Major challenges of the logistics industry before the Covid pandemic and ways to overcome it

29-03-2022 303

The essential nature of logistics has been emphasized by the Coronavirus crisis, from providing personal protective equipment to healthcare workers, to replenishing stocks in supermarkets.

Mục lục
The pandemic has disrupted supply chains around the world. It presents broad logistics challenges everywhere. The essential nature of logistics has been emphasized by the Coronavirus crisis, from providing personal protective equipment to healthcare workers, to replenishing stocks in supermarkets.

From the greatly reduced ability to ship goods by air and sea, and the rapid transition from in-store purchases to e-commerce. Before the COVID-19 pandemic, never before did many businesses and consumers have to adjust, improvise and innovate so quickly.
 

Here are four key logistics challenges driving the search for new solutions

Capacity

Before the Covid pandemic, ocean freight used to account for about 90% of global trade volume. But the pandemic initially cut the supply of manufactured goods out of Asia, then spread around the world and sent demand for ocean freight plummeting. Ocean carriers have responded by removing the possibility of shipping from the market: canceling sailings and eliminating the “wires” where ships call at certain ports before reaching their final destination.

Air traffic capacity has also declined, in large part due to a significant portion of passenger flights' air cargo volume, many of which have been canceled due to depleted passenger traffic. Meanwhile, driver shortages and cross-border restrictions have reduced land freight capacity in certain places and led to backups and lengthy delays.

Shipping capacity is starting to bottom and stabilize

- Sea freight to air freight, despite higher shipping costs and competition for space. Manufacturers of technology products - laptops and headsets - are seeing increased demand as millions of people around the world leave the office and start working from home for extended periods of time.
- Use air charters for urgent, high-value cargo that would otherwise travel on cargo planes or in the cabins of flights
- Charter sharing and cargo consolidation among forwarders or shippers who can often be competitors;
- Alternative modes such as rail, then long-distance cross-border transport

Demand fluctuates

COVID-19 has accelerated the shift of consumers to online purchases. Businesses that have weathered the storm include those with omnichannel inventory strategies that have transitioned to online buying, in-store pickup, and small restaurants that have converted to point of sale and self-conversion delivery.

The retail approach presents logistical obstacles. E-commerce requires fast fulfillment and delivery that is also inexpensive for the consumer. Among the solutions are alternative inventory storage: have more warehouses near the point of origin or destination, convert stores into warehouses that serve as distribution and fulfillment centers, or use a logistics strategy. Sea freight as "floating storage" through careful ordering and delivery time.

Geographical risk

The crisis also provides an opportunity to reassess positions in the supply chain. At the start of the pandemic, when China shut down production, some US fashion retailers said more than 70% of their stocks were sourced from the country. Disruption to its industries has left e-retailers facing 10-week delays. The same is true for brands made in other countries.

Will the crisis change global production and sourcing patterns? It will push manufacturing or sourcing companies in Asia to diversify by spreading production, or adopting acquisition strategies. For many, it will be difficult to cut off or loosen up. relations with China. The supply chains there are highly efficient, the workforce large and skilled, and the market large and growing.

Inventory management

Changes in consumer demand are appearing in the supply chain to an ever greater degree, creating lasting problems for production and supply. From delayed goods to unwanted goods, the pandemic has created inventory chaos.
 

Some innovative solutions to change Logistics:


- Improve visibility tools and use advanced data analytics to create better models;
- Move stocks closer to key markets;
- Find out if smaller inventory volumes are needed to respond more quickly to fast-paced trends;
- Demand and order planning in shorter, more frequent cycles.

One lesson of this crisis is that without people, technology has no value. Companies that respond quickly to pandemic-induced supply chain disruptions often do so because technology is not useful by itself, people make technology useful.