Challenges Facing the Logistics Industry in 2021


Logistics and transportation is an important part of most businesses. It is the driving force behind almost every sector. However, like other industries, it is facing negative changes due to the pandemic. The US logistics industry is estimated to see a twelve percent decline due to COVID-19.

Businesses need to reinvent themselves to fight the challenges presented by these uncertain times. To shed light on this unprecedented time brought about by the coronavirus and other industry changes, here’s a look at five major challenges that logistics businesses will face and how they can mitigate them.

Supply Chain Disruptions

It is no secret that the pandemic has severely impacted major and minor supply chains. It has led to the alteration and even suspension of many supply chains. But, businesses should not consider this as a temporary situation. As a blessing in disguise, the pandemic has helped identify how fragile supply chains were. It has helped businesses realize that they can’t be over-dependent on China for their supply chain needs.

Thus, businesses need to rethink their strategies with increased adaptability, such as switching between different routes easily in case of a problem. Similarly, they also need to look for multiple suppliers across different regions to ensure minimum disruptions in their operations.

Rise of Digitalization

Logistics businesses face a risk of becoming obsolete if they don’t digitalize their operations. With digitalization, businesses can easily store, access, and analyze customer data. This can help understand the customer needs and provide better services, such as regular order updates, on-time courier deliveries, and even personalized services.

However, data digitalization isn’t an easy process. Similarly, businesses need to use the digitalized data for maximum benefit. They will need to hire data experts who can help identify key metrics from the data collected. Businesses will then need to make changes to their operations based on the data analysis.

Increased Skills Gap

Most logistics businesses still rely on traditional methods. The employees are still not very knowledgeable or comfortable using technology. As businesses slowly move towards digitalization, they will face issues with hiring. They will need employees having key quality skills in the IT domain. And a shortage of IT skills is an issue that the industry is already facing. The gap is only going to widen with time.

As per a report, only about twenty-eight percent of enterprises considered themselves digitally advanced, and it was mainly due to a lack of skills and training. The pandemic has provided logistics businesses with the opportunity to hire new individuals who possess the relevant skills. The key, however, will be to get in early, or else you might lose to your competition.

Being Eco-friendly

The rise of e-commerce has helped in the growth of logistics. It is also posing a challenge for businesses who want to become greener while also remaining competitive and profitable. Going greener is necessary due to government regulations and customer sentiments. Logistic businesses face issues with return deliveries, increased resource consumption with packaging, increased fuel consumption for delivery purposes, and increased energy consumption.

Logistics businesses need to adopt various strategies to become more environmentally-friendly. For example, they need to replace their traditional gasoline vehicles with electric ones to reduce their carbon footprint. Similarly, they also need to search for efficient packaging methods that can help reduce wastage.

Cybersecurity Issues

The rise of digitalization also increases cybersecurity threats to businesses. There are two main issues related to cybersecurity that will affect logistics businesses. The first issue is regarding data security. Cyber attacks can cause confidential business and customer data to be compromised. This can cause various operational and legal issues. The second issue is regarding operation downtime. Operations can remain affected or become less-efficient if the data becomes unavailable for use. It’s because of the chain reaction caused as operations in the logistics industry are interdependent. An issue faced in one can affect other operations.

To mitigate the cybersecurity issue, businesses need to implement strong cybersecurity measures such as having a firewall, shifting to secure cloud computing, creating multiple data backups, and updating the software regularly.

Agreed, that is a difficult time for the logistics industry. These challenges are here to stay and will make or break many businesses in this sector. The pandemic has not only accelerated many issues already present in the sector but has also introduced a new set of problems.

Businesses can either give up or look at these challenges as opportunities to fine-tune their operations. Once they find the right strategies to adopt, it will lead them on the path of stable growth and business success.

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