Anyone will tell you that the logistics industry is booming, and it is also constantly evolving as businesses strive to find new and more efficient ways to get products to consumers. The logistics industry helps companies transport goods and services from manufacturing to consumption and plays a vital role in the supply chain by ensuring that the right goods and materials are delivered to the right place, at the right time and in the right quantities. An efficient logistics system is essential for companies to compete in today’s increasingly global marketplace.
The logistics industry will face several challenges in coming years, and in this article, we aim to highlight the main challenges we foresee for the sector.
High demand for crude oil and low supply has been pushing gas prices up this year. This is the biggest challenge for the logistics industry, because transportation is a significant aspect of logistics activity, and makes up around a third of total expenses, and this may increase. These rising prices will lead to higher freight costs in 2023, especially for transporting time-sensitive or refrigerated goods. Although carriers are expected to absorb as much of these costs as possible, consumers may see an increase in delivery charges in 2023.
Sourcing quality raw materials in sufficient quantities is becoming increasingly difficult for many companies due to current geopolitical and ecological crises. Global political unrest, the aftermath of the pandemic, climate change, higher energy costs and efforts to reduce carbon emissions can all influence the availability of raw materials.
Higher customer expectations
New customer expectations, such as same-day delivery, is putting additional pressure on the logistics industry. Retailers and shippers will try to meet demand by creating satellite warehouses and smaller distribution centres close to populated metropolitan areas. Consumers are also increasingly demanding assurances from retailers and transporters that they are taking their environmental impact into account, and the industry will need to be more agile in adopting important sustainability targets.
Reducing emissions is one of the biggest challenges for cities this century. On the one hand, there is pressure to stop using transport systems that endanger the health of citizens. On the other hand, reducing emissions is an essential part of the decarbonisation process which is vital for tackling the climate crisis.
Logistics play an important part in reducing emissions in cities, and in the next decade we are going to see more and more electric vehicles in the supply chain. The latest truck models come with improved engines, improved emission compliance and better mileage performance. However, adopting routes and optimising loads, tracking and reporting emissions, and choosing alternative fuels, are also ways in which the logistics industry can make its services more sustainable.
Technology and innovation
Adopting new and innovative technological solutions has become crucial for logistics companies. Technology can increase productivity while minimising time, costs and errors, such as automation systems and data-driven software solutions, data analytics for improving customer experience, operational efficiency and safety, and robotics and autonomous machinery, which help cut down on the time required to complete and deliver orders. New innovations and technologies will help businesses overcome challenges and improve efficiency.
Cybersecurity risks, driver shortages, natural disasters and offering customers and clients visibility of the entire supply chain are additional challenges that the logistics industry will face in the next few years. Logistics companies will have to focus on finding solutions to all these challenges to offer customers the best possible service while reducing their impact on the environment.