The Covid-19 epidemic initially disrupted supply chains with China and these are now gradually being restored. However, the epicentre of the pandemic has shifted to Europe, which has brought challenges for producers and distributors. The logistics sector is striving to maintain liquidity. All truck drivers – regardless of nationality – are exempt from the 14-day quarantine required on entry to Poland. Similar exemptions have been introduced by other EU member states. Fast-track lanes have been created for freight trucks across the EU. It’s all in an attempt to minimilise supply chain disruptions.
Services have experienced the largest drop in consumer demand but goods are not fully immune to the slowdown either. We can expected a marked decline in the automobile sector, followed by electronics and clothing. All three sectors are suffering from limited production – caused by factory downtime and shipments being held up at ports and borders – as well as lower demand due to uncertainty and precautionary saving by consumers.
There are sectors that are faring well in the current situation. Fast-moving consumer goods (FMCG) are experiencing heightened demand. People are stockpiling but are also consuming more of certain goods due to spending more time at home. This applies to medications, groceries and household chemicals. Demand for food previously satisifed by restaurants, bars and canteens has now been fully replaced by home cooked meals with the exception of restaurants providing delivery/takeaway services.
E-commerce has thus far weathered the storm. Couriers claim that their work is not slowing. On the contrary, they are taking over the servicing of the end-consumer. InPost responded to heightened demand by allowing deliveries to lockers at the weekend. Amazon and other e-commerce firms are offering workers overtime in order to cope with the surge in orders.
The length of the pandemic is crucial for market prospects
The long-term consequences of the pandemic for the economy as well as the warehouse and logistics sector will depend on how quickly it is tackled. The extent of government support for businesses will also be a deciding factor. It is almost certain that the authorities will deploy unprecedented measures to prevent liquidity problems spilling over from directly affected industries into other sectors.
The outlook for Polish logistics and warehouse real estate is closely linked to the economic situation in the country and its main trading partners. Germany – which Poland is closely tied to in economic terms – is facing the same challenges. China is returning to normality after draconian measures allowed the government to successfully contain the initial epidemic. Factories in Wuhan and other cities are re-opening. This week, the first freight train will arrive in Poland from China (Taiyuan) after temporary suspension. China did, however, experience a deep recession in Q1 and a rebound will be curbed in the coming weeks and months by lower demand from Europe. All around the world bold, unprecedented measures will be required to allow the economy to weather this – hopefully temporary – storm.
The warehouse real estate sector is better placed than others to come out of this situation intact. Sectors that should continue to perform well are the food retail industry, pharmaceuticals and some parts of e-commerce.