Global Business and Management Research: An International Journal

Vol. 13, No. 3 (2021)

Investigating the Impact of COVID-19 on the Logistics

Sector: A Case Study on Egypt
Engy Bayoumi*
Graduate teaching assistant at College of International Transport and Logistics at Arab Academy
for Science, Technology and Maritime Transport, Alexandria, Egypt
Email: Engy.osman@aast.edu

Jilan Keshta
†
Graduate teaching assistant at College of International Transport and Logistics at Arab
Academy for Science, Technology and Maritime Transport, Alexandria, Egypt

Sara Elgazzar
†
Dean of College of International Transport and Logistics at Arab Academy for Science,
Technology and Maritime Transport, Alexandria, Egypt

*Corresponding Author
Abstract
Purpose: This paper aims at investigating the impact of COVID-19 on the logistics sector
activities in Egypt as the COVID-19 widespread is considered as a global shock. Its impacts are
being soaked up internationally in terms of business activities, economy, individual aspects, and
logistics activities in different ways. Design/Methodology/Approach: The study was conducted
based on semi-structured interviews with different stakeholders in the Egyptian logistics industry,
in addition to published reports and studies analyzing the COVID-19 impact on the logistics sector.
Findings: The paper highlighted the barriers and obstacles that are faced by the stakeholders
and practitioners in the field of logistics through COVID-19 lockdowns to meet their customers'
demand and restore balance for their portfolios. It concluded with a roadmap providing some
suggestions and recommendations to strategize logistics practices and achieve sustainable logistics
performance.
Research limitations/implications: Stakeholders in the logistics field need to implement
strategies and policies for crisis management, renovating production operations plans, and
satisfying consumer needs. Upon that, the road map will show the gap for future researchers and
industrial managers to upgrade their long-term planning to face any unconditional situations in the
upcoming years.
Originality/Value: The paper provides evidence on the negative influences of the logistics
industry with a noticeable shrink in manufacturing, imports and exports, transportation,
distribution, freight forwarding, warehousing, and overall international trade due to disruptions of
the whole supply chain network and lockdowns in most of the troubled countries.

Keywords: COVID-19, Logistics, Supply chain, Economy.

Category: Case Study.

1. Introduction
COVID-19 highly influences the management of the global supply chain and the whole logistics

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processes; as countries apply hygiene practices to all trade flow, to prevent the spread of the virus.
To control the notable disruptions that happened; the industries getting affected, stakeholders have
to take precautions and actions supporting businesses, as the outbreak end period is unconscious.
Operators are responsible to adjust business procedures while developing long-haul strategies, to
stabilize the country’s practices in globalization within significant concern to the epidemic (Zhang
and Hayashi, 2020).
The main purpose of this paper is to investigate the impacts of the Corona-virus outbreak on the
logistics activities and supply chain specifically in Egypt. This paper illustrates various issues of
COVID-19 such as its impacts on the global economy, supply chains, and logistics activities by
reviewing previous studies and considering operators' opinions in these fields. The contributions
of this paper are first, it will discuss the current situation of global economy and logistics activities
performance. Therefore, the impacts of COVID-19 will be clear. Secondly, it will focus on the
Egyptian situation as a case study. Finally, analyzing the data and predictions of the operators to
show the main impacts of COVID-19 on all logistics activities. In this paper, the introduction is
followed by the ongoing state of Coronavirus through the literature review, followed by the
methodological section leads into the analysis and findings, and the paper closes with a roadmap
and recommendations for further research.

2. Literature Review
The literature reviewing an illustration about COVID-19 and how the world reacted to this
pandemic. Then it highlights the impacts of the virus on the economy and global trade especially
in Egypt as well as its impact on the employment level. Moreover, it illustrates the impact of
COVID-19 on the logistics and supply chain sectors by focusing on specific activities such as
transportation, distribution, imports and exports, warehousing, and inventory management to
investigate the impact of COVID-19 on the logistics and supply chain industry, especially in
Egypt.

2.1. Coronavirus COVID-19

Starting from 2019, COVID-19 a severe disease from SARS-COV2 species has changed the world
dramatically. Primarily, Corona Virus was localized in China only, later on, it spread across the
whole world which led to a total lockdown. The World Health Organization (WHO) first
announced COVID-19 as a world health urgent situation in January 2020 while on March 11 it
officially revealed a pandemic (Y.Yang et al., 2020).
This requires countries to implement public health measures such as social isolation and curfews
to minimize the virus spread that led to a huge number of people dying, lower the efficiency of
logistics activities in all sectors, a severe decline in productivity among firms, greater uncertainty,
and fear in all countries (A. Brodeur et al., 2020).
Moreover, due to countries' lockdown and imposed restrictions, it affects all events and business
sectors noticeably and discourages international trade practices. Consequently, almost all firm’s
profits declined to a great extent, universal stock markets lost about US$6 trillion in one week
from 24th to 28th of February, many import & export-oriented countries were severely affected
because of their supply chains disruption and it also has a severe negative impact on the world
economy (Ozili and Arun, 2020)
2.2. COVID-19 impact on economy and trade
Nowadays we are living in a globalization era, as the economies of all nations are connected

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through exports, imports, expenditures, financial markets, facilities, technology, etc. As a result,
world lockdowns, quarantine restrictions, curfews, etc., caused massive economic shocks, a crisis
such as a severe decline in world GDP, global trade deficits and inflation rate, and human suffering
such as death, layoffs, income declines, and unemployment (Islam and Muyeed, 2020).
Regarding business activities, COVID-19 affects all firm’s revenues and strategies to a great
negative extent. Organizations started to fire off their employees to maintain revenues, also they
changed their working regime by working from home through online applications instead to
maintain social distance. Moreover, all firm’s supply chains are exposed to numerous risks such
as changing production strategies, changing suppliers and shifting warehouse locations, changing
transportation routes, and so on (J. Jackson et al., 2021).
Accordingly, COVID-19 affects global trade in goods and services especially during the first half
of 2020 with a drop in value of about 15 percent. Then it began to recover in quarter 3 and 4 in
2020 as global trade in moving goods grew by about 8 percent as shown in the following figure:

Figure 1: World trade in goods & services

Source: (UNCTAD, 2021)

In particular, in Egypt, all economic activities slowed down as a result of the lockdowns. The
Purchasing Managers’ Index (PMI) diminished to 38.3 during the period April to June 2020, its
lowest level on record. The employment rate turned down by 2.7 million during the same period,
pushing unemployment to 9.6% from 7.7% the previous quarter, with job losses, on the whole
among informal employees, reported mainly in retail and wholesale trade, manufacturing, touristy
and transport. Also, foreign reserves dropped sharply due to large-scale capital discharges in the
COVID-19 crisis, in addition to the fall in Suez Canal revenues, and merchandise exports. The
foreign exchange depreciated marginally from LE15.7/US$1 in February 2020 to just below
LE16/US$ as of August 2020. (TheWorldBank, 2020). Consequently, many countries in The
Middle East and Central Asia requested International Monetary Fund (IMF) financial aid
especially in Egypt (IMF, 2020).
2.3. Impact of COVID-19 on Logistics activities and supply chain
The impact of COVID-19 on the supply chain has been quite negative, as a result of the expansion

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of the trade has slowed down because of the nationwide internment in most of the affected
countries. COVID-19 threatens business operations everywhere, it's useful to recollect that the
virus was initially feared for its impact on global supply chains; While the attentiveness and focal
point is rightfully on running the immediate requirements of the ongoing crisis, the COVID-19
pandemic has uncovered susceptibilities in global supply chains (Desai, 2020).
Pandemic trade restrictions affected the power to supply and distribution of goods, evacuating
inventory and tightening production capacity. In addition to the Retail grocery stores, they faced
inventory shortages as they asked for less food and commodities. Producers are working to extend
supply, but have only such a lot of proportions. Grocery chains have reduced hours to produce
time for re-stocking, whereas food processors are increasing hours and manufacturing restricted
product lines to increase capability and potency. Despite that, the modification within the
consumers’ buying habits, leading to empty shelves and temporary product shortages;
consequently, producers and retailers charge to re-stock. (Salisbury, 2020).
COVID-19 spotlights the necessity for warehouses to be automatic beneath the pressure of the
decline in human work efficiency, worker fluctuation dependency, natural migration, and the
requirement to reduce the fee of logistical processes during crises. As automated warehouses
reflect in revenues and not to get affected by the lockdown, despite the temporary decrease in retail
ensuring the shortening the time to pick up products and fulfill the needs to be distributed to the
market (Shah, 2020).
The transportation industry carries important social and environmental loads which have been
adversely affected by the outbreak of COVID-19; which end in positive number effects like higher
accessibility to producers, customers, and placement costs. Moreover, the outbreak of COVID-19
reduces the capacity of the transport to amass and sell a range of commodities necessary for
industrial and producing systems. The effect is that cost is increased and there are at the same time,
delays in supplying essential services. Therefore, transportation costs haven't grown significantly
and are affecting the commodity market beginning from the firms which can no longer produce
efficiently due to the inaccessibility of raw materials as well as their respective customers or
markets (Lewry, 2020).
The logistics network disruption that has occurred from the pandemic, has spotted the necessity of
stakeholders being able to identify suppliers, shift production to various alternative locations, and
onboard different suppliers as demanded. As logistics service providers struggle from supply chain
bottlenecks and adding pressure to encounter contracting responsibilities due to lockdowns,
mandated business closures, ease approvals, workforce deficiencies, and exporting bans, terms of
agreements and liabilities are being nearly burned up (Nwaeze, 2020).
The pandemic and recessionary environment can also accelerate technological change through
artificial intelligence and automation. In industries like retailing and inventory; robots are
increasingly getting used to attenuate human contact; as logistics providers, transporters, and
freight workers are facing high risk to COVID-19, the reconfiguration of supply chains within the
medium term through reshoring and near-shoring presents a development challenge. Through
industrialization by producing hubs that produce vital components for many companies, mainly
within the technology, automotive, and pharmaceutical industries; due to technological
constraints; anticipating supply chain risks or unexpected crises, promoting sustainability,
optimize performance and logistics efficiency (Corkery and Gelles, 2020).
The COVID-19 pandemic hardly affects the economy and the logistics sectors in the whole world.
From the economic point of view, it is clear that there is a decline in GDP, imports and exports,

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and exchange rates worldwide. Moreover, it is noted that the employment rate declined globally.
While from the logistics and supply chain perspectives, it is severely affected by COVID-19 crises
within all its processes, and hence, the efficiency of all business performance is affected too. So,
the next two sections of this research will illustrate the methodology used in this paper to
investigate the effect of COVID-19 on Egypt followed by suggestions to overcome the negative
impacts and losses.

3. Methodology
The research used both secondary and primary data collection methods to investigate the impact
of COVID-19 on logistics and supply chain sector in Egypt. First, previous studies have been
reviewed to get an overview about COVID-19 impact on the logistics and supply chain sector and
to conclude with main aspects that need further investigation based on primary data
collection. Then, semi structured interview was developed based on the extensive literature
to discuss the impact of COVID-19 on the Egyptian economy and how it affects social practices,
its impacts on the logistics sector focusing on each logistics activity separately, and the challenges
and barriers that might hinder Egypt to overcome COVID-19 impact on logistics and supply chain
sector.
The interview was conducted online in two consecutive weeks at the end of January 2021 with six
Egyptian operators and stakeholders in the field of logistics and supply chain; import manager and
export manager in Transport and Logistics company, a senior marketing executive and a senior
research & development executive at Alexandria Container & Handling Company in Alexandria
Port, a production operator and a warehouse manager in a manufacturing company and a retailing
company respectively. Finally, the interviewees' responses have been analyzed to conclude with
the research proposed roadmap.

4. Findings and Discussion

4.1. COVID-19 impact on the economic and social practices in Egypt
The interviewees commented that the Egyptian economy was in a recession status and a decline in
its economic activities before the COVID-19 pandemic due to other factors such as inflation, high
exchange rates, and poor investments. Starting from 2015, the Egyptian economy starts to flourish
as a result of some political changes. However, after COVID-19 the Egyptian GDP falls again but
by a small percent compared to the previous years. for instance, the amount of Egyptian pound
depreciated compared to US dollars and Euros, the revenues of the Suez Canal fall, many
companies in Egypt faced severe losses especially the private sector and Small and Medium
Enterprises (SME's) and hence, they started to minimize their employee salaries and some of them
minimize their employment by firing off extra and part-time employees to minimize their loss.
Moreover, the interviewees agreed that although the losses that Egypt exposed during the COVID-
19 pandemic, is not huge compared to other states such as; Brazil, United Kingdom, United States,
Italy, and China.

4.2. COVID-19 impact on the logistics sector in Egypt

4.2.1. Transportation

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The interviewees asserted that; curfews and lockdown affect the ability to transport and distribute
goods. So, companies were quickly reformulating their supply chain blockages as conditions
changed to find alternative local suppliers to reduce reliance on foreign suppliers. They agreed that
maritime and air transport are the most affected modes of transport. Egyptian ports during COVID-
19 have a notable lower cargo volume especially from China so freight rates declined, appointed
port transits, and routes are canceled by the shipping lines as the East Port Said terminal is locked,
while its west side remains open with limited operations. The Port of Alexandria is merely
receiving vessels to discharge cargoes, and therefore the Port of Damietta is restricted to cargo
ship activity. Consequently, the demand for road transport increased as it’s the least affected mode
of transport in Egypt. Moreover, the interviewees mentioned that Egypt has a lack of modern
logistics practices such as minimizing their transport process documents, last-mile connectivity,
using the Internet of Things, and driverless cars although of its high cost but it would minimize
the harmful impacts of COVID-19.

4.2.2. Warehousing, Distribution and inventory management

The interviewees stated that retailers and wholesalers in Egypt have faced inventory shortages in
some exported products such as medical supplies so producers had been working to increase local
supply, but had only limited capacity. Moreover, merchandisers have reduced hours to provide
time for re-stocking, while food processors are increasing hours and only manufacturing limited
product lines to broaden capabilities and efficiency as the freight rates for distribution increased,
losing the efficiency of economies of scale and business profitable manners. Shifting workforces
to work remotely as customers shift to online shopping and transactions, to avoid human contacts;
for instance, realizing the need for implementing systems and sensors, permitting customers to
create orders online and request that the bought product be delivered, enabling tracking and
prediction of client orders, ensuring easier inventory control.

4.2.3. Egyptian imports and exports

The interviewees stated that; due to trade restrictions mainly in maritime transport, exporting had
been suspended for months for the basic items, except for the medical supplies’ products, which
were subjected to a severe shortage at the beginning of the pandemic in Egypt. Also, Egyptian
imports decreased faster than its exports as Egypt depends on Chinese products to a great extent.
However, they agreed that due to the COVID-19 crisis, this trade deficit would encourage
manufacturers to produce their requirements locally to meet the needs of the national demand.

4.3. The challenges and the barriers faced Egypt during the COVID-19 pandemic
The interviewees stated that there are a lot of challenges and barriers that might hinder Egypt to
overcome the COVID-19 pandemic. First, Egypt has a lack of safety commitment culture; in other
words, Egyptians do not commit to following the public health instructions such as wearing masks
and so on, but lately, government policies have started to impose penalties on people who don’t
follow safety measures. Moreover, from the business point of view, most Egyptian companies use
a reactive approach. They lack risk management strategies and they don’t think about contingency
plans. Finally, the interviewees hardly believed that most Egyptian companies depend on initial
activities such as using a lot of documentation processes and a lot of employees to make one
process done without any sort of using technology or green practices.

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4.4. Suggestions to overcome Corona-virus barriers in the logistics sector in Egypt

The interviewees suggested that; to overcome COVID-19 challenges and barriers in Egypt, the
Egyptian governments have to put rules and regulations to raise awareness about hygiene measures
and precautions to control the virus with the least losses. Besides, Egyptian organizations have to
follow proactive approaches by setting plans for emergency crises. Moreover, they have to know
the country's capabilities and resources to depend more on their local products rather than exports;
despite that monitoring the competitive global markets, to be well known with the new
technologies and innovations.

This section highlighted the fact of COVID-19 negative impacts on all business enterprises and
the major problems existing in the management of unexpected situations which cause a dramatic
influence on the country’s economic situation and international trade. In which, such suggested
possible solutions could be regarded by firms to apply, eliminating their problems and guiding the
stakeholders to assess implementations; noticing the effect on the long run for business success.
Summarizing the research interpretations and propositions in the next section with
recommendations and findings for future researches.

5. Conclusion
According to the findings, there are some obstacles are facing the Egyptian logistics activities
and supply chain performance, the following roadmap provides some suggestions that could help
in overcoming these obstacles and achieve efficient and proactive performance:

Table 1: Roadmap identifying the main COVID-19 obstacles and suggestions.

Obstacles Suggested Solution

• Use virtual transactions rather than physical ones.

Lack of • Develop secure databases, supporting blockchain
digitalization• Upgrade in the Internet of Things
• Artificial intelligence
• Robotics in warehouses and inventories
• Sustainable Green practices

• Increase employee’s awareness for virus symptoms

• Merge employees schedule, to apply social distance and avoid the
crowd
Lack of safety• Replace signatures with confirmation emails
measures • More efforts to maintain hygiene in workplaces and transport modes
precautions • Increase spending on medical supplies for workers
• Improve cleaning and sanitizing environment

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• Develop managerial skills

Low • Maintain cash flow management
productivity • Adjust quality control management
and efficiency • Less relying on imported industrial materials

• Shift demand to the local market

Trade • Producing products good substitute
•
restrictions and Focus on supporting small producers
supply • Lowering consumer consumption
disruptions • Secure labors safety to maintain their workforce
• Restructuring firms’ operations
• Collaborations between private sectors and policymakers

Ineffective • Continuous mirroring on the planning succession

strategy for • Opening new markets and chances to investors
disasters in the• Accelerating acquisition of the internet of things
long run • Strengthen country digital infrastructure
• Engage workers to be motivated during hard times

The research reviewed the impacts of COVID-19 globally and especially in Egypt, showing its
effect on the logistics sector supporting the whole research content with a roadmap; that outline
the main obstacles faced, and suggested solutions, to be used as a guideline to business enterprises
as a way forward in their operations.
In conclusion, Egyptian stakeholders and investors are greatly in need to strengthen their business
efficiency to avoid sudden risks. Moreover, their supply chain reliance on foreign products, raw
materials, and spare parts; requesting further research to follow import substitution strategies and
cope with trade restrictions and help the Egyptian market to gain a competitive advantage, risk
management controls, and overcome uncertain challenges.

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