Logistics service providers (LSPs) will need to up their game as shippers’ demands will remain diverse and unpredictable for the foreseeable future.
According to James Hookham, secretary general of the Global Shippers’ Forum, the outbreak of Covid-19 hit cargo owners as hard as it did logistics service providers, resulting in serious damage to supply chains.
“Across the board companies are assessing the impact of the pandemic on their businesses. For shippers, factors that will be vital in assessing the shape of the future market will be the level of demand and the kind of services they are looking for from their logistics providers.”
The massive blow to consumer confidence and disposable income affected everyone, he said.“It is not just the buying patterns that have changed, but also the spending power of consumers. While it will return in different ways and in different time scales, the demand this generates will largely dictate the demand for cargo services going forward – it will be unpredictable and uncertain.”Hookham said LSPs would have to be able to adjust to this unpredictability.
This would require f lexibility and agility to meet shipper demands.“Another factor that remains on the radar, although it has had far less attention in recent months due to Covid-19, is the fact that we are still in the middle of a trade war. This will continue to dominate and inf luence the way the global logistics markets recover from Covid-19,” said Hookham.
“The US/China tariff war has seen some high and low points, but the fact remains it has not gone away. Even more concerning is that the experiences with this pandemic over the last few months has led to increased protectionism by countries – and one can expect to see trade relations between major economies sour even more. This will also have a clear impact on rate of recovery and the recovery of demand for LSPs. It will also dictate the shape that recovery takes.”
Hookham said amidst all this uncertainty and unpredictability the industry remained under tremendous pressure to develop realistic and achievable reduction targets for greenhouse gas emissions.“Due to the pandemic a key meeting where these reduction targets for the global shipping sector were to be discussed and even finalised was postponed and now is yet to take place. The issue of climate change remains on the table amidst all the other challenges being experienced.”