The impact of the pandemic on globalisation and the transport, logistics and supply chain sector

Poland was ranked 41st in the latest edition.

DHL and the NYU Stern School of Business have published the 7th edition of the DHL Global Connectedness Index 2020 (GCI). The report is a compilation of information on international flows of trade, capital, information and people. It is also the first comprehensive assessment of globalisation during the COVID-19 pandemic. Poland ranked 41st in the latest edition. The Netherlands, Singapore, Belgium, the United Arab Emirates and Ireland are currently the most ‘connected’ countries in the world.

Fast and secure medical logistics depend on global connections

Whilst the globalisation index remained stable in 2019, forecasts for 2020 indicate that the number of global connections will fall significantly. The factors having the greatest impact on this situation include: border closures, travel bans and the grounding of passenger airlines. However, the level of connectivity is unlikely to fall below that seen in 2008–2009. This is because trade and capital flows are already returning to their early 2020 levels. There was also a significant increase in data traffic during the pandemic, as people switched from face-to-face contact to online interactions.

“The ongoing crisis has highlighted the importance of international connections, as they help sustain the global economy, provide people with a livelihood and support businesses in their trade. Integrated supply chains and logistics networks play a vital role in maintaining connectivity and the level of globalisation. One example is the transport of COVID-19 vaccines, which require special conditions. “To ensure their distribution, fast and secure medical logistics are essential, and their effectiveness stems from global connectivity networks,” argues John Pearson, CEO of DHL Express.

“The DHL Global Connectedness Index 2020 report shows that globalisation did not collapse in 2020, but merely changed – at least temporarily – the ways in which countries are connected. In the overall ranking, Poland came 41st, which indicates that we still have room for improvement. It is widely known that countries with a well-developed network of international connections grow more dynamically and will emerge from the pandemic more quickly,” comments Tomasz Buraś, CEO of DHL Express Poland. “It is worth noting that, in many respects, the world is less globalised than we think. For example, foreign direct investment flows account for 7 per cent of global production expenditure. Similarly, around 7 per cent of total telephone call time – including calls made via the internet – is international in nature, and only 3.5 per cent of people live outside their home country,” he adds.

COVID-19 is putting globalisation to the test

The pandemic has affected many areas of globalisation. As predicted, lockdowns and travel bans have led to far fewer people travelling. The DHL Global Connectedness Index shows that population mobility continues to decline. According to United Nations estimates, the number of people travelling to foreign countries had fallen by 70% by the end of 2020, returning to 1990 levels! What is more, the situation regarding international tourism is unlikely to improve until 2023.

Capital flows are also significantly lower than before the pandemic, although swift and decisive responses from governments and central banks are stabilising the situation. According to UN forecasts, the decline in this area will amount to around 30–40 per cent. This applies to foreign direct investment linked to new investments, company takeovers or the expansion of business operations abroad. However, we also saw similar declines in 2001 (-43 per cent) and between 2007 and 2009 (-35 per cent).

The situation is different when it comes to trade, capital and information flows. These remain at very good levels. As early as August, international trade had practically returned to pre-pandemic levels, recording a decline of just 3–4 per cent. There were, however, exceptions: exports of personal protective equipment rose by 92 per cent in 2020. In this context, it is worth noting that international trade has become the cornerstone of the global economy.

The situation is best in the case of digital data flows. The pandemic has shifted many areas of activity – such as work, leisure and education – online. This has led to double-digit growth in global internet traffic. From mid-2019 to mid-2020, it rose by 48 per cent, whilst international telephone calls saw a 20 per cent increase.

Europe is the world’s most globalised region

The Netherlands tops the ranking of the most ‘connected’ countries. The top five is rounded off by Singapore, Belgium, the United Arab Emirates and Ireland. It is also worth noting that Singapore leads the ranking for international flows relative to domestic activity. Meanwhile, the most globalised region in the world is Europe – the leader in terms of trade and the movement of people. Eight of the world’s ten most globalised countries are located on the Old Continent. North America is also worth mentioning, as it is the leading region in terms of the transfer of information and capital.

Furthermore, the list of economies whose size significantly exceeds other international flows includes Cambodia, Singapore, Vietnam and Malaysia. At the same time, regional supply chains are a key factor in the development of South-East Asian countries. Since 2001, the DHL GCI has been monitoring the level of globalisation in 169 countries and territories worldwide. Over 3.5 million data points are used for this purpose. This makes it possible to measure each country’s global connectivity. This is measured based on the volume of international trade relative to the size of the national economy (depth) and the extent to which international trade is globally dispersed or concentrated.