The challenges the logistics industry has faced in the last six months are immense. Can you paint a picture for us?
COVID-19 has created a volatile environment for all industries including the express freight industry, both at home in Australasia and globally. In a short space of time, we saw nationwide lock-downs, changing regulations, and evolving guidelines from local authorities to contain the virus spread and protect communities. This was matched with a rapid rise in demand for certain goods and services, especially critical medical aid and equipment, such as personal protective equipment, COVID-19 test kits, ventilators and more.
The entire industry has experienced massive disruption, the long-term repercussions of which will take years to understand and overcome.
Globally, we saw a 73% drop in passenger air cargo belly space between February and May 2020, which led to significant capacity constraints even as we work round the clock to respond to substantial global demand.
However, COVID-19 has firmly highlighted the value and power of efficient logistics networks and air freight – not only in shipping healthcare and medical supplies, but also in keeping businesses and commerce operating.
How has FedEx grappled with the impact of COVID-19 locally and globally?
Around the world, we’ve been flexing our network to help accommodate changing customer demands. In particular, we’ve increased our rotation of flights to and from Australia and are changing routes where needed to create efficiencies and respond to border closures and restrictions.
Since May 2020 up until July 2020, FedEx flight capacity in Australia has increased by up to 60% to keep up with the increased demand for inbound cargo all over the country. We are optimising our multi-modal network and leveraging our air and ground fleet. All this, while adhering to local and national government regulations to contain COVID-19.
Owning our own cargo fleet has allowed us to continue operating and responding to needs of our customers and communities. We continue to facilitate import and export movement as one of the biggest international cargo airlines operator in Australia currently, however we increasingly continue to witness an unprecedented demand especially for inbound cargo. Consequently, this has bearings on our global supply chains and transit times to Australia are impacted.
How has this changed FedEx’s 2020 business strategy in Australia?
Our long-term strategy has not changed, and our priorities remain the same as pre-COVID-19: to support small and medium sized businesses by making it easy for them to do business with us using both digital and human touchpoints.
We are enabling our customers, especially those most vulnerable to the impact of COVID-19, to access newer opportunities as they pivot their business models. We are partnering with SME customers, supporting their business recovery and ensuring they can maximise opportunities through digital transformation as they move to online transactions.
In Australia, FedEx and many other express freight providers are reliant on domestic air networks. The shrinkage of this industry will continue to impact global and domestic freight operations. Our agility and the power of our networks has been the key to our successful and continued operations.
What will be the biggest challenges for logistics during the next 12 months?
We see three drivers behind the creation of the ‘new normal’: production shifts, renewed focus on deferred shipping options, and increased e-commerce adoption.
Businesses will decentralise their supply chains to reduce dependencies on one country or one production location. Diverse sourcing and digitisation will be the key to building stronger, smarter, decentralised supply chains that are more resilient and help ensure a lasting recovery.
Increasing demand for deferred shipments has been a business driver for FedEx in the Asia Pacific region for several years. Now COVID-19 is accelerating a strategic shift in supply chain management from ‘just- in- time’ delivery to ‘just- in- case’ inventory building. This model favours the increased use of slower, more economic delivery products.
We continue to support customers through our multi-modal network, and our air and ground fleet which is a key differentiator in the industry.
A priority for the logistics industry over the next 12 months will be to manage customer expectations as we deal with rapidly changing regulations and restrictions, and significant spikes in demand.
* Peter Langley is the vice president of FedEx Express Australasia
This article appeared in the September 2020 edition of DCN Magazine