What Impact Have Global Supply Chain Issues Had on Large Fleet Transport?

The pandemic has disrupted nearly every component of the global supply chain. This has occurred from the pipeline of transportation and logistics that receive goods from where they are manufactured, all the way through to where they are sold.

Logistics companies like ODLS, which are responsible for moving, storing, and transporting goods, have been directly affected by supply chain issues. While facilitating trade and commerce, logistics companies help businesses get their products to consumers as part of value chains across national borders. Consequently, supply chain issues caused by the pandemic have adversely affected competitiveness, economic growth, and job creation in the transport sector.

As opposed to ocean and air transport, land transportation has generally remained globally available as roads have remained open, with the exception of countries under severe lockdown. As a result of the high demand for food and medical supply transportation services combined with reduced employee availability, prices have increased in this sector.  

Manufacturing and other industries that rely on land transport are generally not operating at full capacity due to lockdowns. Therefore, spot road freight rates have fallen in some markets. There has been an increase in the demand for rail services due to higher air cargo freight rates, blank sailings, and longer truck transit times. But larger fleet companies are not able to fulfil the demand. 

Congestion, delivery delays, and higher freight rates prevailed due to operational constraints. Nevertheless, not all segments are impacted equally as companies that cater to e-commerce are seeing an increase as consumers shift to shopping for essentials online. On the other hand, those that cater to other sectors (such as auto and consumer goods) are seeing a drop in activity.

The large fleet transport business is being severely impacted by the economic downturn since they are unable to maintain a business continuity plan, a backup plan, or an interruption plan. Due to lack of technology and directions to follow proper health guidelines, the response for overall operations has become complicated.

Due to the supply chain issues, large fleet transportation owners are highly vulnerable to degraded service. As a result, many of these supply chains may shorten or diversify, relying on alternative partners (such as nearshoring) or intensifying their efforts to bring strategic value chains home (such as reshoring). Additionally, more warehousing capacity or dry ports may be built near demand centres to reduce the time it takes to deliver goods.

The working conditions and wages in transportation need to improve in order to ease shortages of truckers and sailors. A major investment in infrastructure, including ports, ships, trucks, and trains, is necessary, as is a significant investment in human resources. As a result of the pandemic, many countries are reshoring their productive capacity in order to reduce supply chain disputes. While this could improve the stability of global supply chains, the process is expensive and gives large fleet transport ventures little room to move.