The COVID-19 pandemic has led to the Australian government in enforcing community widespread lockdown measures. Due to a range of travel restrictions, fewer people have been using the road infrastructure to commute, thus translating to a substantial decline in passenger vehicles.

The latest data from Transurban reveals a fall in traffic volumes across the March quarter in Sydney (-5.2%), Melbourne (-6.7%) and Brisbane (-2.2%). This decline accelerated within the final month of the quarter, coming down by over 40% in some cities, as social distancing and lockdown restrictions tightened. However, this did not occur within the large vehicle segment, comprising trucks and other similar heavy vehicles. These broadly remained stable until the second half of March and did not decline by more than 15% per week. In fact, the large vehicle cohort accounted for a significantly higher proportion of daily traffic, compared to the same quarter in the previous year. It was 2.5 times greater in the first week of April 2020 than in 1Q19.

Figure 1: % Change in Average Daily Trips – Overall and Large Vehicles

A greater share in movement amongst large vehicles across Australia’s major cities reflects the importance of the transport and distribution sector, particularly during COVID-19 pandemic. Australia’s domestic logistics network has remained operational at relatively normal capacity despite the fall in overall business activity.

The transport, warehousing and logistics sectors have been supported by strong retail turnover in essential goods – particularly within supermarkets. The Australian Bureau of Statistics (ABS) preliminary data released on 22nd April showed seasonally adjusted retail turnover in supermarkets and grocery stores had increased by 22.4% from February to March. Turnover doubled for consumer staple products, including flour, rice, toilet paper, canned food, as well as medicinal products, and cleaning supplies increased by over 50%.

The continued activity within the transport and non-discretionary retail sectors during a time of economic uncertainty demonstrates the relative resilience of occupiers in this sector. Also, as its extension, it also displays the resilience of industrial real estate. The transport, postal warehousing and retail trade sectors have accounted for 62% of industrial gross take-up in Australia over the last year. It is expected that these sectors will continue to dominate demand for industrial space over the next 12 months.

Figure 2: Take-up by Industry – Australia (2Q19-1Q20)

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