COVID-19 Impact on the Express Industry
The NDTA Washington DC Chapter’s webinar held April 23, 2020, focused on the impact of COVID-19 on logistics, and specifically within the express industry. Ethan Mattern, Head of DHL Public Sector, and Michael Taylor, Head of Public Sector Compliance and Governance for DHL Express, spoke about these impacts from the perspective of an integrator.
In supply chain logistics, significant differences exist in networks and their ability to be flexible. While all operate in a relatively similar fashion, fixed assets such as those found in power grids can create limitations.
A “black swan” event is one that deviates beyond what is normally expected of a situation, and that would be extremely difficult to predict. COVID-19, a completely unanticipated event that is having drastic impacts across every industry, is a perfect example of this term.
Carrying capacity is at 100 percent before such an event, but the event creates disruption. As capacity starts to diminish, demand will increase and create an overshoot. Unfortunately, after events like this, degraded carrying capacity will not recover in some instances. A loss factor is always involved.
The current pandemic is far from the first black swan event to affect transportation and logistics. The 9-11 terrorist attacks in 2001 took 27 months to recover from, and the aviation industry as a whole lost around $13 billion. The SARS [Severe Acute Respiratory Syndrome] outbreak that occurred between 2002 and 2003 took seven months to recover from and resulted in the aviation industry losing $7 billion. During 2010 and 2011, Icelandic volcano eruptions disrupted the airspace over central Europe. Cargo was subsequently moved around the area of impact, but the event still took seven months of recovery time and caused $4.7 billion in losses for the aviation industry. The 2014-2016 Ebola outbreaks in Africa took over two years to recover from and cost the industry $2.2 billion.
Some analysts predict the current pandemic could result in losses up to $113 billion, depending on how long recovery takes. Extended closures of manufacturing centers like Wuhan, China, may cause a lag in the availability of component pieces used in a variety of products. Without knowing if this lag time exists, the full impact on the supply chain cannot be seen. While forecasting the full impact of the pandemic remains elusive, the effects will undoubtedly be felt globally.