How did the epidemic affect China’s logistics?
Editor’s note: This article is from the WeChat public account “ Yibang Power ” (ID: iebrun), author: Shihangshan one thousand
In the Spring Festival of 2020, new coronavirus-infected pneumonia spreads throughout the country centered on Wuhan. Almost everyone’s eyes are paying attention to Wuhan, and almost everyone is meditating “Wuhan Come”. As the head of a logistics technology company headquartered in Wuhan and a veteran who has fought in the logistics industry for 20 years, the chairman of Hubei Prolog Technology Co., Ltd. Zhou Zhigang saw more than most people.
How does the epidemic affect China’s logistics? What uncertainties will the ongoing epidemic bring to the logistics industry? Standing in the epidemic area in Wuhan, Zhou Zhigang, who has been providing logistics services to the epidemic area, has shared his professional analysis in the hope that it can provide a reference for the industry and hope that it can help everyone.
The following is the original:
Effect of Xinguan epidemic on logistics and countermeasures
Impact on logistics revenue
After the New Crown epidemic occurred, everyone took the analogy of the impact of SARS in 2003. At that time, the logistics industry was under double pressure of reducing revenue and rising costs. Let ’s take a look at the data and analysis at that time:
According to the “Investigation Report on the Impact of SARS on the Logistics Industry” released by the China Federation of Logistics and Purchasing in 2003, in terms of the impact time, 41.2% of enterprises believe that the impact on logistics revenue will exceed 3 months. 78.8% of companies believe that the impact on logistics costs is less than 3 months; in terms of impact coverage, 61.8% of logistics companies face falling revenues and 70.2% of logistics companies face rising costs.
In terms of impact, the impact on revenue is more important than the impact on cost. The weighted average impact on revenue and cost are 20.4% and 14.5%, respectively. The proportion of increase in transportation costs reaches 73.6%, which is significantly higher than the cost of storage. Affected proportion.
The reason for the decrease in income: from the demand side, the decline in household expenditure and changes in consumption structure will reduce the overall demand; from the supply side, regular disinfection and the use of epidemic prevention equipment will slow down the production rhythm, adopt isolation, Measures such as restricting the movement of people have reduced labor efficiency.
The reasons for the increase in cost are as follows: first, the risk of virus infection increases during SARS, the number of returnees is uncertain, working hours and efficiency are affected, and labor costs increase; It improves the efficiency of logistics and circulation, increases the transit time, and drives up transportation costs.
New crown in 2020How big is the impact on logistics revenue under the epidemic? We are not yet clear about the trend of the epidemic situation. Although the factors affecting the logistics industry in SARS in 2003 also exist in this epidemic, compared with 2003, we can see some favorable factors for the development of the logistics industry from the following three aspects: :
First, the response to this epidemic is strong
In 2003, the SARS epidemic began in Guangdong in November 2002 and was announced at the end of June 2003. The WHO announced Beijing’s “double release” for 7 months. The strict control period was after the Spring Festival, especially after the Spring Festival. April and May. This year’s new crown epidemic began in December 2019. After January 23, cities around Hubei and other cities and provinces were delayed for one week. Construction was controlled nationwide by a multi-pronged approach that effectively controlled the spread of the epidemic and minimized the epidemic. Impact on normal production and life in the later period.
Second, the impact on the logistics industry is controllable
In terms of manufacturing, the outbreak occurred mainly during the Spring Festival holiday. Of the four quarters of the year, the output value in the first quarter accounted for the lowest. If the epidemic can be controlled in the near future, production will be resumed one after another (now the most time is to postpone the resumption of work by 2 weeks), and the losses in the first quarter can be compensated, which will only affect the short-term production response. As long as the recovery is timely, the scope of impact on the manufacturing industry is limited. .
In the retail industry, a large part of total socialized consumption has been completed before the Spring Festival, and the impact of the epidemic is mainly concentrated on experience consumption such as catering, entertainment, and tourism. Although the epidemic will have an impact on consumption motivation, consumption categories, and consumption quotas, from the perspective of post-80s and post-90s consumers, it is mainly manifested as delayed consumption. After the epidemic is controlled in time, the suppressed consumer demand It will still be released, and its impact on total socialized consumption will be small. At the same time, after this epidemic, the logistics scenarios and businesses for experiential consumption will become more abundant and mature, forming a new proportion of business in the logistics industry.
In terms of policy response, various countries across the country supported the timely introduction of business management policies during the epidemic, and provided a policy environment for production recovery and development of enterprises. At the same time, banks also provided financial support to some enterprises that support the restoration of production order. This will greatly help the early restoration of the overall social production order.
Third, the role played by logistics is widely recognized
Compared to 2003, the socialization degree of China’s logistics is now very mature, and has produced strong logistics strengths such as Cainiao, JD.com, SF, Three Links and One, Suning Logistics, Debang, and Rishun Socialized enterprises or platforms. In this outbreak, the mature logistics operation mechanism has played a great role in the supply and deployment of emergency materials. The trust of the government, enterprises and consumers in logistics has been further strengthened, which is the depth of the logistics industry. Development provides a better foundation.
Now that all aspects support the logistics industry’s priority to resume work and break through the bottleneck of logistics, it also shows that everyone has realized the role of logistics in supporting the social economy, soThe logistics industry provides a better operating environment.
The thickness of the logistics chassis, the improvement of the logistics system, and the integrity of the logistics network have fully reflected the ability of the logistics industry to respond to risks in this epidemic, and have been widely recognized. Therefore, after the epidemic is controlled in a timely manner and the normal life and production order is restored, the logistics industry’s self-rescue and recovery capabilities will be much stronger than in 2003. This is also the basis for effectively controlling the impact of the epidemic on logistics revenue and costs.
Impact on supply chain construction
At the time of the SARS outbreak in 2003, China accounted for only 4% of global economic activity. Now it has risen to the second largest economy in the world, accounting for about 18%. At present, China’s manufacturing system is the most complete in the world, and the industrial chain, supply chain, service chain, and value chain are also the most complete. The impact of the epidemic on the supply chain is also obvious, which has also prompted more companies in the supply chain. In-depth thinking in construction, the scope of thinking has been expanded from usual business support to business support in all scenarios, thereby promoting the maturity of supply chain construction.
First, source sourcing procurement
Compared with 2003, China ’s transportation network has been greatly improved, logistics timeliness has been greatly improved, and supply chain supply has become more convenient. At the same time, the management and control of the transportation network has also become much larger than in the past. The overall control of the transportation network during the epidemic, especially the strict control of the severely affected areas, means that unilateral supply sourcing will make the supply chain risky. After the epidemic, related supply chain companies’ procurement There may be adjustments to the strategy, and it will become more cautious in source sourcing control. The response to emergencies and the supply chain cost mechanism will also be re-evaluated, transforming from strategic centralized supply to coexistence of centralized supply and network supply.
Second, supply chain construction based on online and offline full ecological business
During the epidemic, travel was limited, and the biggest impact was in the offline consumption field. This also prompted companies to focus on the development of online and offline ecological services in the supply chain construction. In this epidemic, the good-quality shop is the use of online In the case of online and offline supply chain networks, when online and offline store business is affected, the business focus is put online in a timely manner to reduce the impact on the business. After this epidemic, the integrated business model of online and offline business will become standard, and the supply chain construction based on online and offline full ecological business will become the norm.
Third, supply chain inventory and network
The focus of supply chain management is to ensure that the supply chain inventory is within the controllable range. The so-called controllable is available and the supply chain security is to be controllable at all times. This outbreak has enabled more companies to understand the hedging function of the supply chain network. The construction of supply chain nodes will also be transformed from the key construction to the layout of the logistics network. The effect of the logistics network will be used to provide services and guarantee supply, reducing logistics in the affected areas. Probability of supply shortages at the hub or for materials or finished products transported through it.
In terms of inventory settings,Under the premise of considering the balance between supply and demand, the safety stock should be reset to ensure the safety of the supply chain in the event of an emergency.
Impact on the development of logistics technology
The follow-up of each major event will require an upgrade of the corresponding industry. Although the logistics industry has played a more timely and stable role in this epidemic, efficiency and quality need to be further improved. The development of logistics technology also proposes higher application scenarios.
First, the digital information platform for logistics
During the epidemic, the overall supply chain monitoring and response plan lacked lower-level transparency. This is due to the low degree of digitization of the supply chain. The application of digital platforms is not widespread in the entire supply chain. This brings difficulties to timely response and scheduling in emergency logistics. After the epidemic, the digital logistics management platform will require more and more enterprises to use it. The entire society requires the digital platform to quickly understand the changes and achieve timely, transparent and controllable logistics status.
The logistics digital information platform will become a necessary content for enterprise information construction. Based on the iterative characteristics of software platform construction, the entire technology platform will be designed and deployed in accordance with the high requirements of emergency logistics.
Second, intelligent logistics
During the epidemic, smart factories and intelligent logistics centers that require fewer employees and are easier to control the epidemic have become a highlight. On the contrary, industries or enterprises that have higher labor requirements have been greatly affected. In this context, unmanned and less-populated logistics scenarios will have greater development, and the demand for matching intelligent logistics technology will increase, and the in-depth application and reliability of intelligent logistics technology will be required. . At the same time, 5G-based commercial applications will increase popularity and accelerate the promotion of logistics cloud services.
Third, the flexibility of logistics
Based on the high demand for logistics response to the epidemic, the commonality and versatility of logistics facilities have become the focus of attention. This also requires that in the subsequent logistics construction, logistics facilities have certain flexibility attributes. The flexibility of logistics is reflected in the multi-functionality of strategic logistics centers or nodes, the compatibility of multiple services, the tolerance of emergency services, and the flexibility and convenience of additional deployments, which can be realized in a short time. Completing the supplementation or expansion of logistics capacity, which requires the integration of planning, software and intelligent hardware.
Conclusion
As the epidemic situation continues, the overall production cycle of most industries in China will be postponed as a whole due to the epidemic situation, and many things cannot be given a definitive opinion. But we all know that the more adversity, the more development, during the epidemic, the fear is the fear itself. China is also in the process of economic transformation and high-quality development, which is also a test of the resilience of the industrial development of our country.
For the logistics industry, what is tested during the epidemic is the ability of enterprise resource dispatching and emergency organization, and what is tested after the epidemic is the speed of self-rescue of the enterprise and continuous operation.Camp ability, everyone is racing at the same time. As a logistics practitioner, we need to resume operations at a faster rate to ensure the production and consumption order.
Of course, the premise of the above analysis is that the epidemic situation can be effectively controlled, so I also pray for the countless retrogrades who protect the public health, and look forward to the angels returning soon. Come on in Wuhan! Go China!
Note: Hubei Prolog Technology Co., Ltd. (hereinafter referred to as “Prolog”) is a technology supply chain and logistics service provider, providing customers with one-stop logistics and supply chain services from planning and design to operation, Including supply chain analysis, logistics center planning and design, business process transformation, automation equipment integration, logistics information software development and implementation, process and operation education and guidance, logistics efficiency improvement, analysis and tracking, logistics operations, etc.