Logistics, resilience key to the post-COVID-19 economy

The transport and infrastructure sectors continued to drive the global economy throughout the pandemic, now they will need to meet new challenges and shifting consumer behaviors and expectations.

Like many industries, the transportation and infrastructure sector have been severely impacted by the COVID-19 pandemic. Unlike many other sectors, transportation and infrastructure have not shut down in the wake of the pandemic. Rather, transportation logistics companies have had to rise to the occasion to keep goods moving, grocery stores stocked, and essential supplies in the hands of those who need it the most. By quickly adapting their business practices and increasing safety standards, transportation and logistics companies continue to drive the economy. End consumers may not realize how these companies impact their day-to-day lives—over 70% of goods consumed in the U.S. end up on a truck at some point before arriving at their destination. Overall, the impacts of COVID-19 will fundamentally change the industry, accelerating innovation by using the pandemic as an opportunity to address some of the industry’s most pressing needs.

Meeting expectations for shifting consumer behavior and trends.

With consumers spending more time at home, they have changed their spending behavior, turning increasingly to online purchases. While there was a rise in e-commerce before the pandemic, COVID-19 has only accelerated it. With the economy under significant pressure, retail sales are down while online sales are shooting up. Not only has consumer behavior changed, but there has been a shift in consumer expectations as well. Internal market research conducted by Schneider has indicated that shippers are overwhelmingly feeling the “Amazon effect”, or the expectation for faster delivery. Consumers are applying pressure on shippers to reduce lead times, and shippers are looking for ways to reduce the number of days between when the order is placed and its arrival. As an industry that continues to operate during any crisis or disaster, transportation and logistics companies work to keep freight moving by creating supply chains that are resilient, agile, optimized, and future-ready.

Disruption is a buzzword in the marketplace, but there is a constant necessity to embrace it to stay on top of the ever-changing landscape and plan for shifting behaviors and trends in the next decade. This will allow establishing next-gen technology capabilities to ultimately improve the experience of customers, drivers, carriers, and end consumers.

Amidst uncertainty due to resurgent COVID-19 infections, volatile markets, and supply chain disruptions, the industry is doubling down on long-term investments in data-driven decision science models to better manage freight logistics. By utilizing this framework, Schneider embeds advanced analytics throughout the freight processes and systems; enabling predictive, prescriptive and preventive decision recommendations. By leaning into this type of data-science technology, the industry is evolving in real-time and keeps pushing the economy forward.

Making a bigger push to go green

Many in the industry are using the pandemic as an opportunity to renew their commitment to efficiency and sustainability, making a bigger push to go green. Companies are facing mounting pressure from regulators, investors and customers to act now. The keys to success will be to strengthen ESG strategies, reduce greenhouse gas emissions, improve fuel efficiency, and change global operational policies to reduce carbon footprints while creating tangible value and long-term profitability.

Based on a recent study by the World Economic Forum, 70% of transport companies do not disclose—or only partially disclose—their emissions and only 23% have set emissions targets. Of those setting targets, less than half have reduced CO2 emissions versus last year. Such goals are typically considered too low by climate change experts to have a meaningful impact over the next 30 years.

Drawing on a depth of experience and expertise—as well as over four decades of working toward more environmental sustainability—Schneider has identified the following best practices for the transport and infrastructure industry:

Investing in sustainable equipment and technology such as US Environmental Protection Agency (EPA)-compliant engines, terrain-mapping predictive technologies, adaptive cruise control, road speed limiters and automatic tire inflation systems.
Training and engaging drivers in sustainability initiatives early and often. Offering simulation-based driver training programs to show drivers they are the primary managers of truck energy efficiencies and incenting drivers on fuel management.
Shifting to multimodalism. Intermodal transport uses a combination of truck and rail is on average two times more energy-efficient than over-the-road transport. Multi-modal providers deliver maximum energy efficiencies: the more diverse the modes, the greener the supply chain.
Choosing the right partners. Working with the most energy-efficient railroads and third-party carriers can help exceed energy-efficiency standards.
Using alternative fuels wisely. Support renewable fuels that are competitively priced and do not impact truck performance, durability or the ability to meet near-zero emissions standards set by the EPA.
Collaborating with customers, suppliers, associates and environmental groups. Shared investment and accountability will lead to greater energy efficiency.

Addressing the labor shortage

The transportation industry, especially trucking, continues to face a labor shortage that has been amplified by the pandemic. This shortage contributes to delivery delays and higher prices at the store as companies pass on the higher costs to consumers. Driver retirements, career changes, and the pandemic's effects on drivers’ licensing bureaus and training schools amplify the labor shortage. Studies show that the transportation industry offers viable and respectable career opportunities for millions of workers, including those without a college degree, and extensive on-the-job training. The roles also continue to be incredibly diverse—more than the industry is given credit for. Amidst staggering unemployment and a pandemic-induced economic recession, the transportation and logistics industries are among the few that are stable or growing.

The pandemic has made clear how critical workers in the transportation and infrastructure sector are to the economy. But potential new workers may be considering health, safety, and social impact in new ways when considering whether or not to take employment in the sector. Traditional motivators, such as salary, benefits and location are only part of the equation and other generational factors— job security, sustainability, learning and development, and safety—must also be considered. In the post-COVID-19 era, physical locations will hold less importance while safety will arguably be the most critical factor. The industry and policymakers will need to meet workers where they are, altering recruiting and training practices to build a future-ready workforce. Some companies are shifting to virtual training methods to ensure worker safety.

This is also an opportunity and an obligation to ensure that a diverse workforce is in place to drive critical solutions of the future for next-gen mobility. The industry is not leaving talent on the sidelines but cannot overlook the need to be creative to attract a robust pool of qualified candidates. A diverse employee base leads to better ideas and stronger results, driving increased value for customers, partners and consumers.

Overall, the pandemic presents a unique opportunity for the transportation and logistics industry to make a concentrated push to build resiliency and meet consumer demands by embracing data-driven-dynamic decision science, accelerating sustainability efforts and building a future-ready workforce.

Published November 2020