Since the beginning of the coronavirus pandemic and the resulting border closures, global markets have been dramatically transformed. Logistics services, however, continues to play an integral role in keeping the global economy running.
The global economy functions optimally only when imports and exports flow freely and trade deals are properly executed. Otherwise, GDP falls. According to experts, the economic growth rate in 2020-2021 will drop to 0.4%. The cargo transportation market is the first to react to an overall economic decline: a 1% decrease in GDP typically reduces the transportation market by 2-3%.
For example, in China, the origin and destination of a significant number of global transport orders, the transportation market decreased by 18.4% in the first quarter of 2020 according to the statistics bureau. Cargo turnover amounted to 7.8 billion tons, which is 13.6% less than last year. Global demand did not decline immediately and was not satisfied by the People's Republic of China due to quarantine and sanction measures.
The first production shutdowns and transport artery closures began in China. The auto industry suffered the most, as supply chains involving parts production sites and assembly plants were disrupted. Positive dynamics persisted in critical sectors like food, pharmaceuticals, and fuel.
Logistics companies have been forced to rebuild systems, respond quickly, and urgently seek alternatives to “broken” supply chain links. AsstrA has quickly found solutions to support continuous traffic flows.
Deliveries of finished products have been delayed due to interruptions or blockages of raw material imports and delayed or canceled production processes. Because of the crisis, demand and purchasing have dropped. Lower prices and limited transport resources are examples of the challenges faced by supply chain participants, including everyone from importers, manufacturers, and logistics intermediaries to buyers, distributors and end customers.
Also, employees working from home have often not been able to process import/export documentation as effectively. During the quarantine, a limited number of logistics chains participants began managing documentation online. On the whole, however, many business processes were interrupted. The slower pace and lower quality further hurt the performance of an already weakened market.
For the first 5 months of 2020, AsstrA’s business with Asian Customers has grown unevenly. Despite quarantine measures and according restrictions on the logistics market, AsstrA’s overall turnover on shipments from/to China has stayed at 2019 levels and has amounted to 2.5 million euros so far in 2020.
On the other hand, AsstrA’s Kazakh Client portfolio has grown rapidly. Turnover for the first part of 2020 has increased 57% and orders are up 62% compared to the same period in 2019. Meanwhile, turnover in Turkmenistan was down 46% despite 15% more orders. In Kyrgyzstan, turnover was down 9% on 26% fewer orders. In Uzbekistan, AsstrA’s newest market in the region, growth has been in line with expectations.
“Our performance figures indicate just how tightly the logistics sector is tied to the overall economy. At AsstrA, we’ve successfully mobilized our team to “stay afloat” and adapt to the needs of a market shaken up by COVID-19. All things considered, our results have been quite impressive,” commented Margarita Dyadyaeva, AsstrA Almaty Branch Manager and Kazakhstan Country Manager.