In April, we hosted an experts’ roundtable to explore the impact of COVID-19 on the global supply chain (watch it here). During the audience Q&A portion of the event, due to time constraints, we were not able to cover every question, so we asked our experts to weigh in after the webinar and share their thoughts.
As a reminder, joining the conversation were:
- Santosh Sankar, founding partner of Dynamo Ventures, a venture fund that invests in building startups in supply chain and mobility;
- Umair Ahmed, Vice President of Products at FABRIC, a startup creating innovative e-commerce solutions, and he’s the former Senior Director of Product Management of Supply Chain at Lowe’s; and
- Dr. Shawn Bhimani, visiting Assistant Professor of Supply Chain Management at Northeastern University’s School of Business where he specializes in analyzing supply chain disruptions.
Here are the additional questions and answers we did not cover:
(The questions have been edited for clarity.)
- In terms of public transportation and air travel, how do you think the industry and human movement will change due to the pandemic?
Dr. Shawn Bhimani: In the short term, active transportation routes will have reduced service (fewer flights and transport options) due to lower demand for public transportation and enhanced requirements for cleaning. In the long term, infrastructure may have adaptations to safeguard against virus spread, health checks (e.g., temperature, contact reporting), and more agility through flexible resources so that transportation agencies can more easily scale up/scale down as needed based on context. Here is an article on how to plan for this.
- How do you foresee an almost inevitable recession affecting the global supply chain along with the overall US economy? If and when a recession hits, what are your projections on the timeline of it and how long it could last? What are tactics companies, in general, can use to keep afloat through these tough times?
Santosh Sankar: A recession may impact supply chains in a variety of ways, including (but not limited to) impacting working capital, supplier capacity, inventory, and consumer demand. Any estimation of the timeline of a recession may be inaccurate, because there are currently multiple confounding events (below-zero dollar oil prices, an election year, a potential second wave of covid-19, etc.).
What we have learned from previous recessions is that they push companies to turn to technology to increase efficiency and productivity. This shift to technology will be key in the near and long term not only for companies, but for individuals looking to build well through these tough times and, when things become better, be able to perform well in the recovery. Of particular interest are the automation of processes and upskilling of employees.
- We’ve observed the inability of demand for transportation to be linked to supply due to both the lack of centralization/connectivity of government entities with private companies as well as the inability to execute nimbly. What do you think the impact will be on public/private partnerships in responding to future circumstances like this in the future?
Santosh Sankar: The government is an at-scale user of freight brokers whose role is to match supply with demand (they do this when natural disasters hit on a regular basis; there are entire firms that exist just to service government demand). It might be that the aged systems that run both sides of the equation could benefit from modern middleware software integrations and in the long term more interoperable and networked software.
- Should we expect pricing of LTL and FTL freight to soar back to normal post COVID-19, or will the downturn in reduced freight prices remain for a while? How does a trucking firm maximize asset utilisation during this period to reduce operating costs?
Santosh Sankar: Unfortunately, I don’t have a crystal ball. In broad strokes, getting exposure to “consumer staples” and healthcare would help utilization. LTL closely follows manufacturing activity, so it would suggest that manufacturers need to get online before they can pull on trucking supply. There are some signs of this, but they are being dampened given Mexico is still sheltering in place which has closed key suppliers for many firms including Ford, GM, and Whirlpool.
- What kind of ramifications/consequences do you predict in regards to fresh produce availability around the world? And how do you think this will impact world hunger?
Dr. Shawn Bhimani: In the short term, we will witness a mismatch between food supply and demand because of reductions in industrial-sized purchasing (e.g., universities, corporate buildings) that will cause significant portions of fresh food to be discarded or wasted. This is because industrial-sized purchasing orders food in packaging that was not created to be sold to retail consumers. This also creates an opportunity to ship such food to those who can use industrial-sized quantities (e.g., food banks, homeless shelters), if companies were willing to pick up the tab for transport.
The results on “world hunger” (a complex issue) are multifold, including the reduced ability for vulnerable households to purchase food, inflationary prices, and the dangers of sourcing/harvesting food during a health crisis because of the risk of contagion, malnutrition, manual labor, and with specific regards to that final example — the risk of being put into forced labor due to extreme vulnerability. In the long term, similar to transportation agility, we may see manufacturing and packaging agility to adapt food sizing based on actual demand. Here is an article to provide additional background on this.
We would like to thank our panelists, all those in attendance, and especially the attendees that submitted questions.