Logistics is broadly defined as coordinating and moving resources from one location to storage and transportation to their final destination.
Transport and Logistics companies aim to ensure goods reach their final destination as fast and effectively as possible, but they can face some challenges. Challenges can be driven by consumer expectations, environmental changes and even regulations. This article will focus on the 5 top challenges faced in logistics, and with each challenge, we will offer a corresponding solution.
Shortage of Skilled Workers /Drivers
Dealing with drivers and transporters is critical in the transport and logistics industry. Generally, having a shortage of skilled labour is one of the most significant challenges many companies face. The lack of skilled workers means transporting goods takes longer to reach their final destination. Quite a several logistics sectors encounter an increasing lack of competent workers and specialised experts, especially with the advancement in modern technology. There is an excellent need for technically trained manpower to ensure that the transportation of packages between destinations is reliable and timely.
Solution: Planning for Shortages in Labour / Training and Development
One of the effective ways to attract new workers is to offer amenities that address the drivers’ interests, requirements, and aspirations. Shippers can begin developing a more positive relationship by demonstrating the importance and necessity of drivers for the company’s growth.
When your freight procurement programme is fully automated and optimised, it gives your staff more time to work on tasks that have greater significance. That entails preparing the following generation of procurement specialists beginning in 2022. The end result is a more efficient workforce that possesses the knowledge required to future-proof the procurement process.
Cost of Fuel
The main concern for logistics businesses worldwide is the rise in fuel prices, as they account for most of the increase in transportation costs. In South Africa, the ever-rising price of petrol has affected hundreds of South African businesses, including the transport industry. An increase in fuel prices increases the total shipping cost or freight charges, resulting in expenses and, ultimately, losses for the business. This worries many companies because they have to remain sustainable whilst making a profit at the end of the day. With the current global events such as the Ukraine-Russian War, Transportation costs will continue to rise and become an increasing issue for the logistics industry to keep up with the new advances in company processes.
Solution: Cutting Transportation Costs
Transportation costs are the biggest problem and sometimes come to 50% of the product’s value while the demand for shipping companies is rising. Companies can reduce transportation costs by redistributing their business to fewer carriers and negotiating lower rates. Fleet management routing software can help carriers use the shortest, most efficient routes, reducing the mileage driven, wear and tear and maintenance costs.
Handling Customer Expectations
Not only have markets become competitive, but supply chains also have grown complex, and customer expectations have shifted. The recent pandemic had consumer habits moving to online shopping. Also, because of the pandemic, companies have opted to have employees work from home, so the need to shop online also increases. Customers would expect their logistics partners to assist them in the shipment and delivery process; they demand tracking information and real-time updates on their order status. When people buy online, they want full transparency into where their delivery is as customer expectations have increased.
Solution: Emergent technologies and reliable third-party logistics (3PL)
Working with a 3PL expands your horizons regarding the complex world of logistics management. These service providers have a great understanding of shipping and are well-equipped to adapt to significant logistics challenges. 3PLs shorten the contact points in your supply chain. They can inform customers of every step that their purchases go through. Expectations also get better managed with transparent item availability. Some 3PLs offer customer service support, making direct customer communication much more accessible.
To meet all customer demands, you must improve visibility across your entire supply chain. Your business should be able to track each of your shipments and maintain communication with the drivers.
Enhancing Business Procedures
Keeping up with new advances in business procedures is another challenge for the logistics company. As new opportunities arise, adapting and adopting these changes is best to improve service and operational efficiency. According to a study, 36% of firms surveyed strongly agreed that they relied on their logistics partners to deliver cost savings and process improvements. This requires logistics partners to have the knowledge and experience to look beyond the supply chain and operations to effect change throughout the framework of the entire procedure. Moreover, they should be financially stable, adaptable, and willing to take appropriate risks for long-term gain.
Solution: Start with Digitalisation
Digital solutions for end-to-end transportation management can transform disjointed networks into connected ecosystems. When your transportation network functions as an ecosystem, you get the transparency you need – and faster access to the data that drives improvements across all nodes of your network. Companies should also note the role of reshoring and restructuring complex networks as part of their strategy. But this is a more straightforward process with the latest tools for network transparency.
Safety on the Roads
Road safety has been a concern over the past few years and has become a considerable challenge for the road freight industry and the environment they operate in. In South Africa, bad road conditions contribute to wear and tear on tyres. Maintenance increases truck fuel consumption as drivers slow down to manoeuvre bad roads for extended periods. Rough and unkept roads can also lead to hijacking and accidents.
Solution: Investing in Insurance policies
Due to the increases in the previously mentioned areas, freight companies have to invest more in insurance policies to ensure their employees are safe and maintain their business.
Despite all the challenges mentioned above, logistics companies can still meet the ever-changing customer expectations, grow and make profits if they can be committed to keeping in touch with new technology, being flexible and constantly evolving.