It’s been, shall we say, an eventful couple of years for the logistics sector. Between 2020 and 2021, we saw the general flow and storage of goods heavily disrupted by global travel bans, Brexit and the blockage of the Suez Canal. It’s therefore no surprise that the average number of container schedule delays doubled globally and increased by six times in the Far East and North America between Q1 2020 and Q4 2021.
Nevertheless, as with many issues, the reality isn’t black-and-white for this sector, and the challenges posed in 2022 have also inspired innovative solutions that this article will explore.
Here we’ve narrowed down the biggest obstacles that the UK logistics industry faces in the year to come, and what some nifty companies are doing to navigate them.
A report by the International Finance Corporation (IFC) at the height of the pandemic illustrated just how much long-haul transportation was affected by border closures: “in the European Union, trucks formed 37-mile-long lines on the A4 highway after Poland closed its border with Germany in mid-March [of 2020]. In India, the lockdown created a shortage of truck drivers, which resulted in over 50,000 containers piling up in the ports of Chennai, Kamajarar, and Kattupalli”.
The World Economic Forum reminds us that “the unprecedented chaos caused by COVID threatened the competitive position – even the survival – of many businesses that found they could no longer meet customer expectations”. As a result, supply-chain companies have spent time and capital they could have otherwise used to enhance their operations and allow their businesses to thrive.
Digital solutions are now simply vital to helping them survive Covid-related disruptions, with investment in innovations like smart tracking components just one example of how logistics firms are navigating the situation ahead. This allows businesses to more effectively react to unexpected changes during shipment, reducing the possibility of disruption.
Even before the pandemic, e-Commerce was looming large over the logistics industry. Originally dubbed “The Amazon Effect” in 2019, consumer expectations have gravitated even further towards fast, free delivery and competitive prices, despite this not necessarily being achievable for every firm. This has put even more pressure on logistics to meet these growing demands for speed, efficiency and transparency.
As such, in 2022 supply-chain firms may end up relying more on micro-warehouses or similar setups for greater logistical efficiency. London-based courier CitySprint, for one, has moved away from using overnight central hubs for the last mile, and instead uses multi-drop delivery throughout its nationwide warehousing network of “34 sites and 3,500 accredited, uniformed and DBS-checked couriers”. This consolidates numerous same-day deliveries into one courier journey with various stops. However, even if firms can boost company operations by allowing sellers to store products in multiple locations, which allows for better order routing, warehouse space remains in short supply in the UK.
Therefore, adapting to this new business model is highly competitive. Restructuring the delivery process to build resilience is also a tall order for firms already incurring costs from late deliveries caused by border friction.
3. Labour shortages
Last but certainly not least, much has been made of the labour shortage crisis over the last several months, especially for heavy goods vehicles (HGV) transporting cargo between countries.
According to research from Logistics UK, the total number of HGV drivers in the workforce fell by 49,000 in Q4 2021 compared to the level during the same period in 2019. The UK government issued 5,000 temporary visas last October to offset the decline in drivers able to cross the border, after new post-Brexit visa requirements came into effect in January 2021. This has also been exacerbated by the pandemic, which created a backlog of applications that slowed down the approval process for new and existing drivers.
Striking a note of cautious optimism however, Logistics UK does suggest things will stabilise, although not without effort and patience from those within the industry: “The long waiting list to take a vocational HGV test in Great Britain has been a key contributor to the driver shortage crisis; the data in the report revealed today shows that the DVSA is making progress in catching up on the testing backlog which grew out of the restrictions under the COVID-19 pandemic”.