How Should the Logistics Industry Prepare for Future Disruptions?

After the pandemic is before the next disruption: Research for the system-relevant sector of goods transport and logistics must be initiated now. Professors Prof. Dr. Hans-Dietrich Haasis, University of Bremen (DE) and Prof. Dr. Wolfgang Stölzle, University of St. Gallen (CH) question scenarios regarding current and future disruptions that need to be examined.

By Prof. Dr. Hans-Dietrich Haasis, University of Bremen (DE)
and Prof. Dr. Wolfgang Stölzle, University of St. Gallen (CH)

(Bremen/St. Gallen) Based on previous experiences with the effects of political measures related to the COVID-19 pandemic on goods transport and logistics, it can already be concluded: There must not be a “business as usual”. The recent cuts represent the sharpest disruption for the industry in the DACH region since World War II. There is a need for action, regardless of the widely proclaimed claim of so-called system relevance.

Business research has repeatedly dealt with “disruption management,” albeit rather peripherally. In larger companies, however, the creation of “business continuity plans” has become a regular practice – this in light of the experiences from the financial and economic crisis of 2008-2009, the eruption of the Icelandic volcano Eyjafjallajökull (2010), particularly for air traffic, the nuclear disaster in Fukushima (2011), or the so-called Swiss franc shock (2015), the latter especially for Swiss companies.

Current Economic Situation Threatening

Currently, the economic situation appears threatening for all actors – albeit to varying degrees: For example, air freight is lacking belly capacity (97% of passenger flights have been canceled for weeks at the Lufthansa Group), the utilization of German general cargo networks has collapsed by between 20 and 40%, and on the railways, significant shipment volumes have also fallen due to temporary production restrictions and stoppages in the bulk goods-affine industry. Additionally, containerized shipping and inland shipping have had to record significant declines due to the massive drop in international trade.

Now the question may arise: Why draw a conclusion now when media headlines are more focused than ever on the “second wave” and the processing of the crisis’s consequences threatens to be forgotten? Here, one can take inspiration from medical research: Ad-hoc projects on COVID-19 are already underway in various municipalities or regions to draw quick conclusions for timely, appropriate medical measures. Therefore, applied logistics research must not wait and watch but must develop research activities promptly that can be set on three timelines:

• Short-term: What measures can sector actors take today and in the coming months to better address the economic consequences of the crisis?
• Medium-term: How can one better prepare for a renewed tightening of political measures surrounding a potential pandemic situation – however it may be defined – with suitable crisis management?
• Long-term: How will both public and private actors respond to similarly massive disruptions of any kind in the future – also regarding the redesign of goods transport and logistics systems?

All Modes of Transport Are Affected

In principle, the questions on the three timelines aim to increase resilience in the field of goods transport and logistics. This affects all modes of transport, i.e., in addition to road and rail freight transport, also air freight, inland shipping, and short-sea shipping, as well as the associated handling and storage facilities. Institutionally, logistics service providers, transport companies for all modes of transport, providers of complementary services (e.g., handling, customs clearance), logistics facilities (e.g., warehouses, transshipment points) of industrial and commercial enterprises, digital platforms (freight exchanges and digital freight forwarders), and operators of infrastructure facilities (e.g., airports, inland ports, seaports, train stations, terminals, freight transport centers) are addressed.

Resilience research in goods transport and logistics thus encompasses a broad scope. To enable a focus, it is first necessary to address the question of which goods can be classified according to the disruption on a spectrum from “particularly critical” to “not critical at all.” Because in extensive disruptions, it cannot be about maintaining the functionality for the supply of businesses and consumers with all categories of goods equally. Rather, a graduated approach is required that allows for securing the resources for the supply of particularly critical goods. As a result, goods transport and logistics systems would not be inherently qualified as system-relevant, and measures to combat susceptibility to disruptions could be targeted more effectively than before.

Another fundamental question relates to the connection between original scientific findings regarding the respective type of crisis and the performance of goods transport and logistics systems. Specifically, this would mean linking current medical findings on the nature of infection, actual infection rates, the number of sick individuals (differentiated by the severity of the illness), and the number of deaths caused by the (not: “with”) virus with targeted disruption measures in goods transport and logistics. Consequently, the measures surrounding the lockdown up to the border closures would also receive a different assessment, with hard consequences for goods transport, just as the activism surrounding the procurement and wearing of masks would. It would also have been possible to recognize early on to what extent a widespread closure of retail would have been necessary, resulting in a politically induced, completely changed consumer behavior that posed its own, sometimes unnecessary challenges to goods transport and logistics systems.

Disruptions Not Only Due to Pandemics

Despite the intensive engagement with the consequences and measures of the so-called COVID-19 pandemic: Serious disruptions for goods transport and logistics can also have entirely different causes, so that expertise from various fields must be linked with resilience research in goods transport and logistics systems. One could think of uncontrollable nuclear accidents in the DACH region and in neighboring areas, prolonged drought periods, terrorist attacks with far-reaching consequences, or serious threats from the fields of chemistry, biochemistry, and pharmaceuticals.

As a result, additional public funds related to the economic consequences of the current crisis should not be limited to a purchase premium for cars or the temporary reduction of VAT, but rather should be proactively available for research into greater efficiency and effectiveness in resilience in goods transport and logistics. This requires an integratively designed research framework as well as a renewed appreciation of application-oriented logistics research.

Image left:       Prof. Dr. Hans-Dietrich Haasis, University of Bremen (DE)

Image right:    Prof. Dr. Wolfgang Stölzle, University of St. Gallen (CH)