Abstract
In today's international trade market, logistics and transportation executives deal with much more than merely loading boxes on trains, ships, and buses. The market is plagued with sophisticated technologies, emerging crises, pandemics, and changing business processes. Therefore, the main point is to discuss the emerging challenges and possible solutions within the rapidly evolving world. The current Covid-19 pandemic has affected logistic firms involved in storage, movement, and flow of goods. With no end in sight, manufacturers and suppliers of industrial and consumer products have no option but to take decisive steps and realign their businesses. This paper summarizes some of the newest challenges and the tools ideal for the improvement of the transport and logistics supply chain during the Covid-19 era. Some of these tools are readily available to them for the pursuit of long-term competitive advantages.
Transport & Logistics: Emerging Challenges and Solutions
Introduction
Transport and logistics in the global arena face many challenges. Conversely, these challenges possess various solutions that could minimize risks and maintain services at acceptable levels of cost. With global trade becoming more prominent, both sourcing and distribution become global, opening up a can of challenges. Whereas some of the threats are new, others are quite persistent and require companies to rethink basic strategies and become smarter in managing their operations. The World Trade Organization points out that the 2008 recession caused a 10% decline in global trade within a year (International Finance Corporation (2020). As a result of the Covid-19 pandemic, the IMF predicts a 3% contraction in the worldwide economy in 2020. This is followed by a formidable recession that will deliver a second hit to demand affecting logistics companies, thus deficiencies in the movement of goods (International Finance Corporation, 2020). This new reality spans across local transportation to international transportation. Currently, numerous operational constraints may lead to congestion, delivery delays, and higher freight rates. However, according to the IFC report, the auto and consumer goods are facing a downturn, whereas those aligned to e-commerce are facing a boom.
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Research Questions
What are some of the n ew challenges within transportation and logistics management?
What viable solutions exist to solve these challenges?
Literature Review
The transport industry faces many sector-wide changes such as the need to curb carbon emissions, cope with congestion at the port, and finding viable transport routes. Common problems range from road transport safety to issues emerging from differences in legal, political, and management areas. To guarantee the security of transit goods aspects such as technical base analysis and the types of transport, shipment costs the length of the road, among others, are considered. Solutions also have to deal with shifts in energy, trade, and finance. The Covid-19 pandemic struck and caught many businesses unaware, crumbling the logistics and transport industry that was devoid of alternatives and pre-emptive measures.
Challenges
Supply Chain Security
Transport security has been a persistent matter in the logistics industry. However, the current situation has increased concerns, thus the need for effective seal tracking and customs trade partnership against terrorism.
Air and Freight Limitations
According to a report by International Finance Corporation (2020), disruptions caused by lockdowns rippled through global supply chains. Travel restrictions led to driver shortages creating a backlog of cargo in many Chinese ports. Many countries followed suit and effected travel restrictions causing massive flight cancellations. Though passenger planes carry a small amount of freight, many countries affected sector-wide bans to control the virus. While it could be argued that plane-cargo business soared in some instances, this wasn’t quite enough to keep up with market demand. Ocean routes which provide an alternative option at the expense of time delivery were also affected as most suppliers shut down as soon as the virus hit their shores.
Closed Borders
According to International Finance Corporation (2020), 200 Fortune Global 500 Firms operate from Wuhan-China, the epicenter of the virus. Its lockdown massively disrupted the global supply chain. Even before the pandemic, China had trade wars with the US, and it is highly unlikely the situation will improve soon. This has led to more mistrust within the sector, with collaboration and partnerships almost impossible.
Workforce and Labor Shortage
Many companies are retrenching to meet operational costs with many countries affecting lockdowns and less demand on the supply chain. In some instances, a few employees have opted to stay home either through quarantine or willingly. As a result, there is a shortage in labor supply, putting a strain in the industry.
Solutions
Transport Collaboration
Due to the decline in production, suppliers can join forces to cut costs. For instance, during shipment, manufacturers could share freight costs or storage costs ( Folinas, Tsolakis, & Aidonis, 2018). This initiative would see small players survive.
Embracing Technology
Technology is known to cut risks in production. Embracing E-freight services would go a long way in minimizing exposure to the virus and operational costs. Many freight companies have tapped into the internet of things, robotic systems, and artificial intelligence to overcome some of these challenges ( Folinas, Tsolakis, & Aidonis, 2018).
Gain Control over Inbound Freight
According to Tiwari & Trivedi (2012) , retailers such as Woolworth and Tesco implemented this practice as part of inland sourcing. The two companies have reported substantial savings over time.
Transport Optimization.
Currently, very few retailers have optimized solutions that address the challenge posed by the global pandemic. This calls for efficiency in load planning, equipment, carrier selection, and route design.
Conclusion
Consideration for best solutions in the Covid-19 era should be aligned to existing strategies for optimum results. Many retailers weigh their freight options as part of their sourcing strategy. These recommended solutions are critical to assist in balancing current policies, operating costs, and working capital requirements for a faster supply chain.
References
Tiwari, P. K., & Trivedi, P. (2012). Global transportation-review of challenges and best practices. International Journal of Management & Business Studies , 80-84.
International Finance Corporation (2020), The Impact of COVID-19 on Logistics. Retrieved from https://www.ifc.org/wps/wcm/connect/industry_ext_content/ifc_external_corporate_site/infrastructure/resources/the+impact+of+covid-19+on+logistics
Folinas, D., Tsolakis, N., & Aidonis, D. (2018). Logistics Services Sector and Economic Recession in Greece: Challenges and Opportunities. Logistics , 2 (3), 16.
