Supply chain resilience is more critical than ever.
With the constant changes in technology and consumer expectations, challenges like cutting transportation costs, the rise in fuel, and driver shortages during the pandemic have certainly hurtled us into a new era of logistics.
The pandemic as we all know has accelerated the pace of change in many industries. It has now forced many businesses to cut transportation costs. By doing so, the business has now had to either depend on fewer carriers or ask for reduced rates.
Right now merging multiple shipments can negatively impact a business due to the complexity of meeting customer service standards when grouping cargo, either deliveries are late or they never show up.
An example of this is, for example, when a customer orders a same-day delivery on Amazon, it increases the pressure on other businesses to do the same, (even when they cant do it). This again comes at the cost of customer satisfaction.
Since Covid started, businesses have been implementing new ideas while learning from past mistakes. But despite the new challenges faced, it’s important to use them as a learning opportunity, so we can remain adaptable and create agile logistics systems moving forward.
So, let’s dive deep into the top 3 challenges in transportation and logistics.
1- The Difficulty to Cut Transport Costs
I’m not going to sugar coat it: Shipping and transportation are by far the most expensive cost in logistics. Around three million people work in the logistics sector, making it the largest German economic sector after the automotive industry and trade, and because it’s the largest overhead for most businesses (even remote ones), it seems this issue isn’t going anywhere anytime soon.
2- Rising Fuel Prices & Impact on the Economy
When the price of fuel increases, the overall mood of consumers dampens, when the prices skyrocket, of course, it dramatically impacts the logistics industry. Because of this, serious delays along the supply chain are inevitable as decisions on which trucks to fill need to be made. Indeed the impact of rising fuel costs presents a challenge to everyone in the supply chain as each party has to factor in this cost.
3- Driver Shortages Related to the Pandemic
The shortage of heavy goods vehicle drivers is widespread across Europe, reaching 80,000 in Germany and 400,000 across the whole EU, according to industry associations. This shortage has had a domino effect: When the economy is growing, there’s no way to get all the goods where they need to be, so the cost of the products increase, which then gives the opposite effect of a booming economy.
From cutting transportation costs to rising fuel costs, and pandemic-related driver shortages there’s no doubt the logistics industry has its hands full. Transport and logistics will continue to be under a lot of pressure in 2022. But people can address these challenges by integrating the right software solutions into their business processes.
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