Strong foundations for recovery

STRONG FOUNDATIONS FOR REVOVERY

Following a survey conducted by MHD’s publisher, we reveal the latest stats from businesses in the sector as we move into a new normal following the peak of COVID-19 challenges.

At a time when the world has been shocked by a pandemic and resilience has never been more critical, Australia has been found to possess a strong foundation for a robust post-pandemic business recovery.

That’s why MHD’s publisher Prime Creative Media recently undertook an industry survey, to help companies understand where the transport, logistics and supply chain industries are placed.

Supply chain and logistics were the earliest industries impacted by COVID-19, with many factories in China shutting down for a prolonged period over the Chinese New Year. But now the interruption to component supply has been superseded by concerns over consumer and business demand in the Western markets for the foreseeable future.

Simon Birmingham, Federal Trade Minister said at the end of April this year that one in five Australian jobs relies in some way on trade, for example in agriculture, manufacturing, tourism, education and financial services. “China is our largest trading partner and has helped Australia to record 26 consecutive monthly trade surpluses, meaning we’re exporting more than we’ve imported,” he said.

Australia recorded a mega $19.2 billion trade surplus for the March quarter along with its highest ever current account surplus, highlighting how important our supply chains will continue to be as the Australian and global economy begins to recover from the impacts of COVID-19.

HOW WAS THE SECTOR IMPACTED?

A wide variety of people across executive, mid-level manager, finance, sales and marketing, procurement and operations participated in MHD’s industry survey, reflecting where the logistics sector is placed as the national and global economy begins to emerge from this once-in-a generation challenging time.

Australia is a nation of major global operations and small businesses, that are mixed across both metro and regional locations. Twnty five per cent of survey respondents have 11-50 employees in their company, whilst the other equal majority of respondents have over 500 employees. This can be attributed to Australia’s location in the oceanic region and wide open space that can facilitate large logistic hubs spread across multiple points of the country.

During the pandemic, it was shown that one of the major disadvantages of stretched supply chains is that they can easily break at any point. You never know when a link in the supply chain fails due to uncontrollable factors, and your entire business is affected by it.

Companies have had to invest their resources into shortening but also speeding up the supply chain and making sure that the required goods are transported from one end to the other in the shortest period of time.

In the midst of the COVID-19 pandemic, logistics and freight workers ramped up their duties, going to work each day fulfilling a

critical role, allowing consumers to access essentials.

However, companies in the sector have been forced to put control measures in place, limiting physical interactions between workers, suppliers, customers and others.

WHAT CHALLENGES ARE BUSINESSES FACING?

Almost 50 per cent of industry respondents said the current effect of COVID-19 on their business is somewhat negative. Business has come under a variety of threats as a result of the COVID-19 pandemic including the closure of borders, increased screening and security measures and the greater frequency of cyber security attacks.

However, all Australian states and territories consider freight and logistics to be essential services, exempting them from the interstate travel bans and quarantine requirements. This is most likely the contributing factor to over a quarter of respondents reporting that not a lot of impact is on their business at this time.

Not many industries have had the luxury to see their business boom during this unprecedented time, but almost 20 per cent of people said they have seen an increase in business since

COVID-19. Due to social distancing restrictions, the digital transformation for companies to invest in omnichannel solutions has prematurely sky-rocked the e-commerce boom.

Click-and-collect models, marketplace proliferations, buynow-pay-later options and increased availability of faster payments and delivery choices will fuel the next surge of online expansion and help restore revenue for Australian retailers with e-commerce capabilities.

While ocean and surface freight volumes fell, due to COVID-19 restriction orders sapping global consumer and manufacturing demand, the pressure is on container lines to logistics managers to eke out efficiencies while still staying competitive and adapting to a new economic landscape.

It’s unsurprising then that among logistics professionals that said they expect to make a change in the wake of COVID-19, majority will invest in technology and a recommencement plan for businesses who have temporarily closed and a diversified supply chain for those who operate as essential services.

WHERE TO NEXT?

Majority of survey respondents said they expect their companies to return to previous levels in the next three to six months. Sixteen per cent believe it will take more than a year to return to normality, however just under a quarter of respondents are confident it will only be one or two more months until business can operate at the same levels pre-pandemic.

Another likely post-coronavirus impact is that companies that have been able to effectively adapt to workfrom-home environments will lessen their reliance on physical offices, thus reducing fixed costs.

For shippers, this next period is focused on rethinking their supplier network, stage inventory to balance against current demand fluctuations, and lean on internal or 3PL-provided freight visibility solutions.

Forty per cent of industry respondents said they don’t expect to create new positions in the next year, however 33.7 per cent are hoping to create more positions in the next twelve months.

Employment marketplace SEEK has revealed new figures that show that Australia’s job market is making progress, with manufacturing, transport and logistics among the top industries for employment opportunities. According to SEEK, the fastest changes in job ad growth are manufacturing, transport and logistics, presenting a 59 per cent increase.

SEEK data indicates that the jobs are in warehousing, storage and distribution, road transport, machine operators and assemble and process work. However, business and system analysts, software engineers, developers and programmers are being sought after too.

This is further reflected in the industry survey, with an overwhelming majority of all respondents reporting they are exploring new technologies and services to make their company more productive and efficient. Clearly the focus now for all companies across the sector is strengthening

communication between a company’s stock management, warehouses and customers to streamline the supply chain network as best as possible.

INDUSTRY INVOLVEMENT

As major news outlets continue to report on the strains the supply chain is experiencing and show a general perspective on the logistics industry, MHD’s close relationship with leading distributors, companies and decision makers has given the publication exclusive access to content and stories that cannot be found elsewhere.

Industry respondents rated case studies about companies similar to their own as the most beneficial source to help purchasing decisions during this time. In fact, close to half of all respondents said that information from third-party sources such as industry magazines and reports has been highly beneficial over direct advertising from social media platforms like Google and Facebook.

Forty per cent of respondents rated social media as the lowest trustworthy source during recent times. Emailed newsletters and media websites were rated moderately to highly trustworthy and the most trustworthy source according to industry is trade magazines and periodic journals.

This data is reflected in MHD Supply Chain News reader engagement, which has set new records with the latest industry developments, innovations and successes during the COVID-19 pandemic.

Although all physical trade events have been postponed until further notice, a very healthy 47.6 per cent of respondents said they are likely to attend trade events in the future when the government deems it to be safe.

Fifty two per cent of respondents rated the Federal Government’s support for the sector during the COVID-19 crisis as acceptable, whilst 31 per cent said it was very strong.

As businesses struggle to meet the demands of this new normal, they are continuing to leverage Government stimulus packages and explore new supply chain technologies that are dramatically improving visibility. Focusing and evaluating are being highly regarded as the most beneficial tools for preparing for the rebound during the foreseeable future. ■