Top Challenges Faced by Logistics Industries | LOTUS Containers

From long down the history, the logistics industry has been known to be acknowledged with various challenges. But it has more or the less has helped them to discover new techniques that have made it more efficient than before. In the present era of global economics, logistics play a key enabler in facilitating global trade with lots of ease and convenience. The industry itself is complex and dynamic, thus exhibit various challenges that reduce its efficiency and cause hindrance in everyday activities. Logistics play a potent role in boosting a country's economy by facilitating domestic and international trade and, by extension, ensuring a successful business operation. With increasing competition, the numbers of freight forwarding companies have dramatically increased over the years. But companies still confronted various challenges in playing logistics operations.  However, some topmost factors like varying customer demands, complicated business models and increasing client expectations have become a challenge in streamlining shipping management.

Let’s go through some of the biggest challenges encountered by logistics

Cutting Transportation Cost: Growing and fluctuating fuel price is one of the principal factors that are responsible for increasing transportation costs. High fuel price escalates surcharge and adds up to the freight cost influencing wages and hence creates an environment of inflation. Together when accounted it becomes a growing concern and the first hour needs to take a major action to avoid or reduce this challenge because of a few corners here and there won’t show any results. Adopting a strategic approach and setting benchmarks call for a greater need that can prove significant in revamping network design and consequently reducing down transportation costs. To execute this, logistics managers need to be updated with 360-degree information on existing and future orders. This can be done with the installation of software devices like TMS (Transportation Management System) that can track freight, find the best viable routes, and thus anticipate future fluctuation in fuel price. Many small businesses to escape from the extra cost of software installation hire a third party that caters to the ocean, air, roadways, rails transportation that assists with quality services in a very optimum rate.

Improved Customer Services: With increasing globalization and technological advancement, customers have become more aware and more demanding. Nowadays, the tracking and location of freight are as interconnected as a social network. Customers ask for full transparency, punctuality and real-time information about their freight. Their expectations have been manifold and hence they don’t bother paying extra for single day delivery. Therefore, to meet such expectations freight forwarding companies need to adopt such technologies and advanced inter-modal transportation to avail of the best customer services. LOTUS Containers is one of the leading companies that work with improved customer services and provide the best intermodal transportation services and unique container solutions.

Manpower Management: Manpower is one of the primary and important resources in any business because it’s human who carries forward a task led by machines and technologies. ‘Manpower’ and ‘Management’ both are considered to be of pivotal importance in the business world. Management is full of responsibilities and when mixed with management works marvel. Turning to logistics, managing human resources becomes more stimulating as the drivers and staff are located in different areas where appropriate coordination becomes important between the two for the easy and swift process. This is where the role of a manager comes into action. By appointing logistics managers at different locations, responsibilities can be decentralized with appropriate work order management that simplifies and accelerate the logistics process.

The Higher Cost of Technologies: With growing technological advancement has become an increasing challenge for the logistics to stay on top of new advances and adopt improved business processes to survive in the industry. Some of the latest technologies that companies need to adopt are-

•  Communication Technologies such as GPS (Geographical Positioning System), GIS (Geographical Information System), E-Tracking, EDI (Electronic Data Interchange)
•  Automatic Identification Technologies such as Scanner, Bar-code, RFID (Radio Frequency Identification)

    Material Handling Technologies and Facility Design Technology. Though the initial cost of installation and maintenance is very high it accounts for great advantage because with time things are getting digitized, optimized, and more automated.

Varying Country’s Trading Policies: With increasing competition in the domestic market, many companies plan to expand their business across international boundaries as well. With this view, comes a bigger challenge because different countries have different rules, regulations, and trading policies that have to be adhered to. To maintain a good trade relation and practice fair trade, a firm needs to comply with trading country’s policies, documentation, verification, etc that may cost a good amount. Meanwhile, any changes in policies affect the firm and its entire business process.

Driver Shortage and Retention: From the last few years, logistics has seen an increasing shortage of truck drivers that directly hampers the delivery process. A steadily declining pool of available drivers for hire limits the freight forwarding companies' transportation to keep a pace with standing demands. Due to the unavailability of drivers, the freight rates are increased by the shippers which directly hamper the business to transport its consignment. Truck driver shortage also leads to unemployment in other processes as well that renders the economy too.

Master Data Management: Data becomes the key to any profound business to be growing ad successful and similar is the case in logistics too where a manager has to deal with lots of data collection and evaluation to planning a good strategy. Keeping a good record of every in and out data becomes of uttermost significance to run the process hassle-free. A data manager has to look upon various tasks like fleet numbers, cross-checking of routes, fleet loading & unloading, ensuring the safety of overall operations, and many more. Keeping a record of every single data becomes is one of the biggest challenges encountered by logistics. But with a global distribution network being more complex, the landscape of logistics has changed drastically over the last decades. Now shipping companies are equipped with well-designed software like TMS (Transportation Management System) that simplifies complex work and props the process.

Changing Government Regulations: The involvement of the government in logistics is of centuries old. It faces significant compliance regulations imposed by local, state and federal authorities. To carry either domestic or international, compliance with government rules and regulations becomes mandatory for a business. Any changes in policy or laws affect trade practices. The government to safeguard the economy makes some changes in trade policies from time to time like an increase or decrease of import or export duties impose heavy taxes for trade barriers, etc. Though the government imposes such policies for positive implications this severely affects the people indulged in trade.

Environmental Issues: It is off prior to most concern that the entire process of logistics should be carried out in an environment-friendly way that focuses on sustainable development. More than half of the total transportation is managed by roadways. Shifting freight transportation to more environmentally modes such as railways or ocean ways is a prerequisite of logistics. Using rail instead of a large hauling truck reduces the carbon emission by 83%. Hence, this becomes a challenge because switching rail or sea mode requires capital expenditure for new connections, new facilities, networks, etc.