One of the reasons why covid-19 spread so fast was good logistics. We easily moved from one country to another, spreading the virus by bus, private cars, ship, rail, or air. That is one reason poor underdeveloped countries were less affected. We can add demographics. Their relatively young population was less susceptible to the virus.
Then came the fast discovery of a vaccine. The virus is slowly fading into history, but its effect on supply chains and logistics has lasted. It raised the cost of transport as firms closed or took a long time to reactivate their workers and equipment. No wonder logistics firms’ profits went up during the pandemic.
We were about to ride over Covid-19 when another disruption, the war in Ukraine, stopped the recovery. Oil is the key ingredient in the logistics and supply chain. The price of oil went up and ate into the profits of logistics firms.
The problem with high oil prices is that it takes time to seek alternatives. You can eat chapati of maize flour if the price goes up, but you cannot make your truck electric the next day. Rails are fixed to last for centuries, and so are the roads and ports. Adjusting to new technology takes time and is expensive. Remember the adjustments to airports when Airbus 380 hit the skies?
Adjusting to such shocks is gradual, both mentally and technologically. Human beings finally adapt to any situation. Covid -19 no longer scares us. Ukraine war is no longer in the headlines.
Transport and logistics will adjust too. Customers will get used to higher prices. The good news is that innovations will blossom, like the shift to electric cars, robotics, new routings, micro logistics, greater use of ICT, and some surprises like exporting flowers by sea, a contribution by chemists in prolonging the life of flowers.
Economic shocks force us to change and adjust, often for the better. Some shocks are accidental. For covid -19, we still can’t tell the virus’s origin. We are still speculating. For the war in Ukraine, we can understand human being and their insatiable need to be great.
We should use such shocks in logistics and supply chains to innovate and change the industry. That is the best way to revenge against forces beyond our control.
