Logistic "antifragility": how the second wave of quarantine will affect the freight market
Svetlana Milgevskaya, owner of SAT
No one doubts that the second wave of the COVID-19 pandemic is imminent. And, although today we know very little about a dangerous virus to make accurate predictions, scientists and doctors assure: now we will have to live in a new reality. And this will last until an effective and safe vaccine is found (and this is at least 2-3 years).
There are several reasons why they talk about the second wave.
One of them is an analogy with the deadly Spanish flu pandemic of 1918-1920, which, after almost complete weakening after the first wave, took the lives of about 30-40 million people with the second wave.
Another reason is the increase of the number of new infections after a noticeable decline in late spring. And this is quite understandable: the pressure of already visible negative consequences for the world economy forced the governments of many countries of the world to loosen anti-quarantine measures.
The cost of containing the pandemic turned out to be unbearable even for such developed countries as Germany and the United States - these countries were among the first to announce the second wave of coronavirus incidence.
The famous American economist, business philosopher and author of the bestselling "Black Swan" Nasim Taleb published the book "Antifragile: Things That Gain from Disorder" back in 2012. He offered an understandable and effective way to remain successful in times of uncertainty, kinks and shocks - to become "antifragile". That is, to acquire a valuable ability to temper as a result of negative and unpredictable events, to use stressful situations to gain experience as a unique advantage in the market.
The relevance of the concept of "antifragility" is more than obvious in the context of the "new reality of COVID-19". This was clearly demonstrated by small local businesses that not only managed to survive in the new conditions, but also grabbed new clients from their bankrupt "fragile" competitors.
Can we talk about "antifragility" in the context of analyzing the activities of Ukrainian players in the logistics market? Sure.
As of September 2020, the Cabinet of Ministers of Ukraine introduced a division into 4 quarantine zones, and the situation with restrictions may change within 3 days - depending on the transition of a particular region to another zone. What does this actually mean for logistics service providers?
If we assess the losses of the industry as a whole, then as a result of the coronavirus crisis, air carriers (in particular, civil aviation), as well as operators of passenger transportation, have suffered more: a complete stop of public transport, intercity communications, air travel affected these market players.
However, it cannot be said that companies that deliver goods (we are talking mainly about B2B delivery) did not feel the consequences of quarantine measures: they lost many customers - after all, with the stop of non-competitive enterprises, the demand for delivery services also fell. According to the State Statistics Service, if compared with the previous year, cargo turnover in January-August fell by 17.1%, while motor transport suffered the most - minus 23.5%.
But there were also positive aspects: for example, the global drop in oil prices, as well as the stable operation of border checkpoints for international freight traffic.
It is already obvious that in the market for the provision of cargo delivery services, those players who develop and introduce a super-flexible working scheme in the event of internal restrictions on transportation will win.
After all, the situation with quarantine zoning can change rapidly. Accordingly, this will also affect the change in the directions of delivery of goods. Therefore, it is important that logistics companies do not stop expanding their infrastructure, despite the fact that the losses caused by the spring lockdown are quite tangible.
Delayed cargo - an inevitable problem in the context of the coronavirus crisis - is a big problem, but its negative impact can be reduced through infrastructure solutions and fast, high-quality communication with customers.
Digitalization of the service plays an important role in the latter - this will be an advantage both for the "company-client" chain and for optimizing internal losses.
This is the “antifragility” that Taleb speaks of: a force majeure situation forces business to seek solutions, and, consequently, to develop in those directions that do not show visible prospects in conditions of stability and predictability.
What is the forecast for the logistics industry?
The second wave of the pandemic will hit, first of all, "fragile" companies that do not have financial instruments to compensate for losses and sufficiently developed infrastructure facilities.
I would like to believe that after a new wave of the impending crisis, local Ukrainian logistics companies will not give up their market share to "clumsy" but financially stable transnational giants.