Covid-19 Roundup: The impact of Covid-19 and the way forward for logistics businesses
Mixcorp CEO Mixo Kobe: Industries depend on transport and logistics to operate, so we must adapt.
Many industries and businesses have had to quickly adapt and change to the “new normal” that the Covid-19 pandemic has brought on. The rapid outbreak has impacted the logistics industry in unprecedented ways.
Action plan needed to mitigate potential risks
The local transportation and logistics network is also facing unprecedented challenges. Many South African companies are dependent on an integrated global trade network, and so face challenges in sustaining profitability as most of the essential ports across the world have been closed.
To remain profitable during lockdown, leaders must have an action plan in place to mitigate potential risks and remain operational. They need to communicate that plan consistently and transparently to clients, stakeholders, employees and other parties that are integral to the supply chain.
According to Mixcorp CEO Mixo Kobe, changes must be implemented across operations within the transport and logistics industry. “Our first port of call was to implement preventative measures to prioritise the health and safety of our employees. As logistics workers work in highly labour-intensive space, we have enforced social distancing at integral parts of the production line. The health officer and safety officers on each shift exercise regular temperature monitoring, and emphasise cleanliness and limiting human contact. Eskom has also compiled a generic operating procedure to educate the industry on how to remain efficient.”
Mixo adds that every major industry is dependent on transport and logistics to operate, so companies within the industry must do everything they can to adapt.
SAPICS offers supply chain support
The Professional Body for Supply Chain Management, SAPICS, has launched a number of special support initiatives to help beat the Covid-19 crisis. These initiatives include a supply chain management helpline, a tool kit and a collaboration platform for the profession.
SAPICS is working with internationally renowned industry professionals, subject matter experts and global education organisations to provide supply chain professionals with relevant information and support during the Covid-19 pandemic through platforms like LinkedIn.
Imperial Logistics is essential to the sourcing, warehousing, transporting and distribution of medication and other medical supplies, food, basic goods, and other essential products and services in the company’s markets of operation.
In South Africa, Imperial provides an essential service of distributing consumer goods and healthcare. For this reason, a significant part of the business continues to operate during lockdown.
The company said in a statement that it has enough headroom in terms of debt covenants and liquidity. “Stringent, proactive measures have been implemented across the business to manage costs and optimise working capital and capital expenditure with a stronger focus on cash flow generation.”
However, because of the increasing uncertainty and volatility of its markets, Imperial has decided to withdraw its current guidance for the year to end 30 June 2020.
Impact on container demand and price
CIT Container owner and co-founder Kashief Schroeder reports that restrictions and lockdowns have had a huge impact on the manufacturing of goods and containers. Because production and export worldwide has been halted, the demand for shipping containers has been drastically reduced as fewer goods are being shipped and fewer containers are being produced.
The lockdown only allows for essential goods to be imported and exported into and from South African ports. This has led to a decrease in the volume of containers entering South Africa.
Prices of containers will be increased to alleviate lost revenue from ceased production of both containers and exported goods. Fewer containers are also being circulated internationally, which will also contribute to the rise in prices.
Kashief feels that it’s not all doom and gloom for the container industry and business though. “It is important to look ahead and plan a way forward in these uncertain times,” he says. “Although the Covid-19 pandemic will have an enormous impact on the global economy, there are also new business opportunities arising that industries can invest in.”
He points out that this is the time for Africa to become more self-sufficient, as it has abundant natural resources and land with mining and manufacturing opportunities. “ In the future, we should be able to manufacture our own goods and towards being export-driven rather than import-driven.”