Trucking market after the coronavirus: what should transport companies prepare for?
The international freight market has been “knocked out” due to the coronavirus pandemic and expects an inevitable decline in freight traffic. Freight deliveries will decrease primarily from China, Italy, France, Spain – the most important countries in the world’s supply chains, in which production has almost completely stopped during the quarantine.
Most transport and forwarding companies sent employees on vacation “at their own expense.” Cargo terminals are closed, the main container lines are idle, air and sea flights are canceled due to underload. It is significant that interruptions in the transportation of goods are observed in all directions, whether it be the European, Asian or Middle Eastern markets. An additional burden on small and medium-sized businesses lies in the fact that the costs of storage and idle time of goods in warehouses fall on the shoulders of cargo owners.
Experts predict that the decline in cargo turnover will be protracted, and the restoration of previous volumes may take many months. At the same time, not only the cargo and logistics industries will suffer, but also the end consumer. Now the consumer market is just beginning to feel the impact of the crisis, as there is still a stock of goods in wholesale warehouses. But when the stocks run out, there will be a shortage, followed by an inevitable rise in the price of products.
The state is the main intermediary in the “reset” of the transport business
Obviously, the transport industry will need government assistance, both domestically and internationally. And it’s not just about tax breaks, credit holidays and reduced insurance premiums for businesses. We need concrete measures to support transport companies, aimed at liberalizing the market for international cargo transportation, abolishing restrictive barriers, and reducing bureaucratization.
In order to give impetus to the further development of cargo transportation, states need to:
– Cancel all existing restrictions and licensing system of transportation: permits, TIRs, ECMT permits, etc. The freight transportation market should not be based on the availability and number of permits for transportation to a particular country, but on the existing consumer demand and the ability of carriers to deliver the necessary goods to the desired country.
– Cancel the mandatory weight control for the transportation of essential food and non-food items.
– Exclude from the logistics supply chain state regulatory agencies that slow down the process of cargo transportation.
– Accelerate the process of digitalization of the transport industry and the introduction of electronic document management. All professional drivers with valid documents must be in a single database, which automatically provides access to international cargo transportation without the need for any additional transport permits.
Transport companies themselves must also reformat their activities:
– optimize current costs;
– reorient the categories of transported goods: for example, from industrial goods to food and essential goods;
– master new niches, for example, delivery of goods directly to points of sale or directly to the end consumer, bypassing logistics warehouses and cargo terminals.
With recent events and gloomy forecasts, it is clear that in order to survive and thrive in the future, the transportation business will have to change strategy. Those effective schemes that worked and justified themselves for many years will not help in the future. It is necessary to quickly adapt to changing difficult conditions.
Already today, transport companies are facing such problems as a decrease in traffic flows, reorientation from one type of transport to another, low profitability, and dumping by small companies. Inevitably, the most unadapted players will leave the market, while those companies that show effective management in this period will be ahead of the rest when the world economy begins to recover.
