We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • INDUSTRY PRESS ROOM
  • ABOUT
  • CONTACT
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • ProMat 2023
    • Upload Your Video
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • ProMat 2023
    • Upload Your Video
Home » Tough road ahead for transportation markets

Tough road ahead for transportation markets

Studies show long-standing pressures mixed with Covid-19 stress may cut into profits and delay recovery time in some industry segments—and that digital transformation is key to moving forward.

Transportation studies 2020
July 30, 2020
Victoria Kickham
No Comments

Transportation and freight markets are hurting and the outlook calls for a bumpy ride ahead, according to industry researchers investigating the economic effects of the coronavirus pandemic on U.S. freight carriers. Declining profits and a delayed recovery in many markets top the list of problems, but researchers in separate studies also point to areas that may spell opportunity for many carriers—especially when it comes to “digital transformation.”

“It is clear that transportation companies must navigate the Covid-19–related downturn,” according to a recent study from New York-based management consulting firm Deloitte titled Finding Opportunities in Today’s Transportation Sector. “But the current crisis presents a dramatic opportunity—one that may allow companies to remake themselves and perhaps the sector as a whole by addressing the long-standing challenges of meeting ever-increasing customer expectations (such as faster and free delivery), inefficient networks and congestion, excess capacity, changes in workforce, shifts to trade patterns, and an underinvestment in technology.”

The stakes are high. According to Deloitte’s research, by the end of 2020 up to 45% of the transportation sectors’s operating profits could erode. A second study released this week by New York-based McKinsey & Company estimates the recovery time from the Covid-19 pandemic for freight and logistics companies at three to five years, although that will vary by transportation mode and commodity, the researchers said.

“Some products, such as nonmetallic minerals, ceramic, clay, cement, agriculture and food products, and pharmaceuticals, will likely return to growth faster and more firmly than other products,” the researchers wrote in U.S. Freight After Covid-19: A bumpy road ahead to the next normal. “Companies that can adapt their portfolios to shippers in these sectors can accelerate their own reversal of fortune, shaving as much as two years off the time needed to return to 2019 volumes.”

Addressing these challenges calls for companies to take action in three main areas, according to McKinsey: rebase spending and assess supply risks; reorient their business model toward the pockets of growth that will be stronger over the next few years; and invest in new digital capabilities. The Deloitte study offers insights that echo those goals: 

  • Covid’s impact could actually accelerate long-needed transformation in the sector and facilitate stronger long-term stability, the researchers said. “While a quarter of transportation companies are in dire straits due to the current environment, most transportation companies have greater degrees of freedom to survive this crisis and invest in a stronger future,” they wrote.

  • Regardless of the pandemic’s impact on a company, there are certainties to address, including: the need for new tech and data for holistic decision making and meeting customer expectations for the connected community.

  • Overall, the pandemic has added new pressure to existing opportunities with a renewed focus on meeting customer expectations, especially around fast and free delivery; managing inefficiencies, congestion and fragmented supply chains; integrating new technologies; adjusting to shifting talent models; and tackling disruptive entrants, they also said.

A third study, by Boston-based Lux Research, concludes that the transportation and logistics sector is still in its infancy when it comes to digital transformation and that increased use of digital tools can help companies address problems in three areas: 

  • Visibility: The ability to track/monitor goods in real time.

  • Agility: Expedited delivery demands from digital consumers.

  • Sustainability: Reduction of emissions while leveraging fast modes of freight, such as aviation.

“Across industries, digital transformation chiefly serves as a transformation tool that plays into the fundamental challenges affecting that industry,” the researchers explain. “For logistics, [digital transformation] will act as a resolution for tackling its three pain points around visibility, agility, and sustainability.” 

Transportation
KEYWORDS Deloitte Lux Research McKinsey & Co.
    • Related Articles

      Forward Air launches $40 million expansion of national LTL hub in Ohio

      IATA: global air freight markets still crashing but descent slowed in June

      Ohio’s Rickenbacker airport bucks global air freight slump

    Victoria Kickham, an editor at large for Supply Chain Quarterly, started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for Supply Chain Quarterly's sister publication, DC Velocity.

    Recent Articles by Victoria Kickham

    Leading with speed

    Logistics industry growth slows in April

    Demand for piece-picking robots gains steam

    You must login or register in order to post a comment.

    Report Abusive Comment

    Most Popular Articles

    • U.S. manufacturing resurgence faces headwinds

    • InPerson interview: Geoff Muessig of Pitt Ohio

    • BNSF retires locomotive used for testing alternative fuels

    • FedEx pilots a trailer-loading robot with twin arms

    • Five questions to ask before electrifying your indoor forklift fleet

    Now Playing on DCV-TV

    20230922intralox vs large

    Intralox Parcel Automation: Never Stop Moving

    DCV-TV 4: Viewer Contributed
    Your business—and the flow of products through it—never stops. Intralox’s logistics and material handling specialists have the technologies, services, and expertise to keep you moving.

    FEATURED WHITE PAPERS

    • Rodent Radar: A Guide To Help Protect Your Business From Rodents

    • The Value of Genuine Parts and Service

    • Five questions to ask before electrifying your indoor forklift fleet

    • Unlock Success with Our Freight Tech Checklist!

    View More

    Subscribe to DC Velocity Magazine

    GET YOUR FREE SUBSCRIPTION
    • SUBSCRIBE
    • NEWSLETTERS
    • ADVERTISING
    • CUSTOMER CARE
    • CONTACT
    • ABOUT
    • STAFF
    • PRIVACY POLICY

    Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing