The COVID-19 pandemic continues to shake up the world, but the light is beginning to shine. As North America begins to reach its peak, the economy is starting to look at reopening. Life will likely not go back to normal anytime soon, but what will the rebound look like for the transportation and logistics industry?
The logistics industry has been vital during the global pandemic. Getting the right supplies to the right areas at the right time has become a life or death challenge that the industry has taken in stride. Unfortunately, even such an essential service has not been immune to challenges.
The largest hurdle that logistics companies will face during the rebound is the lack of employees. A recent report by the Bureau of Labor Statics found that over 88,000 jobs were lost in the trucking sector in April. The majority of these were backend workers, however, the on-going truck driver shortage that has been plaguing the industry for years has now been strained even more by the pandemic.
Luckily, this downturn will likely be short-lived. As businesses begin to reopen, the industry will be able to rehire these workers. Truck drivers will remain in high demand, but most other employees should see a return to work. Companies should brace for a tense few weeks at the beginning of the rebound before employment in the industry even out again.
Freight volumes and freight rates have also been greatly impacted by the global pandemic. Sales across North America dropped during March and April as many businesses were forced to close. As businesses begin to open again, both freight volumes and rates are already showing signs of increasing. Tight capacity and produce seasonality will increase rates for shippers soon, but things should begin to stabilize as we see some economic consistency.
The overall impact COVID-19 has had on the economy and the logistics industry is still unknown, and probably will not be for some time. The rebound for the industry will not happen as quickly as many hope. Industry forecaster FTR said, “Although we expect a sharp recovery in the third quarter, the depth of the damage means that we likely will not return to the level of economic output we saw before the COVID-19 crisis until the first quarter of next year.”
Bill Witte, the chief economist for FTR, stated that predicting the rebound is particularly hard due to this being unlike any other challenge the world has been before. “I don’t think this is a normal recession-recovery situation. It’s not a business cycle event, it’s a completely artificial event,” he said. Due to this, looking at past recessions provides little guidance in terms of what the rebound could look like.
As uncertain as the COVID-19 rebound is, the transportation and logistics industry will survive. This industry is vital to the global economy, and this pandemic has shown just how important it is. It will be a long road forward, but one that we will all take together.