LONDON--(BUSINESS WIRE)--SpendEdge, a global procurement market intelligence firm, has announced the release of its position paper on coronavirus impact assessment on the freight and transportation industry and risk mitigation measures to streamline sourcing and supply chain operations in this industry.
Highlights of this position paper
Analysis of the Coronavirus Impact on the Freight and Transportation Industry
The pandemic-induced clampdown of geographical corridors and restrictions imposed on cross-country mobility of goods are some of the factors that are carrying serious implications for the freight and transportation industry. A sudden slump in demand owing to the slowdown in economic activities across the key end-user sectors and restricted passenger mobility have eschewed growth prospects in the freight and transportation industry.
However, suppliers in the freight and transportation industry have the inherent bottlenecks within global goods supply chains to address which have gotten worse with the intensifying coronavirus impact.
Buyers and suppliers are expected to collaborate to address this overwhelming coronavirus impact on the freight and transportation industry. This is the need of the hour as their services are considered critical to cater to emergency requirements from healthcare/government agencies. Such initiatives will also assist them to generate additional revenue streams which are currently rare in this economy that is reeling under the coronavirus impact.
Get your free trial of our procurement platform and get to know what measures the industry leaders are adopting to mitigate supply chain risks in the freight and transportation industry as the coronavirus impact intensifies.
Demand-Supply Trends Governing the Freight and Transportation Industry Sectors
Governments across countries have stepped in to revive the ailing enterprises in the freight and transportation industry as the demand curve has taken a nosedive owing to the coronavirus impact. The airlines industry is among the worst-hit sectors and has resorted to employee lay-offs and downsizing fleets as cost-saving measures. From a procurement standpoint, it is prudent of buyers to leverage forward contracts with suppliers to ensure normalization of supply post the COVID-19 crisis.
Demand-Supply Trends in the Travel Sector
- Suppliers are expected to collaborate with governments to assist in emergency operations by integrating their capabilities with national emergency mechanisms and systems. While accounting for a major contribution towards the national need, this collaboration can translate into sources of substantial revenue in the freight and transportation industry.
- Global travel organizations are partnering with health organizations to strategize a recovery strategy post the COVID-19 crisis. Major buyers should work in a collaborative manner to assist such agencies to evaluate and develop key risk mitigation/recovery strategies post the COVID -19 crisis
Demand-Supply Trends in the Freight and Logistics Sector
- Ports and terminal services have functioned in a normal manner, albeit with substantial human resource safety measures in place. Suppliers were facilitated by additional storage capacities by port authorities whenever deemed necessary. This has eased the burden on suppliers in terms of inventory handling costs and consequently led to a downward price push for buyers.
- Suppliers have actively formed coalition groups, wherein macro-economic issues faced by them due to the coronavirus impact are collectively presented to various government agencies. Consequently, charges such as those associated with detention and demurrage are being conditionally waived off for suppliers.
Want to mitigate supply chain risks and manage the coronavirus impact on the freight and transportation industry? Request a free demo to gain insights into our customized solutions.
Risk Mitigation Activities to Address the Coronavirus Impact on the Freight and Transportation Industry
Development of mutual risk-sharing strategy with suppliers
The nature of the coronavirus impact on the freight and transportation industry and the interdependence between buyers and suppliers in this industry reinstate the importance of collaboration between both the parties to identify issues associated with transportation activities. One of the major areas where buyers and suppliers can collaborate in an effective manner is to constantly monitor new areas where quarantine measures are being deployed and identify alternate travel routes effectively.
Usage of transportation/warehouse optimization software by suppliers
The gradual blockade of transport routes owing to the coronavirus impact has made it essential for buyers to optimize their transport routes. On this note, it is advised that buyers use transportation and warehouse optimization software that will aid them to streamline their delivery routes and reduce fuel-related costs. Warehouse optimization software will provide insights to buyers regarding space availability within warehouses, enabling buyers to plan transportation activities based on their ad-hoc/medium term/long term requirements.
Revisiting contract terms
Commodity and energy prices are expected to undergo frequent volatilities as the coronavirus impact intensifies on the global economy. This should be the cue for buyers who account for significant investments on commodities and energy items to re-engage their suppliers and explore strategies to immune them from the price volatilities. In the freight and transportation industry, it is advisable to fix the short-term procurement price or at least keep a maximum limit on upside price movements.
To stay on top of latest trends and supply market information, check out SpendEdge’s knowledge center on coronavirus impact assessment.
SpendEdge shares your passion for driving sourcing and procurement excellence. We are the preferred procurement market intelligence partner for 120+ Fortune 500 firms and other leading companies across numerous industries. Our strength lies in delivering robust, real-time procurement market intelligence reports and solutions. To know more, https://www.spendedge.com/request-free-proposal