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What is the Biggest Threat to the Logistics Sector?
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What is the Biggest Threat to the Logistics Sector?

The logistics industry is crucial for the success of other sectors such as manufacturing, agriculture, and delivery service. However, it has been facing various challenges in recent months. Take a look at some of these challenges below:

1. Instability for Businesses in the Logistics Sector

No one can accurately predict the future of operations in the logistics sector. However, experts believe that businesses will need to embrace technology as the world evolves. Changing weather patterns and conflict are threats to any business. What can players in the logistics sector do to mitigate this challenge? While some of these factors are inevitable, organizations should prepare for uncertainties. Only then will they survive instability and succeed.

2. Increasing Transportation Costs

Transportation takes up approximately 30% of all expenses, and increasing fuel prices can push costs up to 50%. Companies can take various measures to overcome this challenge by:

  • Cutting down carriers. Businesses can redistribute their operations among different carriers and negotiate for a price reduction. While this is a workable strategy, it can lead to over-dependency on multiple carriers. Businesses should use it only as a short-term solution and seek a more permanent one.
  • Combining shipments. Businesses can combine shipments to get cheaper bulk rates.
  • Adopting fleet management software. Advanced technologies like fleet management software can help freight carriers locate the most efficient and shortest routes to avoid traffic jams.

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3. Shortage of Drivers

Truck driving is one of the most demanding jobs out there. As governments around the world heighten regulations, companies are becoming choosier in their recruitment process. Interviewers are thoroughly checking all applicants' driving records for any violations since they can affect a company’s CSA (Compliance Safety and Accountability) score. Moreover, in countries like the US, drivers must be at least 49 years old to be truck drivers. As a result, the logistics and transport sector is suffering from a shortage of qualified drivers.

4. Advancements in Technology

Adopting innovative and advanced technology solutions is becoming a basic need for companies in the logistics sector. Increasing labor scarcity and rising demands from modern consumers have made the competition even stiffer. Thus, advanced technology solutions are vital for businesses wishing to reduce errors and costs and have more time to boost productivity.

Data-driven software and monitoring systems can allow companies to track their shipments, receive notifications and alerts, and activate customized reporting. Other technological innovations companies should consider implementing are:

  • Data analytics
  • Internet of Things (IoT)
  • Autonomous devices
  • Cloud computing

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EXIMA’s ultimate goal is to provide our users with all the knowledge we have on international trade. For more trading information, make sure to check out our other articles today!

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