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The COVID-19 pandemic had devastating health and economic consequences for the entire world. While personal lives were disrupted due to travel plans, world trade faced increased challenges due to social distancing restrictions, inadvertently affecting international shipping for all businesses. Aviation delays due to reduced manpower along the supply chain extended shipping times while stock availability became difficult to achieve for similar reasons, thereby constraining businesses’ ability to cater to demand.
We dive more into the intricacies of how the pandemic affected international shipping and world trade and the measures many nations took to tackle this problem.
Countries worldwide started imposing restrictions and lockdowns on people and businesses to prevent and slow down the spread of COVID-19. During the first wave of the pandemic, strict restrictions were in place, which included travel and entry bans on foreigners. At this time, international trade suffered the most, with the pandemic driving varying impact on importing and exporting countries. Countries in the Organisation for Economic Co-operation and Development (OECD) experienced an 8.2% decline in exports of goods in 2020, its online report indicated. In New Zealand, the total amount of exports drastically reduced by NZ$14.3 billion in March 2021, a 16.5% fall to NZ$72.6 billion, according to official government figures.
There were a couple of reasons for this decline, the first being the shutdown of businesses. The United States reported that 43% of small local businesses closed temporarily due to COVID-19, a report by the Proceedings of the National Academy of Sciences (PNAS) revealed. New Zealand businesses also experienced a similar situation, government statistics reported, with the number of those in operation across the country dipping by over 1000 from January 2020 to January 2021. The United Kingdom also suffered similarly, with CNBC reporting that declining exports were further worsened by Brexit since many foreign workers, which the country depended on, headed back home during the outbreak.
Importing countries also experienced changes in product preferences, indicating a shift in global consumption behaviour. While the demand for luxury goods and apparel fell, as noted by Bain & Company, consumers were shopping for more household necessities like cleaners and soaps. For instance, according to J.P. Morgan, the United States reported that sales of cleaning wipes and aerosol disinfectants increased by over 100%. The demand for health supplements also increased – local supermarket chain NTUC reported up to a five-fold increase in two weeks, and this is only one of the many across the globe, with countries like the United States, France, Poland and the United Kingdom reporting a boom in sales.
The impact of COVID-19 on international trade resulted in both disruptions and unfilled gaps between demand and supply.
The pandemic’s impact on international logistics can be seen in the disruption of freight movements, but the global shipping container shortage driven by the need for economic security, further exacerbated the situation. Driving inflation in shipping and container prices and resultantly a delay in shipments, many companies found themselves plagued by late deliveries of goods worldwide.
International shipping companies have taken specific measures to diversify their supply chain:
The online realm became an important playground for businesses. Many jumped on the e-commerce bandwagon to market and ship their products to consumers online – an effective modal that surpassed restrictions in geography and physicality. With many more consumers shopping online today, the pandemic presented itself as an important catalyst for the growth of e-commerce. Consequently, delivery companies like DHL Express that offered premium services with tracking capabilities and preferential standard and economy international shipping rates, for instance, took the lead as the leading courier providers for businesses to send parcels to their customers overseas.
The restrictions during the pandemic positively affected the environment. People saw a considerable improvement in air quality, a reduction in CO2 emissions, and a decrease in pollution. Stats NZ also reported that greenhouse gases in New Zealand were reduced by 4.5% percent at the end of March 2022. This transformed customers’ consciousness, with many preferring to shop for more sustainable products and services. Choosing the right delivery partner thus became critical for businesses to reduce their carbon footprint. Green logistics is now a significant aspect of the supply chain industry.
Businesses also diversified their global supply chains to operate smoothly if similar disruptions arise in the future, an example being Singapore, with 42% of business leaders expanding supply chain sources for improved resilience, noted by KPMG’s 2021 CEO Outlook Survey. This diversification includes having alternate suppliers from different countries, holding emergency stockpiles of goods, and locking in independent logistics networks.
DHL Express is a leading global logistics company that offered businesses in New Zealand access to the international market before and during the pandemic, with a promise to keep them competitive as we step into the new normal. We provide some of the cheapest international express shipping rates, alongside a suite of services, including same day delivery and on-demand options. Having facilitated the vaccination rollout with timely and condition-specific shipments, you can also trust us to deliver temperature-sensitive goods in a safe and timely manner.
Why not open an account with DHL Express today to explore our services?