Shock therapy for the logistics industry
Written by Juan Palenzuela, Associate
Edited by Harriet Moll, Creative Director
Global logistics has been ripe for disruption for some time. Several entrepreneurs and VCs have tried to break in to the industry, but change has been notably slow. The main culprits? High barriers to entry and an old school approach to managing and storing information which in many instances is still done through fax machines, piles of paper, emails or in closed data silos.
Added to that is a series of hurdles, most notably customs clearances, insurance and other bureaucratic processes which have meant that a huge chunk of the total cost paid by the consumer is going directly to middlemen.According to BCG, out of the £1.9 trillion of annual revenue generated by non-domestic cargo, up to 45% of the total delivery cost ultimately goes to these middlemen.
Global logistics could be faster, better and cheaper; but many of the key stakeholders needed to make that happen have been averse to change. This has also stagnated innovation in the industry.
Enter the coronavirus. The shock for individuals and companies alike is being lived by us all, we could not have predicted what was coming (with any accuracy). But it has also been a serious wake-up call for global logistics and its customers.
In the race to make more ventilators, which keep coronavirus patients alive, the pressure has now been dialled up on companies and policymakers to facilitate the shipment of parts and pieces needed to make this vital equipment as fast as possible.
It is working. Some industry players are now forgetting about their zero-sum game mentality and instead, they have prioritised collaboration, sharing information and digitising their records. It may well be the first step towards a new type of global logistics, one that is more agile, resilient and open to change.
A new “five pillar” testing plan was announced yesterday by the Health Secretary to combat the Coronavirus pandemic. Amongst other measures, it involves carrying out up to 100,000 tests a day in England by the end of April, up from just 10,000 tests per day right now. The plan also includes the introduction of new blood tests and partnering with commercial institutions such as Universities and Amazon to boost swab testing.
The Democratic National Committee of America decided yesterday to postpone its presidential convention because of the pandemic, delaying it by at least a month to mid-August. The convention will still be held in Milwaukee, merely a week before Republicans gather to re-nominate Donald Trump.
As voting in the contest to elect Labour’s new leader closed yesterday, party members now await results, which will be announced tomorrow in a very anti-climactic fashion: by email. Candidates had already been asked to record a victory speech to be sent out as early as possible. That won’t be necessary for all of them, as Sir Keir Starmer is widely expected to take the leadership spot. The party's next deputy leader will also be revealed.
Business and economy
Following criticism, the Treasury announced changes to the emergency loans scheme for businesses struggling to survive the pandemic. Banks will no longer be allowed to ask for personal guarantees on loans up to £250,000. So far, more than 130,000 loan enquires have been received, but just 1,000 have been approved. The changes are intended to make it easier for businesses to access those loans.
New official figures show that 950,000 people have applied for the government’s universal credit benefits schemes since the lockdown began on March 16, confirming the vast extent of financial hardship experienced by many people across Britain. The figure is an indication that the country is suffering job losses on an unprecedented scale, despite the strong measures taken to avoid that.
A leaked memo from SpaceX revealed that the company has banned Zoom, an increasingly popular video conference platform, because of significant privacy and security concerns. The company is not the first to call foul.Zoom has been criticised in the past due to its false claims of end-to-end encryption, its “surveillance methods” and the fact that until recently it sold user data to third parties.
Columns of note
In the Financial Times, economist Tim Harford says that asking difficult questions, such as how to value a statistical life, will be key to developing a successful pandemic strategy. That fight will not come without sacrifices, he says.
The pandemic is an opportunity that despots around the world will use to strengthen their grip on power, argues Philip Collins.
Source: New Yorker
What happened yesterday?
Oil prices have rallied after Russia and Saudi Arabia showed willingness to reenter talks to bring an end to their price war. That has helped offset the impact of a dire weekly jobless claims report in America, which shows a 6.65m surge.
Investors around the globe have been slightly encouraged. In Europe, the Stoxx 600 was up by 0.42% to 312.08, while the German Dax was ahead by 0.27% at 9,570.82 and the FTSE Mibtel had put on 1.75% to 16,834.03.
In the UK, the FTSE 100 ended the session up 0.47% at 5,480.22, while the FTSE 250 slipped 0.76% to 14,436.80.
What's happening today?
Sqn Asset Fin
UK economic announcements
(09:30) PMI Services
Int. Economic Announcements
(08:55) PMI Composite (GER)
(08:55) PMI Services (GER)
(09:00) PMI Services (EU)
(09:00) PMI Composite (EU)
(10:00) Retail Sales (EU)
(13:30) Non-Farm Payrolls (US)
(13:30) Unemployment Rate (US)
(14:45) PMI Services (US)
(14:45) PMI Composite (US)
(15:00) ISM Non-Manufacturing (US)
Did you know?
From 1979 to 1992, the Soviets drilled a super deep hole into the earth's surface that reached 12,262 metres just to see how deep they could drill.
House of Commons
In recess until 21 April 2020.
House of Lords
In recess until 21 April 2020.
No business scheduled.