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COVID-19 Update

As the COVID-19 situation globally slowly unwinds, some of the challenges and opportunities that will emerge in its immediate aftermath are beginning to become discernible. Ranked in a series of 4 stages by Dr. Raymon Krishnan, President of the Logistics & Supply Chain Management Society. We are now in Stage 3 as he describes it and stage 4 will happen after we emerge from what LogiSYM Editor-In-Chief, Mr. Joe Lombardo describes as a hibernation period for many supply chains and supply chain ecosystems.

In the short-term, capacity management will continue to be difficult. All sorts of barriers have appeared that are making the old ways of working and shipping both domestically and across borders more difficult. For example, lack of freight capacity as a result of blank sailings and grounded passnger fleet will plague us for many more weeks – if not months.

China whilst awakening from its slumber during the self imposed lockdown in Wuhan and many other parts of the country, still has strict restrictions on the access of foreigners and flights into the country. Even full freighter aircraft have not been spared. UPS and FedEx pilots for example, have to take frequent virus tests. At present, freighter services still operate more-or-less normally, but this could change if the number of cases continue to rise.

It has been reported that crews of container ships have been stranded in various parts of the world as immigration authorities impose quarantine periods on crews, similar to those of other travellers. Some crews are stuck on their vessels whilst other vessels cannot get crews. Singapore was one of the first countries globally to allow ships to start calling into its ports for crewing but the process of crewing vessels has become more cumbersome resulting in less efficient use of shipping capacity.

The lifting of many of these necessary restrictions are still weeks or months away and will only probably be removed after countries have ended their domestic quarantine policies. Many would have forgotten or cannot remember the situation immediately after 9/11 but the imposition of extreme measures immediately after that fateful event were quite extreme and many of the new policies and procedures around security in air travel are still in place today.

The effect of such an approach will be to reduce adaptability of freight and this will have a spillover effect into the market and slow or hinder recovery. As pent up demand is released around the world over the coming weeks as lockdowns hopefully end, both shippers and logistics service providers will have to cope with a freight transport system which is not operating at its optimum. Capacity will be depressed by all sorts of obstacles.

Of course, this will benefit those who adapt to the new environment and many supply chains should use this time to explore different options and opportunities. Many Logisticians, are stuck in a routine to ensure product and information flows at what is considered optimal levels. In our relentless pursuit of cost efficiency, what this situation with COVID-19 has shown is that lean is not agile and most have proven to be unable to withstand sudden unexpected disruptions such as what we are now seeing. Global supply chain thought leader, Dr. John Gattorna, in an article released earlier this week, has said that “Now we must move back along the efficiency spectrum and accept that we may need some level of in-built redundancy, in the cause of increased resilience”. The challenge will of course be if organisations and leaders in organisations remember this after the epidemic is over.

At the very least, what emerges after this period of hibernation will be interesting to see and we should look at this optimistically but with the necessary cautions to improve supply chain pipeline velocity to ensure goods, information and finance continue to flow as needed in our interconnected supply chain ecosystems.

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