Leading logistic companies’ market cap rockets by 83% to over $2tn amid pandemic

Leading logistic companies' market cap rockets by 83% to over $2tn amid pandemic

Most businesses under various sectors took a plunge in market capitalization in the wake of the coronavirus pandemic which crippled most economies. However, an overview of selected logistics companies’ stock performance shows that the industry has to some extent thrived from the pandemic.

Data presented by Buy Shares indicates that the cumulative market capitalization of ten leading publicly-traded logistic companies grew by 83.27% on a Year-to-Date basis. According to the data, the companies had a market capitalization of $2.25 trillion as of August 24, 2020. The companies opened the year with a cumulative market capitalization of $1.23 trillion representing a growth of $1.02 trillion. Most of the sampled companies are based in the United States and Asia.

An overview of the data shows that Japan-based SG Holding had the highest market capitalization hitting $1.56 trillion as of August 24th. The figure represents a growth of 100.05% from $781.3 billion on January 1st. On the other hand, XPO Logistics has the least market capitalization at $7.85 billion, representing a growth of 7.09% from the start of the year.

Home deliveries boost logistic companies

From the data, it is clear logistics companies gained from the coronavirus pandemic that crippled the global economy. At the initial stages of the health outbreak, businesses were forced to close temporarily due to the shortage of input materials from suppliers and the need to protect workers.

Logistics companies were directly affected by the pandemic since there was a challenge of protecting both workers and customers. As an integral part of the value chain, logistic firms facilitate trade and commerce and help businesses get their products to customers meaning this role was under threat due to the pandemic. The pandemic threatened logistical and transportation slowdown with many experts spelling doom for the sector.

With most people staying at home, they turned on logistic companies for the delivery of essential supplies. When the pandemic broke out, stocks for logistic companies plunged. However, they later rebounded thanks to their role in home deliveries that were boosted with a surge in e-commerce. For example in China, when the government imposed lockdowns, only logistics and delivery companies were allowed to carry out the delivery. The strategic role the delivery companies played during the pandemic contributed immensely to the surge in market capitalization of the selected companies.

Notably, the companies had to first put in place the health protocols to safeguard the safety of employees and customers. Most logistics firms had to segregate shift schedules and warehousing locations for safe-distancing as well as paid sick leave and financial relief for impacted workers.

The future of logistic companies

Moving into the future means that logistics services and delivery models need to continually change to meet new health and safety provisions. Additionally, it is important to look beyond and plan for the new normal which will emerge post-coronavirus. The market cap for most of the companies could have remained low in the absence of strategic response to the pandemic.

In general, companies must expect that temporary supplier shifts will become permanent and make decisive changes. Leading logistics players will have to align their efforts to expand on the current momentum and develop a cohesive response to calamities like Covid-19.