“An economic rebound can only happen with healthy companies. That is certainly not the case now ... there was a mad dash towards online retail and virtual working platforms, but this has only managed to keep the world going on a very low gear,” Tan Chong Meng said noting that bankruptcies will increase, and unemployment pressures will rise.
He said for PSA, it will take years rather than months to recover.
“Although consumption will ultimately return, it will remain sluggish in the medium term, and hence, our business, which relies on trade volumes will likely be set back about 2 to 3 years,” he added.
Even then, the PSA chief said that will depend on how long the world will debilitate under COVID-19.
Supply chain regionalisation
Tan Chong Meng also said supply chain regionalisation could rise post-pandemic with more and more countries becoming less reliant on China alone for production.
“Producers and manufacturers might focus more on regionalisation to shorten supply chains, manage inventory more effectively and reach markets more quickly. This could accelerate the move of production from traditional global factories like China to regional manufacturing zones,” he said pointing out CEE for Europe, Mexico for the US, India and Southeast Asian countries for Asia.
“Intra-regional trade would likely grow faster than inter-regional trade and for our transhipment activities hub and spoke excellence could become a preferential service over relay transhipment,” he added.
The PSA chief also noted that multi-national corporation customers would look strategically located regional logistic centres that are adjacent to ports and other modes of transport.
“The game changers could be inter-modal seamlessness and efficiency between sea, rail, barge, truck and air, aided by digital continuity and control across transportation modes,” Tan Chong Meng said.
Inevitable recession
He also called on businesses to use the crisis to build up resilience.
“While we don't know how long the current crisis will last, we need to use this time to prepare for the future — brace ourselves for the inevitable recession(s), focus on bolstering our resilience and that of our stakeholders, pivot our strategies to meet emerging trends like regionalisation and most of all, prepare ourselves by reforming and rewiring our professional DNA,” he added.
