The warehousing and distribution sector will feel the impact of the pandemic long after it’s over. According to Elaine Low, regional MD for the South East Asia and Pacific region at Ceva Logistics, the pandemic has brought with it significant paradigm shifts in the logistics industry as challenges have erupted across the supply chain.
“All aspects of industry were impacted,” she said during a recent online conference. “Modes of transportation changed. Airfreight capacity was cut severely, with over 70% of the capacity gone, while on the ocean side we saw a large number of blank sailings. Border restrictions were another challenge – and we continue to see new requirements and procedures coming in.”
All of this had led to significant challenges in the warehousing and distribution sector, said Low. “Sourcing options are no longer the same and supply chains are being altered to meet new demands. Increased capacity was necessary in the warehousing sector as demand for certain items increased, while at the other end of the spectrum items that were no longer moving as fast needed to be stored.”She said this tremendous shift in capacity had also affected pricing.
“Pricing works on supply and demand principles. When demand outweighs supply there is an upward trend. The volatility in the market place has not been easy to deal with and has further impacted on pricing.”In addition, said Low, there was no way to predict demand as it was constantly changing.“Many shippers have much smaller margins and the cost of freight has been skyrocketing. It is not a sustainable situation.”
Axel Herzhauzer, regional business development leader for Ceva Logistics, said change was inevitable in this new operating environment – and the restoration of the supply chain simply meant that there was no going back to doing things the way they had been done pre-Cov id-19.“Going forward agility and flexibility will come into play,” he said.
According to Low more inventories are expected to be held on shore in future, while border restrictions will continue to affect availability of goods and labour resources. A new reality will also be the need to have warehouses and distribution centres closer to consumers as supply chains came under considerable pressure during the pandemic.“We expect to see continued demand for warehousing and there will be a need to create more capacity. You can’t create warehousing capacity overnight, it requires time and strategic planning.”
She said at present the need for space was being balanced by the capacity generated in industries that were downtrading such as the automotive sector, but this would not fulfil future requirements.“A new range of warehousing and distribution centres that meet the omni-channel approach of logistics will have to be created, but there will be a lag time in delivering these which the industry will have to take into consideration.