to-return agriculture, food, and services and benefit from growth in e-commerce. FTL’s freight mix also contains a significant portion (16 percent) of fast-to-return basic commodities."
- McKinsey asserts that trucking and logistics must come to grips with the economic reality of the pandemic. See this visual for an illustrative financial statement for a US trucking company, showing the potential effects. "The pandemic’s demand shock is reducing volumes and yields, and could turn a company from profit to loss."
- In the face of this reality, leading companies should take action across three dimensions, according to McKinsey. First, they should make bold moves on discretionary and non-people-related costs. Second, companies should reorient their commercial model toward the pockets of growth that will be stronger in the coming years. Third, leading companies should be investing in new digital capabilities to unlock top- and bottom-line impact.
- "A model company in terms of reducing the impact of the pandemic is the Hungarian logistics company Waberer’s International Nyrt (Waberer’s). With a fleet of more than 4,100 trucks and 7,600 employees, the company is one of Europe’s market leaders in international full truck load transport (FTL) and the Hungarian market leader in the field of domestic freight and complex logistics services. At the beginning of the Covid-19 pandemic, Waberer’s introduced immediate cost-cutting measures to maintain short-term financial stability in the changing environment. As a result, the company was able to offer a stable and continuous service during the critical phase of the lockdown. Tibor Dudola, Strategic Buyer at Waberer’s International, believes his company is also well-prepared for a second wave: “In this situation, flexibility and speed in meeting changing market needs are most important. This applied both at the beginning of the pandemic and during the recovery phase. In our opinion, the European logistics market will be severely affected in the medium term.”
- "Transportation businesses that did not have contingency plans for emergencies have been struck particularly hard during this crisis. For companies that fall into that category, now is the time to put such emergency and resilience plans in place. Devising and revising action plans now could prove crucial if the coronavirus resurges in the fall and winter as many health experts predict."
Summary Of Our Early Findings Relevant To The Goals
- Our initial hour of research was spent scanning to see what was publicly available surrounding this, and to provide information, data, and statistics surrounding this topic.
- We found very little surrounding "how to prepare for the next round of COVID-19". This could be because experts are disagreeing whether there will be another round of this virus, or this industry is in denial that it could happen. What we DID discover, as evidenced by the McKinsey study, is that the trucking logistics industry is rapidly responding to the fall out from COVID-19 and leading companies are responding to this by making their companies much stronger and able to withstand this type of crisis moving forward. Because of this finding, we are suggesting that we pivot the research, which will be reflected in the scopings.
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