COVID-19 ‘Lockdown’ and the Logistics Industry

As we are all aware, the fall-out from COVID-19 is severely impacting businesses’ ability to trade. This in turn will affect liquidity and the ability of debtors to maintain payments. It is not business as usual, these are extraordinary times.

Even though government has done a good job of managing the outcomes related to the lockdown, the reality is that the majority of logistics companies do not fall under the heading of essential services. We are seeing business in the logistics industry operating at 20% of their normal output.

From a logistics industry perspective, we are seeing companies moving their focus, servicing essential services suppliers that were not their primary focus in the past.

Most of these companies have implemented one or more of the following approaches to weather the storm:

  • Extending payment terms with creditors.
  • Requesting payment relief from banks.
  • Revise budgets to incorporate the losses into the remainder of the year.
  • Innovation is key, optimising the digital space to secure future sales.
  • Tax breaks.
  • Delay payments on provisional tax.
  • Government funding.
  • Cutting executives remuneration for an extended period.
  • Implementing forced leave and temporary layoffs.

By George Marais, authorised representative, Prestige Credit Insurance Consultants