COVID-19 and the transport industry: Overview

The transport industry has survived the COVID-19 pandemic – so far – in good shape. A boom in online shopping, combined with a strong resources sector and bumper crops, has kept the trucks rolling.

But as every business owner knows, you can have sunshine today and rain tomorrow. Transport companies have prospered over the past 18 months or so, but clouds are gathering on the horizon. 

This blog is the first in a two-part series. It will explore COVID’s impact on the transport industry to date. Part two will look at the trends that are likely to play out over the next few years.

The transport industry: Driving the economy

The COVID-19 pandemic became a global concern in late 2019. By early 2020, nations worldwide were locking down their borders and taking measures to protect their citizens and their economies. 

Australia was no exception. In June 2020, our economy went into recession for the first time in 30 years. Yet online shopping grew despite the overall economic slowdown, thanks partly to financial support from state and federal governments.

Deloitte’s Economic assessment of Australia Post’s activities during COVID-19 report shows that online retail spending in Australia boomed. A modest year-on-year increase in January 2020 (around $1.75 billion vs $1.5 billion) led to a massive surge in May (around $2.6 billion vs $1.6 billion).

These increases naturally led to greater demand for last-mile delivery services. Deloitte’s report shows that year-on-year, food and liquor deliveries were up by 110% in May 2020: homewares and appliances by 92%, variety stores by 129% and fashion by 82%.

Agriculture and resources performed strongly

Elsewhere in the economy, ABS data shows the gross value of Australian agriculture increased slightly in 2019–20. More recent data from the Department of Agriculture, Water and the Environment (ABARES) shows that in 2021 – and thanks in part to a good wet season – winter crop production is forecast to be well above average.  

Meanwhile, the Department of Industry, Science, Energy and Resources’ September 2021 update predicts “Australia’s resources and energy export earnings to again reach a new record in 2021–22”. 

These strong performances, coupled with low fuel prices and less traffic on the roads, kept transport operations in the black. As Marty Corry, NTI’s Transport Risk Engineer, notes, “There was good money, there was high efficiency and there was a lot of work.”

Despite much of the economy being in lockdown, Australia’s GDP still grew (by 1.4%) in 2020–21. That’s due in no small part to the transport industry’s ability to keep the economy moving.

The new ‘COVID normal’: Back to the way things were?

Now, with high vaccination rates allowing governments to lift restrictions and the economy returning to something like its pre-lockdown state, times are set to change.

Even through the boom times, there were signs of future challenges. These included the ongoing driver shortage, rising fuel costs and the impact of renewables. Other concerns were increasing operational costs, a shortage of new fleet vehicles and general economic volatility as the world learns to live with COVID. 

These all translate into new risks for transport businesses, as Marty Corry notes. 

“The smart ones knew the tide would go out and planned for an industry readjustment,” he says. “Those that made hay while the sun was shining, that grew too fast, that didn’t put in place sustainable measures to ride out a bump or two in the road, might struggle.”

Of course, it’s never too late to start making plans to ride out the economic transition. And it’s not all doom and gloom; online shopping isn’t going away. 

“You’ll probably see a decline because people want to go to the shops,” says Marty, “but the novelty will wear off, and people will go back to buying online again.” 

And our resources and agriculture sectors are set to continue performing strongly. 

Attracting and retaining drivers is a critical concern; at time of writing, there are more than 20,000 unfilled truck driver positions on the SEEK job marketplace. Fleet refreshes are also becoming more difficult, with supply constraints making new prime movers hard to find and expensive to buy.

But with an understanding of the upcoming risks, and prudent management, there’s no reason why you can’t position your transport business to prosper in the challenging times ahead.

This blog is Part 1 of a two-part series. Part 2 discusses the industry’s emerging challenges in more detail and how businesses can prepare.