In the 21st century, a business can operate with stalwart logistics services. Supply chains have become part and parcel of the entrepreneurial scenario worldwide, and we can only expect their importance to inflate in the near future. For instance, the current valuation of the global logistics sector is USD 8.6 trillion. However, such magnanimous numbers do not mean that the industry is infallible. Multiple problems are plaguing the logistics, which have become graver after the COVID-19 pandemic. What are they, and how to solve them? Let us find out!
Three Problems Plaguing the Logistics Industry: An Overview
The logistics industry has seen better and brighter days. The problems plaguing the sector have become so ubiquitous and pertinent that we now have a new phrase, ‘supply chain crisis,’ to address them. Delays, shortages, and price hikes have defined the logistics domain worldwide from 2020 onward. Moreover, in the post-pandemic world, as the sector overcomes some challenges, it comes to face to face with a set of new hurdles.
- Increase in Fuel Costs
One of the biggest problems faced by the logistics industry in the online delivery business is the unprecedented hike in fuel prices worldwide. Rising fuel rates pose a challenge for freight management in a company, as the increase in cost compels the carrier to raise their charges or suffer financial losses.
When a carrier raises rates, a ripple effect is created wherein the ultimate burden is passed on to the consumer as higher prices of goods and greater transportation costs. In addition, the issue is further aggravated as higher fuel prices are not felt uniformly throughout the world, something that can disrupt the direction of trade flows and force logistics companies to restrategize their plans.
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The feasible solutions to the problem include the following –
- Logistics companies can invest in a route optimization tool to gauge the most fuel-efficient vehicles. Shorter routes and savvy drivers can significantly affect overall fuel costs.
- Freight carriers must avoid idling. When an idle vehicle burns fuel, the ultimate cost can come down to half a gallon of fuel per hour. Although the proportion may seem small to the untrained eye, it can add up quickly and push the logistics business to the brink of unprofitability.
- The third solution by which logistics companies can tackle the price hike in fuels is by using fuel-efficient vehicles and investing time and energy in fleet maintenance. Hybrid and electric vehicles can dramatically reduce a freight carrier’s dependence on fuel. Simultaneously, the timely upkeep of the fleet can lead to an average mileage increase of 4 percent.
2. Lack of Transparency
As online delivery business logistics get increasingly complex, transparency has become a big problem. In simple terms, transparency refers to how deeply companies can see into and account for the corresponding links in their supply chain and how freely they share this information both in-house and externally. One of the main reasons transparency has become a significant issue is consumer demand.
More and more people are demanding clarity on the logistics partner’s end. For instance, online shoppers demand to know that the packaging of their purchased products is environmentally conscious. Likewise, customers want to know where their package has reached in real-time. Therefore, transparency becomes crucial for logistics companies to reduce the risk of incurring reputational damage. Furthermore, a lack of supply chain lucidity can also pose operational problems. For instance, shipments without origin documents can be held up or turned away at airports or seaports. The culmination is a disruption of the entire supply chain.
The way to solve the transparency issue in logistics is by making concerted attempts to provide visibility to the consumer. It is imperative to earn their trust. Whether it is an on-demand delivery or a traditional delivery, the logistics partner must disseminate all the data regarding the package, from its dispatch day to the estimated time of arrival, who is the delivery agent, etc. Carriers can also use real-time tracking to inform their customers of everything pertaining to the package and its delivery.
3. Absence of Planning and Forecasting
Last but not least, logistics companies are lagging in organizational planning and forecasting. As most freight management companies are not leveraging modern technology for online deliveries, they cannot predict demand or envisage potential problems. Such technological backwardness can cause disruptions in the entire supply chain, culminating in increased costs.
The two ways to deal with the problem include –
- Logistics providers must make concerted attempts to use and implement effective planning and forecasting tools. They must ensure that everyone in the company is using them. In addition, the data extracted from such tools must be vehemently leveraged to improve performance and prepare for the worst.
- Similarly, preemptive planning and preparing the entire team for potential future challenges are the keys to staying afloat as a logistics company and offering exceptional online deliveries to consumers. Such a move ensures that the company is operating from a well-informed position and has the upper hand against the competition.
Wrapping It Up
So, there we have it, the top three problems the logistics sector faces during online deliveries with an overview of solutions. However, the spree of challenges does not end, and other issues like inefficient employee management, rising fleet maintenance costs, improper inventory management, etc., haunt the industry. However, with the right mindset and strategic planning, logistics companies can take any challenge head-on.