The novel coronavirus had dramatic impacts on virtually every aspect of the business world. Global supply chains experienced disruption on an unprecedented scale, causing shortages in critical medical devices, personal protective equipment (PPE), and essential household goods. As 2020 comes to an end, the logistics sector continues to develop and implement innovative solutions that will help businesses operate successfully in this new normal.
This article will discuss the current state of logistics to inform readers of the latest happenings in the sector, as well as provide a reference point for comparison as recovery efforts continue in 2021. Here are some of the most notable things happening in the supply chain at the end of 2020.
COVID-19 Vaccine Distribution Begins
The U.S. Food & Drug Administration (FDA) approved the Pfizer-BioNTech COVID-19 Vaccine by emergency authorization on December 11, 2020. A second vaccine from Moderna expects approval as well, and the U.S. government has already purchased 200 million vaccines in anticipation. Though already in the midst of the holiday peak season, major carriers like UPS and FedEx have begun moving initial shipments of the Pfizer vaccine.
While the Moderna vaccine follows fairly standard storage and transportation protocols, the Pfizer solution must be continuously stored below -90°F to remain effective. If moved to refrigerated storage, the vaccine remains usable for only five days. The U.S. also lacks cryogenic storage capacity, making regional distribution more challenging. Pfizer has invented a special packaging solution that uses dry ice to keep vaccines at the required temperatures for up to 30 days, assuming the capability of dry ice refills every five days. Some experts are concerned about availability of carbon dioxide – recovered as a byproduct of refinery processes for oil and ethanol – to make enough dry ice to meet the pharma supply chain’s needs.
E-commerce Dominates Retail
The shift from brick-and-mortar stores to digital commerce accelerated rapidly thanks to the pandemic, with some estimates showing that e-commerce experienced a decade’s worth of growth in only a few months of 2020. Retailers that traditionally relied on physical stores for the bulk of their sales had to scramble to enhance omnichannel capabilities, while major e-commerce players like Amazon and Walmart dominated virtually every market.
While e-commerce across industries experienced a boom, perhaps none was quite as notable as online grocery sales. Thanks to stay-at-home orders and social distancing mandates, consumers spent the first half of 2020 trying to avoid physically going to the grocery store. Now at the end of the year, consumers have become used to the convenience of having groceries delivered or picking them up at the curb.
Many grocery retailers have sought help from logistics partners to help them adapt to this new normal. With industrial real estate at a premium due to the overall e-commerce boom, grocers and 3PLs have turned to micro-fulfillment and other creative logistics solutions as a means to provide more efficient service to online buyers.
Automation and Robotics Ramp Up
Warehouses and distribution centers have historically been very dependent on a large work force to pick and pack orders, load/unload trucks, operate forklifts, and much more. The pandemic has changed all that as warehouse operators had to implement social distancing measures and limit the number of employees in the facility at any given time.
In response, many companies turned to automation solutions like automated guided vehicles (AGVs) and picking robots to offset labor challenges and improve safety in the warehouse. Overall, the pandemic has drastically accelerated the development and adoption of flexible automated solutions within warehouses.
Retailers and wholesalers realized early on in 2020 that operating one massive and centralized distribution center to serve the entire country was no longer feasible. Coronavirus outbreaks closed the doors of many such facilities off and on throughout the pandemic, delaying customer orders and effectively shutting down the business for days or weeks on end.
Even without a pandemic to contend with, increasing consumer demands for one-day and two-day shipping have made the concept of massive, centralized DCs seem outdated for many e-commerce sellers. Just as the manufacturing sector ramps up reshoring efforts to build supply chain resiliency, many companies have begun making plans to regionalize logistics assets to mitigate the risk of total shutdown in the face of disruptive events.
About Phoenix Investors
Founded by Frank P. Crivello in 1994, Phoenix Investors and its affiliates (collectively “Phoenix”) are a leader in the acquisition, development, renovation, and repositioning of industrial facilities throughout the United States. Utilizing a disciplined investment approach and successful partnerships with institutional capital sources, corporations and public stakeholders, Phoenix has developed a proven track record of generating superior risk adjusted returns, while providing cost-efficient lease rates for its growing portfolio of national tenants. Its efforts inspire and drive the transformation and reinvigoration of the economic engines in the communities it serves. Phoenix continues to be defined by thoughtful relationships, sophisticated investment tools, cost efficient solutions, and a reputation for success.