Four key challenges faced by logistics industry during COVID-19

Logisticians across the globe have been relentlessly working through the pandemic to keep the world’s goods moving. The global logistics industry has rapidly evolved and risen with great willingness in the last few months to overcome the challenges posed by the COVID-19 outbreak. 

The changes that have been triggered since the beginning of the pandemic are bound to pave a new way for the industry. There are plentiful hurdles to overcome, but then there are solutions too. And at the core of these solutions is a blend of people, technology and data analysis that can effectively guide their actions. 

Let’s look at four key logistics challenges that spurred the search for new solutions since the onset of the ongoing pandemic: 

Acute capacity crunch:

For the longest time, under normal circumstances, ocean freight has comprised 90% of global trade. However, the pandemic led to several restrictions on trade overnight and brought ocean freight across the world to a standstill. 

Ocean carriers responded to the plummeting demand by resorting to blank sailings. In the attempt to load vessels fully and fetch better margins, carriers started cancelling sailings. This withdrawal of capacity led to skyrocketing freight rates within no time.

True to the saying when it rains-it pours, air freight service too were compromised as passenger flights which carry a significant portion of cargo were grounded to contain the spread of covid. Many shippers who would otherwise ship by air turned to ocean freight and further worsened the capacity crunch. 

On the other hand, cross-border restrictions severely affected road transportation capacity and resulted in delays. However, much to the industry’s relief, the beginning of July witnessed a rebound in capacity and stabilised freight prices to some extent. 

Sourcing patterns 

The pandemic forced organisations to re-evaluate their sourcing locations. At the start of the pandemic, several businesses were severely affected as the heart of global manufacturing- China was the epicentre of the virus. 

Now that the road to recovery has begun, businesses are considering diversifying their sources and relocating their supply chains closer to home. However, relocating and diversifying sources will require a great deal of flexibility as cutting loose from existing systems can be quite challenging.   

Managing inventory 

The pandemic created endless inventory chaos. Since April, when lockdowns were being imposed and trade came to a halt overnight, there was a major inventory buildup in the months that followed. It was only post-June when capacity was restored that the excess inventory finally made its way to the markets. 

Going forward, to better manage inventory and fortify it against future shocks it will be worthwhile for manufacturers to invest in visibility tools that enable better inventory management. Companies can even consider moving their stocks closer to their key markets and planning shorter frequent cycles. 

Severe workforce shortage

With endless fluctuations in supply and demand and shrinking profits, several companies resorted to layoffs to reduce costs. This piled more and more pressure on the workers who were lucky enough to retain their jobs.

Besides, a shortage of crew members compromised the ability of ocean carriers to operate effectively. Rotation of the crew onboard emerged as a challenge and the lack of workers made it difficult to maintain carriers. This led to more and more vessels being parked in the dock rather than being in the waters and further contributed to the capacity shortage. 

Lessons for the future…

At the end of the day, coronavirus is just another challenge that the logistics industry will eventually overcome. However, what will set companies apart will be the pace at which they overcome these challenges.  

It has been more than evident all through the pandemic that companies that had adopted digital transformation were more prepared to face the unexpected. They could approach the disruptions with great agility and ease as there were tools in place that helped them gain end-to-end visibility. Their supply chains were more integrated and it facilitated easy collaboration and coordination with external as well as internal systems. 

If you would like to learn how GoComet’s digital automation solutions can help you streamline your logistics operations, build agility into your systems and help drive cost savings, get in touch with us here today. 

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