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The logistics and transport industry are the backbone of every country’s economy. It is the driving force behind all sectors, whether the services, manufacturing, or agriculture sector. However, like every industry out there, the logistics industry underwent tremendous changes. These transformations emerged from stringent regulations, changing consumer expectations, tech innovation, and most importantly, the COVID-19 pandemic.
Furthermore, fluctuating transportation costs have always been one of the biggest challenges for global logistics. However, there are tons of challenges that businesses of all sizes should consider while forming their strategies for 2022. The list mentioned below shows the top logistics challenges that companies should be wary of this year.
Let’s have a look.
Contractual Issues
In today’s highly competitive corporate world, contracts hold significance while companies conduct business-to-business activities. However, there are many issues with the intricacies and complexities of the agreements between organizations and third-party logistics providers (3PL). These issues stem from delivery time mismanagement, customer complaints, product holding time, warehouse costs, and whatnot. Third-party logistics providers suffer colossal business losses due to various economic issues that bar them from fulfilling client expectations. For instance, recently, 3PL companies were unable to ship storage containers containing clients’ products at the right time on seaports due to Covid-19 issues. It severely impacted the business of those clients whose customers were awaiting delivery.
Similarly, once the shipment arrives, 3PL providers are faced with warehousing issues with overstock and holding time worries. However, a rational approach would be to purchase land or buildings in areas where the 3PL company ships quite often over the entire fiscal year. Let’s say your 3PL-providing company regularly ships to Coffs Harbour. In that case, it’s best to approach conveyancing Coffs Harbour as they will assist in getting land or buildings for you quite conveniently.
With such proactive strategies, your company will be able to ship products in time and store them safely if any crisis occurs in the region.
Minimizing transportation costs
One of the biggest and most common logistics challenges companies face today is reducing transportation costs. Moreover, transportation contributes to around thirty percent of any logistics company’s total expenses, rising to approximately fifty percent with increasing fuel costs. To reduce these transportation costs, you can take a few steps, including; reducing fuel expenses, consolidating your shipments, and reducing your carriers.
Firstly, you should consider re-distributing business between multiple carriers and ensure that you negotiate the best rates possible. Secondly, you can also consolidate your shipments to receive bulk rates. Lastly, you can utilize fleeting management routing software to ensure that your freight carriers take the shortest, most efficient routes possible. Doing so will allow your fleet to avoid traffic congestion while also lowering fuel costs.
Driver shortages
When you look at the logistics and transport industry, truck drivers have a demanding and challenging job. Why? Because their sole responsibility is to ensure a customer’s product reaches on time. However, logistics companies tend to have a more involved and selective hiring process due to varying government regulations. As a result, they put a driver’s record under tremendous scrutiny to identify any instances of traffic violations or other discrepancies. Since most of these drivers have a traffic violation history, hiring them becomes problematic. Especially for companies operating in the developing sector, this serves as a significant issue. Therefore, they have to ensure to adhere to state regulations while getting the best labor.
Varying environmental and government regulations
Logistics companies face tons of local, federal, and state compliance regulations. In addition to these regulations, they have to tackle different environmental laws, including emission and anti-idling rules imposed by local governments. It creates a huge concern and results in compliance costs exceeding benefits.
Therefore, staying up-to-date with the latest environmental and government regulations is a no-brainer. Moreover, preventive measures will allow these logistics companies to ward off any regulation challenges to ensure successful logistics management.
Technological advancements
Adopting new and innovative technology is now a must for every logistics company out there. After all, competition is tense, labor is scarce, and customers have become more demanding. That said, incorporating innovative technological advancements in your company will boost productivity by reducing errors and costs.
Companies can advance their systems and operations by installing supply chain software to track and report every problem. They can utilize RFID and tracker technology to remain in contact with each vessel. There are supply chain technological solutions available for both inbound and outbound logistics. However, the challenge logistics companies face with these advancements is training the staff to utilize them properly. Since most workers are warehouse managers or drivers, they are not tech-savvy to learn the ropes quickly. Hence, companies have to initially train them and install the system/software after getting training feedback.
Conclusion
Given the logistics challenges that the supply chain industry faces these days, logistics companies must meet rising customer demands to sustain profits. However, as fast-paced as this industry is, it is riddled with various minor and significant challenges and obstacles. These arise from contracts between companies, meeting client requirements, ensuring worker rights, and complying with state policies. However, a viable option is devising strategies considering each factor and drafting contingency plans side by side.
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