The logistics and transport sectors are the backbones of every country. Whether it is services, manufacturing, or the agriculture industry, logistics is the driving force behind all sectors. But unfortunately, this industry is going through tremendous changes. Some countries have stringent regulations because of the global pandemic. Likewise, keeping up with changing consumer expectations and tech innovation is challenging for the transport sector.
Not only that, but the rapid fluctuations in the transport costs have also been another substantial challenge for this sector. The rising fuel costs across the globe have increased overall transport charges, making it difficult for organizations to adjust expenses. Despite facing overwhelming challenges, the logistics industry has the potential to thrive. As companies extend business beyond borders, the demand is likely to skyrocket in this sector.
All you have to do is prepare yourself for the upcoming market dynamics. However, you must consider all the challenges while forming strategies for 2022 and initiate ways to overcome them. If you want to learn more about this, have a look below.
Here we highlight six logistics challenges that businesses face today and ways to limit them.
1. High Transport Costs
High transportation costs are the biggest challenge that businesses face today. Logistics contributes to around 30% of any company’s total transport expense. Therefore, entrepreneurs continuously look for distributors that offer the lowest possible prices. As a logistics company, you can take a few steps to reduce the costs and give a reasonable quote to clients.
For starters, consolidate your shipments to receive bulk rates. If every shipment leaves the port after two weeks, make it three weeks to increase the quantity. Similarly, offer multiple options to clients. You can ask if they want to send goods through an air freight forwarder, sea cargo, or land transport. Accordingly, you can give price quotations and expected deadlines.
Lastly, consider re-distributing business between multiple carriers at the best possible rates. For instance, if another company’s shipment is leaving in the next two days and your client wants urgent delivery, send it through them. In addition to ensuring low costs, it will lead to higher customer satisfaction.
2. Technological Advancements
Today, the competition is intense, and labor is scarce. At the same time, customers have become more demanding. The only strategic way to stay in the game is by leveraging technology. As the world becomes more tech-oriented, every logistics company should adopt innovative technology. You can begin by advancing your systems and operations. Maybe, install supply chain software to track and report every problem.
Moreover, you can utilize RFID and tracker technology to contact every vehicle and keep track of the shipments. After all, tech solutions are available for both inbound and outbound logistics.
However, dealing with tech will be another challenge for logistics companies. Since most workers are managers and drivers, they aren’t that tech-savvy. Thus, you must train the staff and install software solutions after getting feedback.
3. Shortage of Drivers
Don’t you think truck drivers have a tiring and demanding job? Alongside managing the route, they must ensure the customer’s product reaches on time. And due to this, not many drivers are willing to take the job. Besides, logistics companies have a more selective hiring process because of government regulations. They put the driver’s record under scrutiny to identify instances of traffic violations and accidents.
Unfortunately, most drivers have a traffic violation history, making the hiring process problematic. After all, drivers’ records can have a negative impact on the company’s compliance safety and accountability score. The only viable approach to overcome this problem is by integrating technology. Logistics companies can invest in autonomous vehicles to make the shipment process more efficient. Otherwise, they must design an extensive recruitment process to bring reliable drivers on board.
4. Warehouse Management Errors
Every manager tries to run the operations smoothly, but things are never up to par in warehouses. There are instances where the product gets misplaced. Similarly, packing mistakes and damages to the items during storage are also common. Even though one can’t eliminate human errors, enhanced regulation and supervision can make a difference. That doesn’t mean you have to recruit additional staff; instead, use updated warehouse management systems.
You can develop mobile applications for automated picking and packing systems. Likewise, create a system of checks throughout the process to minimize errors and streamline the process. You also have to ensure the warehouse staff is well-trained and knows how to work with the system. Further, you can clearly state product handling protocols to reduce the likelihood of injuries.
5. Contractual Problems
In today’s corporate world, contracts hold a lot of importance in business activities. However, there are many complexities in contracts and agreements between the two parties. Mostly, the problems stem from delivery delays and mismanagement. The customers complain to the retailers, who pressurize the logistic companies. In some situations, they accuse companies of violating the contract. As a result, transport businesses suffer losses due to economic issues that restrict them from fulfilling client expectations.
Recently, the third-party logistic providers could not ship storage containers timely due to Covid-restrictions. And this greatly impacted the business. The only way to handle this problem is by amending contracts. You always have to mention that the company won’t be responsible for delays or damages arising from external factors.
6. Environment & Government Regulations
Unsurprisingly, the government exercises a lot of power over global shipments. According to the Wall Street Journal, only a dozen companies have released and hold authority out of all the agencies involved in trade shipments. Even after the shipments clear the ports, the consumer product, and safety commission refuse approval, making the process super challenging.
Moreover, the zoning permit laws and taxes on international shipments also impact logistics companies. At times, the overall cost increases, whereas often, the shipment gets delayed. The ideal way to overcome these issues is by having a customs officer on board. They are well-acquainted with international laws and paperwork, ensuring the shipment passes through without any trouble.
Given the supply chain’s challenges today, logistics companies must keep up with current market dynamics. That means they must address the underlying challenges the industry faces. From shipment delays to contractual obligations, you have to develop strategies that address the challenges. In addition, take initiatives to meet client requirements and ensure workers’ rights. In short, draft contingency plans and strategies side-by-side to sustain profits.