Managing a logistics company can be hard, and it gets even harder year after year. Companies who haven’t yet thought about adapting to the logistics challenges they face day to day will sooner or later have to, as several obstacles that the sector will need to address in 2023 have emerged as a result of external factors this year, such as inflation and supply chain disruptions. Some of these obstacles are being carried over from previous years.
Big logistics challenges in 2023: How to face them?
In this article, we will discuss some of the challenges that logistics might face in 2023 to make sure that logistics companies are up to date-and ready to prepare the right plans to tackle them.
6 Big logistics challenges in 2023
The logistics industry will have to fight against inflation, natural disasters, worker shortages, tougher regulations, and cyber security problems.
1- Climate change
Extreme weather conditions can have a significant impact on logistics services’ efficiency
- Impact on inland: Harsh snow falls or extremely cold weather can be challenging for inland transportation, climate difficulties like the flooding of roads, and truckers frequently have to drive in torrential rain making it hard to reach their destination on time, or sometimes even safely.
- Impact on sea freight: The unpredictable weather makes sea freight more dangerous than ever, frequent storms are a huge threat to the goods being transported and facing the potential damage or even the breakage of the cargo ships, and in some locations freezing seas and oceans could paralyze the freight flow for several months.
- Impact on air freight: Similar to sea freight, air freight faces the same fears of an unstable climate, heavy snow, rainfall, and even thunderstorms that can affect the scheduling of the cargo shipping, or even cause an unfortunate accident.
- Impact on storing: The increasing temperature does affect the shelf life of the goods during transportation. Especially food and beverage commodities, which rely on relatively consistent and mild temperatures.
- Impact on Ports: Storms and hurricanes have left many ports severely damaged throughout the world. In addition to the fact that as the water level rises due to climate change, the majority of coastal infrastructure, including harbor facilities, docks, and bridges, must be modified. Storms and hurricanes have left many ports vulnerable and severely damaged throughout the world.
2- unstable diesel prices
To ensure continued profitability and avoid any potential setbacks, logistics companies must modify their operations to account for the ongoing volatility in the price of oil.
After the global pandemic caused fuel costs to drop drastically when the lockdown was imposed and travel was prohibited, today, regrettably, because of the uncertainties brought on by the war between Russia and Ukraine.
The first half of 2022 saw a 55% increase in the price of diesel fuel. Experts also anticipate that it will continue to rise through 2023.
Because logistics is an interconnected process, price increases in one area have an impact further down the line.
Labor, energy and transportation costs are currently and expected to experience massive inflation. All of these pose significant risks to the existing supply chain. According to the Economics Observatory, the Consumer Price Index in the United States increased by 5.4% in December 2021 over the previous year.
The effect of Inflation on logistics is very critical and can have a domino effect on prices, causing supply chain costs to rise, resulting in more inflation and higher prices.
4- Cyber security risks
Now the use of digital logistics will increase dramatically by 2023, increasing the likelihood that an online logistics transaction may be hacked.
Now that operators are sharing more data with partners and vendors than ever before. Cybercriminals have a huge possibility.
Taking action to protect IT systems from cyber-attacks is extremely critical given the scope of the cyber threat facing transport and logistics organizations and the potentially massive losses that could result.
5- Rising costs of warehousing
With inflation increasing day by day, many retailers may not be able to afford to build new warehouses or rent new warehouse space.
In addition to the rise of e-commerce due to the pandemic, the demand for warehouses has increased enormously, causing the prices of renting a warehouse to shoot high by an average of 14.9% annually.
to help you pick the right warehouse for your goods you should check this article out 7 types of warehousing : Which Is best For Your Goods?
6- Labour shortages
As a result of the external difficulties we’ve encountered, like pandemics, inflation, and political unrest, supply chain experts have seen a severe labor shortage in recent years. Due to a lack of available workers, production slows and, in some cases, stops entirely. The labor shortage affects the transportation of goods between parties, causing delays and dissatisfied customers. And as a desperate way to save the flow, some companies were led to hiring unprofessional drivers, which caused a lot of loss.
How to be ready for 2023’s logistics:
1- Always have a backup strategy in place to deal with unforeseen events. Create a “crisis team" of experts in each logistics field with a worst-case scenario plan to ensure you are ready for any logistical disaster.
2- Continue to invest in new technologies, such as artificial intelligence, and try to hire professionals to build a strong, safe online logistics system to avoid any hacking.
3- Try implementing cost-effective logistics services, and, if possible, using renewable energy resources, which won’t be affected by fluctuating diesel prices. And always keep an eye on the demand and supply, to have a wider vision of how the inflation levels might be at.
4- Try to use more sustainable logistics methods that will reduce the increasing effect of climate change that harms logistics, directly and indirectly, Together, we can make the globe a better, easier place to live and grow.
Despite the various obstacles, 2023 holds fantastic promise for logistics; all you need to do is outsmart the consciousness and find your way around it. Whether a certain variable has an immediate impact on the supply chain or not, every logistics organization should be aware of it. As we approach a new year, it’s time to start making plans in order to be ready for whatever 2023 may bring.