Recovery from the COVID-19 pandemic could begin as early as next year, with the logistics industry benefitting from new behaviours that could launch an e-commerce boom and more collaborative ways of working forged during the crisis, according to XPO chief executive Bradley Jacobs.
In a letter to shareholders published this week, Jacobs predicts: “Things are difficult right now and they’ll get worse in the short-term. Then they’ll get much, much better.”
Jacobs argued that while 2020 will be “a lost year” for the logistics industry in terms of growth, the pandemic is creating new opportunities and driving innovation.
“We believe that some of the behaviours reshaped by the pandemic may become economic tailwinds in our industry,” he said.
“For example, e-commerce growth, which was already at a double-digit rate, could accelerate in the post-pandemic world.
“Millions of consumers have become more accustomed to online shopping for food, household goods, pet supplies, health and beauty products, furniture and appliances without leaving their homes.
“If this proves to be secular, it will drive even more demand for e-fulfillment, omnichannel retail, reverse logistics and last-mile logistics.”
Jacobs is confident that the recovery will begin as early as 2021 with the logistics industry in prime position to benefit.
“Consumer confidence is very weak right now, but once testing, therapeutic drugs and a vaccine are widely available, confidence will rebound and the global mechanisms for GDP growth will resume. We think that will be in 2021, and when it happens, we have a number of things going for us.
“Transportation and logistics are inherently valuable to all populations; we’re part of the economic and social fabric. Whether COVID-19 is driving permanent changes in behaviour, or will prove more temporary, our industry will still be needed.”
Jacobs believes XPO’s business model will also help its recovery. “As pockets of the economy begin to recover, our diversity of customers, verticals, geographies and lines of business will allow us to respond in targeted ways. We expect to see the upswing first in our large customer relationships,” he said.
New ways of working within XPO, developed in response to the pandemic, will also bring rewards, Jacobs said.
“COVID-19 is also teaching us how to be an even more unified, forward-looking team. We’re adapting all the time and documenting practices we can use in the future. XPO has never been a company of silos, but what few silos there were have disappeared. There’s more collaboration, more empathy for others and more smiles in voices on the phone.”
