“Most people remember last year’s run-on toilet paper,” says Chris Nash, president of the 15,000 member Alberta Motor Transport Association (AMTA). “But they might forget there’s been a steady supply since. That illustrates one of the largest impacts of the pandemic on our supply chain: awareness. People are now much more in touch with the ways our products get to market. From toilet paper, toothpaste and pasta to machine parts and medical equipment, we now take the availability of the things we depend on a little less for granted. COVID-19 has reminded us how fragile the supply chain can be – if we’re not careful.”
It’s complex, ever-changing and essential. Business calls it supply chain or logistics. But, according to the Council of Supply Chain Management Professionals, “Logistics is the process of planning, implementing and controlling procedures for the efficient and effective transportation and storage of goods including services.”
Without the intricate industry jargon, the five key elements of supply chain logistics are: storage, warehousing and materials handling, packaging and inventory, transport, information and control.
“Nationally, the trucking industry has grown by double digit percentages for several years,” Nash notes. “We move $850 billion of goods – that’s more than three times as much as Canada’s largest rail carrier. And those trends hold in Alberta, considering that commercial trucking was exempted from the Canada-U.S. border closures for the entirety of international travel lockdowns.”
Trucking and are rail are the vital spokes of the giant wheel that is the supply chain and logistics sector and the numbers resoundingly show that logistics is a massive economic force in Canada, employing hundreds of thousands of workers and acting as a key component of interprovincial and international trade.
“Trucking and rail are complementary to each other in the supply chain,” explains the industry respected Matt Faure, CEO of Trimac Transportation. “Trucking provides the majority of transportation for short haul moves and for meeting surge capacity, while rail is predominant on longer haul movements.”
There is industry consensus that these are both exciting times and trying times for the supply chain and logistics sector.
Constantly evolving technology is transforming trucking and distribution. Electronic Logging Devices/ELDs for drivers to track their hours of driving electronically vs. paper logs that have been used since the 1930s. Finding qualified talent (supply chain managers with the industry understanding and competency to keep things running smoothly) is vital. And the surging demand for trucking confronts challenges like constantly unexpected weather, unpredictable fuel price hikes, provincial, federal and environmental regulations and globalization.
The logistics sector was already experiencing a momentum of dynamic change before the pandemic hit. Like dealing with the warp-speed impact of technology to boost supply chain efficiency, reliability and sustainability and for the safety and security of all modes of transportation, warehousing and logistic activities.
Supply chain experts agree that although the pandemic was a jarring broadside for business, it was also a teachable moment and accelerated change in the logistics sector. “Perhaps the most general effects and impact of the pandemic on supply chains and logistics were caused by imbalances between supply and demand on a global scale,” explains Giovani J.C. da Silveira, Professor of Operations and Supply Chain Management at the Haskayne School of Business and director of the Canadian Centre for Advanced Supply Chain Management and Logistics.
“As the pandemic impacted different regions at different times and levels of intensity, industries observed significant increases or decreases in activities that could not be anticipated by regular forecasting models. This led to idleness (and subsequent job losses) in many sectors and stockouts or excessive capacity utilization in others. Business managers, including in the logistics sector, had to solve problems in areas such as scheduling and capacity, infrastructure management and work health and safety which were beyond usual business parameters.”
Trimac’s Matt Faure points out that “the logistics sector has always been critical to the North American economy but capacity has been somewhat taken for granted in the past, due to relative stability. With the disruption of the pandemic, focus on protecting the supply chain was pronounced as it became an essential service during the lockdowns.
“The pandemic was incredibly challenging to operations,” he says. “Navigating lower demand while managing higher costs with heavy restrictions in place.
Many companies across the supply chain had to look at fixed costs differently, finding ways to make fixed costs variable, and maintaining a lower cost structure that – due to ongoing uncertainty in the market – we can expect to persist for at least another 12 months.”
Many logistics sector insiders suggest that, while the COVID-19 impact was significant, it was a valuable learning curve for other possible crisis management. “Crises which may relate not only to health emergencies but also to environmental and natural disasters and financial debacles,” da Silveira warns. “Supply chain and logistics managers must build reliability and resilience against future shocks and reduce the risk of future disruptions.”
He admits that while the pandemic has increased the speed of changes that were already happening in the logistics sector, the new priorities will become even more visible in the medium-term, as preparedness for future crises replace the effort to deal with the current crisis.
“Four key trends will probably shape the logistics sector in the future,” he predicts. “Increased emphasis on automation in areas where labor can be safely and easily replaced; the disintermediation of supply chains, as more and more even reluctant consumers substitute main street shopping with online shopping; greater use of analytics for improvement and optimization of supply chain management decisions; and an increasing need to respond effectively to social expectations regarding environmental, social and corporate governance.”
Faure also cautions about a lingering challenge for the supply chain sector, particularly the trucking industry. “Coupled with an aging demographic among North American drivers, the underinvestment in infrastructure and the exposure of smaller carriers to the impacts of the pandemic, there’s a renewed focus on the sustainability of the supply chain and in having strong, stable partners that provide certainty.”
He agrees that dealing with the pandemic underscores some industry changes which had already begun. “The sector has largely reverted to issues that were present pre-COVID-19. That included driver shortages in some regions, an aging demographic and near-term access to incremental fixed assets to meet demand in the mid- to longer-term.
“The pandemic accelerated the digitization of the supply chain, as we changed the way we interact with customers and our employees.”
Chris Nash notes from much experience, “The pandemic raised awareness of our industry’s essential nature. It grows in step with consumer expectations of the safer, faster, more reliable, and more efficient delivery of goods. Demand for our services, and the expansion of more resilient supply chain and logistics corridors, will continue rising this year.”
Now that business has survived (albeit a bit battered and bruised) the impacts of the pandemic, Faure is positive about the resilience of the logistics sector, lessons learned and about moving forward. “Safety continues to be a top priority and always will be. Regardless of external market conditions, most carriers will continue to focus on it. In the near term, the focus is on increasing capacity, in both drivers and equipment, in meeting increasing demand. In tandem, priorities will also remain on investments in technology and innovation, along with consolidation within the industry.”
Looking at 2021 and beyond, Nash is upbeat that “the consolidation of global supply chains and the continued growth of data-driven, connected commerce makes our industry more vital than ever before.”