The global transport and logistics system turned to be one of the most challenged areas as a result of the COVID-19 pandemic. The negative consequences are based on various factors: the closure of state borders, restrictions on the movement of people and goods, the collapse of supply chains, and a decrease in demand and human purchasing possibilities. The combination of these factors affected all types of transport — from the use of personal and public transport to international logistics.
The scale of the negative consequences depends on the type of transport and the state’s integration into the world transport and logistics system. For instance, 90% of flights were canceled in the EU countries, while a decrease in the volume of passenger traffic reached 60 — 90%. Now, we invite you to look at the most challenging issues for national transport systems that occurred at the pandemic times.
Top 5 Pandemic Challenges for Transport System
Today, many countries are stuck in a transitional stage: they have already adapted to the new working conditions and gradually recovered after the crisis. Nevertheless, there are still some risks:
- The anticipation of a second wave of the pandemic,
- An increase in the number of cases of COVID-19 in some regions of the world,
- A partial renewal of restrictions, etc.
At the same time, the uncertainty concerns not only the time of the return to pre-crisis indicators but also the future image of the transport sector in the post-coronavirus world as a whole.
1) Freight transportation
A reverse side of the coronavirus containment was the restriction of transport activity. The overall decline in global transportation will be 36% compared to the pre-crisis times. However, if in ASEAN countries, Central Asia, Russia, and India, transport traffic is reduced by more than half, in China the drop will not exceed 25%, while in Europe and the USA it will be at the level of 40%. Due to a decrease in the volume of sea cargo transportation, 11 of the 12 largest companies were forced to return the rented vessels to their owners.
2) International passenger transportation
Taking into account the volume of the world market for passenger air transportation, only the economic losses of the airlines due to the inability to continue operating during the pandemic will lead to a decrease in world GDP by 1.67%, without taking into account the indirect consequences for the economy. The reduction of jobs associated with the air transportation sector is also widely estimated, which could reach 30 million jobs.
3) Vehicle manufacture
The imbalance between supply and demand in transport services due to the impact of the COVID-19 pandemic naturally affected not only carriers but also vehicle manufacturers. The situation on the aircraft market was not easy before the pandemic: one of the largest aircraft manufacturers in the world Boeing was already in crisis due to two air crashes of the 737 Max model. Due to the spread of coronavirus infection and falling demand, Boeing factories were forced to completely stop production and cut jobs. The same problem applies to the Dutch manufacturer Airbus.
4) Public transportation
COVID-19 has led to a dramatic revenue reduction of public transport enterprises from ticket sales, reaching 90%, and an increase in additional costs associated with disinfection measures and ensuring social distance in transport. For example, for the French transport company Île-de-France Mobilités, the restriction of access to public transport in Paris during the quarantine period led to losses of more than 2.6 billion euros.
5) Infrastructure projects
Despite the need to ensure the uninterrupted operation of transport infrastructure, the situation with new infrastructure projects has not developed in the best way. For example, the company Deloitte analyzes the situation in the US market and notes that many projects for the construction of new transport infrastructure are postponed or canceled indefinitely. The main reason was negative economic forecasts and unclear prospects for the initiators of the projects, which do not allow making long-term investments in the current conditions.
During the pandemic, representatives of almost every transport industry applied for state support. According to experts, the main thing that is necessary for the industry today is avoiding the introduction of new restrictions.