Covid will 'likely result in better logistics efficiency'

8 January 2021

A third of UK logistics and supply chain firms are re-evaluating reliance on China in their international supply chains as a result of the pandemic.

A poll for UK logistics and supply chain event IMHX found 32% of logistics leaders believed supply chains needed to reduce reliance on China because of a jump in shipping rates at the end of 2020.

Shipping rates were found to have surged to as high as $7,500 to the UK from China, according to IMHX, while other retail firms have reported paying at least $8,000 up to $10,000.

Almost half of supply chain professionals (43%) reported heightened demand on “already overstretched facilities” and 63% said Covid hit them negatively.

Rob Fisher, IMHX group director, said 59% believed the UK logistics industry’s response to the crisis was “a reflection of its agility, flexibility and innovation” and changes will likely result in “increased efficiencies for logistics operations”.

Supply chains and logistics processes in industries such as retail and distribution are adapting to meet new requirements and demand, with 77% saying they made changes directly due to Covid impacts, including warehouse design changes to enable social distancing.

According to 69% of respondents, it will take two years for the sector to get back to normal, while one quarter don’t believe it will ever return to the way it was.

Shane Brennan, chief executive of the Cold Chain Federation, who contributed to the report, said as the UK government reduces Covid economic support over time businesses would need to make “decisive action” to survive.

This included reassessing labour costs, accelerating investment plans, responding to fast-changing consumer demands, and automation and digital solutions.

Nine in 10 (88%) firms said the pandemic had created supply chain resilience and they would be better prepared if “faced with a similar situation again”.

Peter Ward, CEO of the UK Warehousing Association, said: “The pandemic has driven opportunity for our sector, as online shopping and demand for home delivery soars.

“With grocery retailers, in particular, re-evaluating their warehouse and logistics strategy, takeup of warehousing space for the first half of this year is already 20% higher than in 2019 and set to grow.”

The report was based on a poll of 185 supply chain and logistics industry professionals conducted in July 2020 by IMHX.

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