Warmer weather is increasing airplay of summer tunes. But we might not warm up to that old Beach Boys tune, I Get Around. This far from the onset of the pandemic, and we’re definitely not getting around. Just ask anyone in the people-moving business. A question on many minds is, when this thing is over, are we going to be getting around like we used to?
Great question. A common view is that COVID-19 has changed things so much that we’re never going back to the way things were. Sitting elbow-to-elbow with a stranger on a plane, train, bus, or taxi ride seems like another existence at this point. The psychological shift it would take to get back there seems at times insurmountable.
The amount of change is etched in the numbers. For air travel, revenue passenger kilometres fell dangerously close to 100% worldwide at the pandemic’s onset, and they remain stuck in deep mud at 70% off pre-COVID-19 levels. No region of the world is spared. Thankfully, cargo is filling part of the revenue void, as spare capacity seems to have shifted to the movement of goods. Still, the collapse of both business travel and the tourism industry has seriously compromised financials for air carriers.
Auto sales are booming, which is a real head-turner in these uncertain times. But where are these sleek new vehicles going? Well, they must be staying within country borders. Pre-COVID-19, Canada would see around 800,000 American vehicles entering per month. That instantly plunged to less than 200,000 and has barely budged from that level since. Most of the remaining visits are for less than a day, so they likely generate little spending.
Stateside, where annual miles driven rarely drop except for an oil shock or a major recession, COVID-19 saw an unprecedented tumble that’s still underway a year later. Miles driven are down 15% and falling, as of January 2021. That includes intra-U.S. movement, commuting, cross-border travel and ordinary daily driving. That’s likely a first since mass auto production began.
Other aspects of transportation aren’t as hard-hit. Movement of goods has been a priority, and our well-being has depended on keeping local and global supply chains moving. On that score, recovery has been impressive. The global container throughput index is not only back at pre-pandemic levels—it’s back to trend growth. In fact, the recovery has been so robust that there are localized shortages of containers that threaten the nascent expansion.
The same can generally be said for rail traffic, at least in North America. Carloadings have recovered from a nasty but short-lived plunge right across the continent. If they’re hobbled going forward, it won’t be due to demand or capacity; if there’s any constraint on growth, it’ll be due to supply shortages, which are affecting numerous industries and now affecting prices paid by industry for raw and intermediate goods.
Trucking is likely no different, judging by demand for medium and heavy-duty trucks. Take a ride on a major highway and it’s plain to the naked eye that things are somewhere between normal and booming.
Clearly there’s a huge contrast between people- and goods-movement—not just locally, but globally. Will we ever get back to pre-pandemic people-movements? Tourism operators hope so, but let’s first focus on business. In very informal surveys of key clients last fall and during the early spring, the first issue of concern was getting through the pandemic—no surprise there. But issue No. 2 was unexpected. Business and the banking community agreed that person-to-person interactions were an absolute necessity, and they wondered when we’d foresee a return to normal.
Curiosity led to a followup question—why the crying need for in-person interaction when you can easily use one of many digital meeting platforms? Turns out nobody wants to do a big merger, acquisition, or new greenfield investment without being able to look the other party in the eye. The same goes for a major investment in equipment: no one is going to take the chance of installing incorrectly that multimillion-dollar gem without the specialist flying in to guide things. The same goes for sensitive software refits, and other cross-border business services. These, of course, are still permitted, under certain key guidelines. But the willingness of experts to travel, test, quarantine and so on is the issue. They simply don’t want the risk and inconvenience—and who can blame them?
The bottom line?
We don’t get around much these days. But we want to and need to. Business needs to travel across borders to function properly and appears to be eager to do so. When they start travelling safely, the tourists will likely follow. We will get around again.
This commentary is presented for informational purposes only. It’s not intended to be a comprehensive or detailed statement on any subject and no representations or warranties, express or implied, are made as to its accuracy, timeliness or completeness. Nothing in this commentary is intended to provide financial, legal, accounting or tax advice nor should it be relied upon. EDC nor the author is liable whatsoever for any loss or damage caused by, or resulting from, any use of or any inaccuracies, errors or omissions in the information provided.