As we enter year three of the COVID era, companies worldwide are grappling with an all-too-familiar array of supply chain challenges—supply uncertainties, capacity and labor shortages, long transit times, and sky-high transportation rates. Tough times call for fresh strategies. As companies seek to reboot their supply chains for better success in 2022, here are some tips on how to navigate the new normal.

1. Digitize to Manage Uncertainty. Before you develop a supply chain plan, you first need to establish certain parameters—for example, how much lead time a supplier requires to produce a product, and how much demand you expect. Unfortunately, right now, the figures that underlie supply chain plans are anything but solid.

“Supply chain organizations are faced with tremendous disruptions, just trying to respond to the variability that’s occurring,” says Mark Balte, executive vice president, supply chain innovation, at Atlanta-based supply chain solutions provider Logility.

To manage variability, collect as much data as you can about supply and demand and apply machine learning to develop a sophisticated picture of changing conditions over time.

Take demand sensing, for example. “If we put a plan in place four or six months ago, the demand pattern is going to change as we get closer to that demand date,” Balte says. The more data the company collects, the better it can predict actual demand.

“We can begin planning earlier, perhaps make a change,” Balte explains. Maybe a company expects a shipment at the Port of Los Angeles. “I was planning to move it to a distribution center in Colorado,” he says. “Now I may only want to move part of it to Colorado and some to Dallas.”

Opportunities abound to collect data that supports decisions, with new Internet of Things (IoT) devices coming on the market all the time. “But companies should begin the journey now, at least collecting data within their own enterprise, and then extending that outside the enterprise,” Balte says.

Data from publicly available sources, carriers, and IoT devices in company-owned or supplier factories can enhance the knowledge base, producing better forecasts.

2. Rate Sources for Risk. Data analytics can also help you develop more resilient sourcing strategies. For instance, Stanley Black & Decker, based in New Britain, Connecticut, analyzes risks its suppliers face due to COVID infections or various other challenges. Those risks point to potential supply chain disruptions.

“We’re able to quickly narrow down the list of higher-risk suppliers that we can evaluate much more carefully to see if their production rates have been hit,” says Guru Bandekar, chief supply chain officer for the company’s Global Tools and Storage business.

Stanley Black & Decker dual-sources or multi-sources components whenever possible. If supply from one vendor starts to look uncertain, the company can shift more order volume to a different supplier.

When dual- or multi-sourcing isn’t possible, Stanley Black & Decker maintains safety stock, setting the volume based on how long it would take to recover from a disruption. “If it will take us five weeks to re-source that part, because it takes time to get a new supplier up and running, then, to put it simplistically, we want to have five weeks of safety stock,” Bandekar says.

3. Move Your Manufacturing. Supply chain disruptions have dramatically driven up freight rates and lengthened transit times. A container shipment from Asia to the United States that would have cost less than $2,000 a few years ago cost as much as $20,000 in 2021, according to Bloomberg.com. And capacity shortages and port congestion have added weeks to the crossing.

“A shipment from Asia to the United States used to take four weeks by ocean,” says Mustafa Hossaini, business development manager at Westec Plastics Corporation, a contract manufacturer of plastic parts in Livermore, California. “Currently we see transit times of six to eight weeks.”

Since the start of the pandemic, Westec has experienced an uptick in inquiries from U.S. companies that might want to move their production from overseas to the United States.

While labor costs in the United States are relatively high, in some cases, domestic production cuts shipping costs so much that the math works out in favor of reshoring.

Hossaini cites a company whose drug delivery product uses plastic parts made in Europe. “They told us that on the last batch of products they received, the shipping costs were $8,000,” he says. “Our shipping rate to them would literally be $150, because they’re located a half hour away from us.”

Companies might also embrace domestic manufacturing to gain convenience and peace of mind, since they can easily visit a contract manufacturer to oversee quality issues and resolve problems, Hossaini says.

In addition, reshoring might eliminate language barriers. And many U.S. companies want to promote their products as “Made in America.”

Stanley Black & Decker strives to source components and assemble products as close as possible to the markets where they are sold. When local labor rates make this hard, the company controls costs through automation. Although the company has used this strategy since the advent of new tariffs in 2016, localization has grown even more important since the start of the pandemic, Bandekar says.

4. Get Flexible with Carriers. In an era of scarce capacity, shippers that strive to accommodate truckers’ needs have an easier time getting freight on the road. “We advise companies to be as flexible as possible with transit times, hours of operation, and trucks they would accept,” says Dave Menzel, president and chief operating officer at Echo Global Logistics, a third-party logistics (3PL) company based in Chicago.

Say a shipper wants a load picked up at 9 a.m., but the carrier can’t supply a truck until 1 p.m., Menzel says. If the shipper really wants that truck, it might adjust its schedule.

Shippers should also strive to get trucks loaded and unloaded quickly, to minimize downtime for truckers. “If a facility has a reputation for long lines and difficulty getting loaded or unloaded, then that facility is a lot less attractive, and trucks will choose different options,” Menzel says.

Fast loading and unloading are especially hard these days, when a tight labor market and COVID-related absences can leave shippers short-handed. Logistics managers should keep that in mind when they book appointments with truckers.

“They should be realistic about what they can load in a given day,” Menzel advises.

Shippers should also provide leeway when drivers arrive a bit later than planned. “Instead of telling them they need to get a new appointment, and the next available one is in two days, you might say, ‘If you miss your appointment by an hour, we will work you in,'” Menzel says

5. Collaborate. Good relationships with carriers and customers can also help shippers better deal with challenges such as uncertain transit times and shortages of crucial resources.

For instance, Stanley Black & Decker relies on strong partnerships with carriers and logistics providers to gain a steady flow of information about the progress of containers on the water.

“We can use that information to predict when we will get the product and then make commitments to our customers, to the best extent possible,” says Bandekar. “Customers want speed, but if they can’t have speed, they want predictability.”

The company also works with over-the-road providers to manage mutual challenges. “What can they do to get more chassis, or attract more chassis toward our supply needs?” Bandekar asks. “What can they do to attract more drivers?”

Stanley Black & Decker and its carriers hold many more conversations on such topics these days. “We are helping them prioritize, and they’re helping us understand the challenges so we can prioritize based on the changing dynamics,” he says.

Shippers may also overcome obstacles by sharing information with customers. “Don’t be afraid to discuss with customers the problems you’re facing, because they are going to face the same problems,” says Lewis Black, chief executive officer of Almonty Industries, a Toronto-based mining firm that is a major producer of tungsten.

Almonty serves customers in the electronics, medical device, aerospace and other industries. The company’s challenges these days include trouble procuring consumables such as drills, explosives and various grades of oil, as well as slow shipping, tight capacity, and high freight rates.

Sometimes, asking for a favor can help. “We ask our customers to send us a spare container if they have one,” Black says. Or, they might ask a customer that manufactures drill bits to send some half-finished drill bit or ones they are going to recycle. “Send them to us and we’ll use them,” he says.

6. Retain Your Talent. The Great Resignation has hit supply chain organizations hard. Companies, especially those involved in e-commerce, are trying to add front-line workers and new facilities to meet increased demand. “But at the same time, you have constant and accelerating workforce turnover,” says Dan Johnston, co-founder and chief operating executive of WorkStep in San Francisco.

WorkStep addresses the supply chain labor shortage with two technology platforms—Hire, a recruitment tool, and Retain, which employers use to gain insights to reduce employee turnover.

Companies have traditionally treated warehouse associates, drivers, and other supply chain workers as cogs in a machine, easy to replace, Johnston says. But in today’s tight employment market, that mindset has changed.

“If you can keep the talent you have, you have to compete less for this incredibly hard-to-find new talent,” he says. “And you can deliver more goods at a better pace to your end customers.”

WorkStep’s customers use Retain to collect feedback from employees periodically, asking their opinions on factors that affect job satisfaction. Using a mobile phone or similar device, the employee takes a minute or so to answer a survey. Retain aggregates and analyzes the results, spotlights areas of concern, and then, when the company makes corrections, tracks how those changes influence turnover.

Using Retain, a 3PL that runs 350 warehouses learned that managers in some of those buildings weren’t following correct orientation procedures for new employees. “You might see an average satisfaction with orientation of 90% across the organization, but in 10 buildings it was 50%,” Johnston says.

By correcting those and other problems Retain uncovered, the 3PL cut turnover among new hires by 36%.

7. Improvise. Beyond strategies to help navigate the current supply chain environment, companies might also benefit from tactical creativity.

Black recalls a time in the 2000s when Almonty Industries struggled with a shortage of rubber tires, which the mining company’s underground vehicles consume in large quantities. “What we came up with was very rudimentary, almost medieval,” he says. “We started making steel wheels with wooden tires.”

Almonty improvises in a similar way to beat today’s shortage of shipping containers. These are especially hard for Almonty’s European operations to get hold of, since the shipping lines focus so heavily today on their lucrative Asia-to-North America lanes.

“There are no containers around, but there are lots of old shipping containers in scrap yards,” Black says. Almonty retrieves those old containers, welds them back together and installs new, government-approved security latches.

“We have someone driving around who rings us up and says, ‘I saw an old shipping container in pieces in a scrap yard,'” Black says. “We send a truck down there, buy it, and bring it back.”

Unfortunately, once Almonty uses the recycled container to ship tungsten to the United States, someone there grabs it and the company never sees it again.

LONG-TERM SHIFT

While pandemic-related disruptions have prompted many changes, companies are not likely to revert to the old ways as the virus finally runs its course. “These capabilities we are building will be the way we operate in the new normal,” says Bandekar. “It’s a long-term shift.”

COVID has thrown a spotlight on issues that have always existed. But when normalcy comes back, other environmental issues, such as global warming and forest fires, will continue to disrupt the flow of goods.

Says Bandekar: “The way we manage our supply chains in the future will be much different from how we managed them in the past.”

Source: www.inboundlogistics.com

Image: www.pexels.com

The post 7 Strategies to Reboot Global Supply Chains appeared first on Cargo News Today.

Disruptions, technology innovations, and consumer demands will persist in 2022. These are the four key trends impacting 3PLs in the coming year, the report says:

1. Supply chain disruptions will continue to plague the industry through much of 2022, creating more pressure for 3PLs to provide strategic insight into inventory and risk management and provide greater demand planning sophistication.

2. Omnichannel fulfillment will become even more prominent as companies seek to expand sales channels and leverage the same inventory to fulfill across all channels, pivoting to support where demand is highest.

3. 3PLs and 4PLs will need to collaborate with other warehouses to create integrated ecosystems that support the level of sophistication in today’s supply chain.

4. Technology is transforming rapidly, with companies shifting to more highly adaptable cloud-based software that leverages fulfillment innovations and integrates with the broader logistics ecosystem.

Source: www.inboundlogistics.com

Image: www.pixabay.com

The post 4 Trends for 3PLs in 2022 appeared first on Cargo News Today.

Around September last year, the air cargo industry was tentatively hoping that the market could be setting out on the road to normality.

Major economies were slowly opening up as Covid case numbers were showing signs of easing and passenger operations were beginning to get back underway as travel restrictions were lifted.

Then November arrived bringing with it the Omicron variant. Lockdowns, travel restrictions, supply chain issues and reductions in bellyhold and freighter capacity on major trade lanes ensued.

Adding to those challenges, the start of the year also sees the industry having to contend with the two-week Chinese New Year holiday, which typically sees a surge of cargo ahead of factory closures, and this year the Beijing Winter Olympics is expected to cause further disruption.

With the year off to a challenging start, Air Cargo News caught up with a cross section of the industry to find out their expectations for the remainder of 2022.

DSV vice president and head of the DSV Air Charter Network, Mads Ravn, tells Air Cargo News he expects a roller-coaster market with Covid continuing to disrupt supply chains, while bellyhold operations will be slow to return.

“Demand will remain strong in every sector and, as the year has already proven, Covid will continue to play a major role in whether capacity will return,” Ravn says.

“Especially on key routes from China and Hong Kong – where they continue to have some of the most severe restrictions – we need some sort of consistency throughout the year.”

He adds: “Belly carriers are trying to piece a programme together with multiple new seasonal destinations that will not necessarily benefit the lack of capacity in the market to and from core manufacturing sites.”

DSV believes that the return of belly capacity to pre-crisis levels is being pushed further out.

“The initial anticipation of 2025 is likely not happening and destinations serviced will change as business travel is very slow to come back,” he says.

“Therefore, we are focusing on maintaining and developing our own DSV Air Charter Network so we can continue to provide as much reliable and flexible capacity as possible for our customers.”

Ravn says handling operations are also likely to come under pressure this year.

“To secure enough people on the ground is perhaps the most severe challenge in several gateways in North America and Europe,” he says.

“This, combined with outdated US infrastructure and lack of staff returning to work, will also influence and slow down recovery.”

Scan Global Logistics (SGL) says it expects the unpredictability of 2021 to continue into this year.

“We expect the market to be pretty much the same as in 2021; travel-restrictions, no clarity about Omicron and potentially other [variants] to follow, and no, or only limited, additional freighter-aircraft to be supplied to the market.

“This will keep constant pressure on the capacities and rates. [Covid] test kits, ocean challenges, airport/ground handling issues etc will remain, leading to increasing charges.”

Looking at seasonal trends, SGL says that the first quarter will remain challenging with rates elevated, the second quarter and early on in the third quarter may see an easing of the situation before the peak season ramps up in mid-September.

On the return of bellyhold capacity, SGL’s global head of airfreight, David Wystrach, says: “Mid-term on this side of the summer, travel restrictions and uncertainty will continue to limit leisure travel.

“Business travellers will not be back to anywhere close to pre-Covid-times. This will limit number of flights and served port pairs.

“Some routes added to the network may be less cargo friendly, e.g. leisure destinations on transatlantic routes.

“On top of this, the current Omicron [variant] will as well impact crews and pilots and with this further reductions on rotations are to be expected.”

Wystrach is also expecting ongoing labour issues across the market to affect ground handlers, forwarders, airlines and trucking companies.

Hervé Bonis, deputy chief executive, Seafrigo Group, says Omicron and seafreight issues will drive demand in the air: “The overall global environment remains uncertain in the first quarter of 2022 due to the high circulation of the Omicron variant of Covid-19 in most western countries.

“This is already impacting on airfreight capacity, especially regarding the China/Hong Kong trade lanes where stringent rules for pilots are in place.”

He adds: “The biggest challenge is definitely to get back to normal regarding intercontinental travel, which then brings back the belly capacity that is not currently available in the market. I expect belly capacity to increase during second half of 2022.

“Regarding our overall volumes, I consider that we will still face seafreight disorganisation, including port congestion, and this will bring opportunity in terms of airfreight volumes.”

Crane Worldwide Logistics chief executive Keith Winters is another expecting labour issues to affect the market.

“There is no question that we are still expecting some turbulent times ahead,” Winters says.

“Currently, with the resurgence of Covid, new vaccine boosters need to be moved and there is still the possibility of borders closing as countries cope with the influx in cases.

“With blank sailings and the Lunar New Year ahead, it’s expected that the first quarter will create more demand which will continue to add pressure in terms of cost.”

On the return of belly capacity, Winters says this is highly dependent on borders opening up.

“We can be hopeful that the new variant will see the end of the pandemic, but there are still so many unknowns,” he says.

“With new aircraft being lined up for charter flights, there will be options, but for now I think we need to look further afield than 2022 to return to what we consider ‘normal’ bellyhold capacity.”

Airlines are also expecting demand to be tight over the coming year.

Roger Samways, vice president commercial, American Airlines Cargo, says that despite some return of passenger flights, indicators suggest that demand improvements and congestion in other modes will contribute to capacity shortages in air.

“Continued capacity shortages in the market, relative to demand, as well as infrastructure challenges at airports, will present ongoing challenges for the air cargo industry,” says Samways.

“We have faced capacity shortages since the start of the pandemic, but we’ve seen innovative, creative solutions across the industry as carriers have tried to support the needs of our customers.”

Samways adds that belly capacity will improve in 2022 compared with last year but won’t get back to 2019 levels due to changing government travel restrictions and possible future Covid-19 outbreaks.

“Our current expectations are that widebody capacity will grow around 20% compared to 2021. The key for our cargo customers, though, is where that capacity is going to be deployed.

“Unlike in 2021 when many of our widebody aircraft were operating on short-haul leisure markets, such as the Caribbean and Mexico, in 2022 our widebody fleet will primarily be deployed on long-haul international markets which is great news for our cargo customers.”

Charter outlook

Charter brokers are also bracing for another busy year. Dan Morgan-Evans, group cargo director at Air Charter Service (ACS), says the disruption experienced over the last couple of years has been too great to unwind completely during 2022.

“The longer time goes on, the more balanced it will become but we are still seeing very strong demand in the short term and long term, with a record number of forward bookings even into 2023,” he says.

“The whole supply chain has changed over the past two years and, unless we suddenly revert to pre-pandemic passenger numbers and all travel restrictions are lifted, then we will continue to see strong demand.”

He says that ACS was previously used to seeing single ad hoc flight bookings with the occasional programme for multiple flights. Now, the company is seeing bookings that are predominantly programmes.

“The challenges will be similar,” he adds. “Covid restrictions, lack of capacity, bottlenecks at airports – but these are all the benefits of using a company like ACS.

“The marketplace is complicated. Whether that’s the aforementioned, or people out there trying to take advantage with phantom aircraft and fictitious contracts.”

Neil Dursley, Chapman Freeborn chief commercial officer, cargo, says the continued impact of Covid-19 shows little sign of slowing down and there is no return to “business as normal” insight.

“What we are seeing in the first weeks of this year is ‘more of the same’; a distinct lack of widebody availability and supply chain challenges impacting the major ocean ports of the world with new restrictions due to new Covid outbreaks in strategic ocean ports. This continues to force more and more cargo into the air.”

Dursley adds that there has been a surge in demand for Covid test kits. The broker has just completed “an enormous programme of flights” utilising multiple AN-225 and AN-124 flights, including on Christmas day.

“Never before in our history, or I believe in the history of the AN-225, has it ever operated so many back-to-back missions,” Dursley says.

“The good news for our clients is that pricing on widebodies from Asia to Europe, as well as transpacific routes, has reduced in January vs December, but we anticipate that this will again increase following the Chinese New Year.”

He adds that freighter operator Magma Aviation, a Chapman Freeborn Group subsidiary, continues to operate at full capacity to and from a range of origins.

He says: “Restrictions on crew due to Covid outbreaks in key locations is creating issues but ones which our partners are supporting so that supply chain continuity isn’t impacted.”

Looking at sectors driving demand, Dursley says that the company is heavily involved in humanitarian related movements for vaccines, test kits and emergency supplies.

“Likewise we see increases in automotive, hi-tech and oil & gas related activities.

“We have continued long-term programmes of e-commerce related movements using passenger-cargo aircraft as well as full freighters utilising both group assets and many third-party airline partners.

“So this storm rages on and with it we are expanding rapidly and recruiting currently over 100 full time employees to support our clients as well as opening up multiple new offices around the globe.”

Navigating the challenges ahead

With another year of disruption and unpredictability ahead, what steps are companies taking to try and navigate the challenges that lie ahead?

Crane Worldwide Logistics’ Winters says that close collaboration, information sharing and flexibility are key to managing the current market conditions.

“It takes all key members of the supply chain to work closely with clients, manage expectations and find solutions that will work in the long term.

“Supply chains are being reassessed by many organisations and are also at the top of priority lists in 2022.

“There is evidence that companies are reverting to nearshoring, alternative routings, transportation switches etc.

“We believe that working together closely with our clients, we can bring the expertise needed to provide solutions, not only the urgent situations, but also in the long term.”

He says these solutions could be additional charter capacity, extra 3PL warehousing or alternative methods of transportation such as rail freight.

Ravn of DSV says that forwarders will need to invest in their own controlled capacity to add some consistency and longevity for customers that commit to capacity and rates.

“Most air carriers have become transactional during last year and there is an intense battle to secure the best commitments in the market,” he says.

“It puts clients, who have been consistent supporters on particular lanes, in a very [difficult] situation, hence they are turning to forwarders like DSV with own controlled charters to leverage their spend, which is often connected to other parts of the supply chain.”

From an airline perspective, Samways of American says that the airline has learnt to expect the unexpected.

He agrees that collaboration across the supply chain is key to managing the situation.

Samways says: “From an industry perspective, increased investment and closer working relationships with industry partners will be important in helping to ensure that we are able to operate efficiently and accommodate as much cargo is possible.”

He adds: “For American, that has included working with our network planning team to help ensure the rebuilding of our widebody network meets both PAX and cargo needs and looking at how we can best utilise our existing narrowbody and trucking networks to help bridge routes and create more options for customers.”

He adds that the airline has already made plans for nearly all its widebody fleet to be dedicated to long-haul international routes, which is ideal for the cargo division.

The company is also poised to take delivery of more than 40 Boeing 787 aircraft over the next few years, which Samways says will help to support further capacity growth across American’s network.

Wystrach of SGL says that it is important that forwarders remain very proactive and that customers keep a high focus on their approach to planning.

“Keeping up with constant schedule changes, impact of airport/port congestions etc., will require an ongoing agility and solution-driven attitude,” he says.

“This will continuously require flexibility for forwarders and customers in regards to pricing, transit times and routing opportunities.

“Constant proactive communication, including offering multiple solutions enabling our customers to make a conscious decision on how to balance cost and supply chain risk, is and will remain a key priority for us.”

Source: www.aircargonews.com

Image: www.pixibay.com

The post Outlook 2022: Another challenging year for air cargo appeared first on Cargo News Today.

For example, a computer chip shortage had a knock-on effect across many industries. Concerns have also been raised about everything from lithium supply for electric vehicle batteries to restaurant food supplies to even coffee shortages.

Never has the issue of supply chain management been so prominent. The question now is what challenges supply chains face in the year ahead. So what can we expect?

Complex, fragmented, under pressure
Products reach consumers through a chain of companies involved, which typically includes manufacturers, logistics firms – who provide storage, distribution and transport – and retailers. Not surprisingly, the whole system is highly complex.

There’s a whole philosophy of contemporary supply chain management (SCM) concerned with making supply chains much more integrated than they used to be. Done well, it can significantly improve the overall performance of companies, as well as benefiting the economy and society. Yet this long-term effort to make the whole system more efficient has been set back by a whole host of challenges in global supply chains.

Three big issues became particularly apparent in 2021. First, and probably the most obvious to many of us, was the unprecedented pressures on global supply chains created by the COVID pandemic and the subsequent series of lockdowns and restrictions which varied in their timing and severity from country to country.

This has resulted in significant geographical shifts in supply and demand, which in turn has created problems for finely tuned global supply chains. Trends that were apparent pre-pandemic, such as increases in online shopping and driver and other skill shortages, are now causing real problems.

Second, the economic and business environment became more challenging. For example, in the UK and the rest of Europe, supply chain pressures were caused by Brexit as a result of increases in red tape and cross-border checks. More widely, firms continue to grapple with a range of international business challenges ranging from fluctuating exchange rates to the building of global management teams.

This all matters because business has become increasingly international – often global – in recent years. This is thanks to the reduction of traditional barriers to the cross-border movement of products, services, capital, people and information. The impact of this change on logistics and SCM is the subject of my book Global Logistics: New Directions in Supply Chain Management.

Third, the environmental impact of logistics and supply chain activities is beginning to be more widely understood. If countries around the world are to meet their emissions targets and commitments, it is key that they develop more sustainable supply chain practices. Glasgow’s COP26 in November had a strong focus on transport including freight and logistics. Business as usual is simply no longer an option if a sustainable future is to be achieved.

But uncertainty is a characteristic of the international business landscape in which supply chains operate. As a result, major companies have become strongly focused on supply chain risk management. This means identifying where risks of any kind exist in the network, assessing the potential impact of these risks, and putting mitigation strategies into place. A range of formal methodologies and tools have been developed to support this process.

The big question is how all this complexity can be handled, particularly in terms of design, planning and execution. These challenges are new in many respects, so past experience cannot be relied upon to generate solutions.

An unpredictable world
So what kinds of things are going to affect global supply chains in 2022? As The Economist neatly put it recently, “the era of predictable unpredictability is not going away”.

The arrival of omicron has provided a timely reminder of the unpredictability of the pandemic. The emergence of new variants during 2022 could accentuate some of the current pressures. In this context, China’s continuing zero-COVID strategy with its tight border restrictions could create problems.

Despite some easing in recent months, international shipping costs are likely to remain high in 2022. Closer to home, the arrival of the full post-Brexit customs checks introduced on January 1 has introduced further friction and added costs, with many firms reporting a worrying lack of preparedness.

Above all, freight transportation and supply chain processes will continue to change during 2022 as more environmentally sustainable practices are adopted. These practices affect everything from transport vehicles, such as switching to electric delivery vans, through to changes in the wider supply chain, such as relocating distribution centres to minimise distances travelled.

Industry and academia are collaborating to develop innovative and sustainable practices, as can be seen in the work of the Centre for Sustainable Road Freight, for example. The year ahead will be key in the adoption of these practices, each of which requires change in the operational practices of firms. Such change will inevitably create short-term challenges as the new practices become embedded.

Business has to be resilient and capable of adapting to major disruptions so that it can develop long-term strategies and solutions to these complex challenges. In the meantime, shoppers are likely to see higher prices, with companies passing on increased shipping and other logistics costs to customers. We may continue to notice things missing from our supermarket shelves – new year product shortages are already being reported in some countries. So as consumers, we are going to have to keep being a bit more resilient ourselves.

The author
Edward Sweeney is a professor of logistics and supply chain management at Heriot-Watt University.

Source: www.marinelink.com

Image: www.pixabay.com

The post The Big Challenges for Supply Chains in 2022 appeared first on Cargo News Today.

Copyright aerial-drone/AdobeStock

The post 2021 in Review: The Dry Bulk and Tanker Markets appeared first on Cargo News Today.

Labor shortages will continue

In the past, when I wrote about cargo ship congestion in the world’s largest ports, as one of the challenges and main issue in 2021, I mentioned the shortage of logistics workers. The biggest challenge is the shortage of truck drivers, which, according to the American Trucking Associations (ATA), reached an all-time high in America in 2021, with more than 80,000 shortages. Europe is struggling with a similar situation: according to the Transport Intelligence (TI) study, the shortage of drivers in Europe exceeded 400,000.

Unfortunately, available data and expert opinions indicate that labor shortages in the logistics sector will continue in 2022. The ATA says there could be a shortage of 90,000 truck drivers in America next year. In addition, data from the The National Transportation Institute in America (NTI) suggests that nearly a quarter of the road transport workforce will retire in the next decade, leaving even more vacancies.

One of the solutions that will help the logistics industry to slowly get out of the current shortage of workers is autonomous trucks. In 2022, they will conquer highways at an ever-increasing rate, leaving man-made vehicles behind. Read more about autonomous freight transport and its future here.

Demand for environmentally friendly logistics is growing

Sustainability is an ever-growing trend that will continue to grow in the coming years, including in 2022. Over the last five years, more and more industries have voluntarily taken steps towards environmentally friendly practices, and logistics is no exception. Businesses are encouraged to do so not only by consumers, who are increasingly choosing companies that adhere to the principles of sustainable business, but also by leading industry associations and countries, imposing ever new conditions.

It is inevitable that all sectors, including freight transport and logistics, will increasingly have to make sustainable decisions. We can also see this from this year’s UN Climate Change Conference (COP 26), where the main message was that countries and companies need to set more ambitious decarbonization targets and do everything they can to curb global warming. Although the current targets for climate-neutral freight transport seem quite ambitious, they are clearly not enough and those working in the logistics sector need to go further. Read this article about the goals set by companies and whether climate-neutral maritime transport is a free choice or a survival strategy for companies.

Even greater digitization is inevitable

The McKinsey study found that in just a few months, the pandemic accelerated the digitalization of customer-supply chain interactions by three to four years. Consequently, it seems inevitable to think about digitalization now, thinking about the future. Whether we like it or not, there will be new developments in digitalization in the logistics and freight sector in 2022 as well.

One way in which the latest technologies will enter the logistics industry more and more rapidly will be robotics. Experts estimate that more and more companies will choose to implement robotics in their warehouses, thus saving money, reducing labor costs and speeding up processes.

Automation will also be one of the most important aspects of digitalization in 2022. The aforementioned autonomous vehicles and drivers, which will be equipped with AR (augmented reality) glasses, ensuring coordination between robots and humans, are only part of the digitalization process that will begin in 2022.

These are just some of the trends that workers in the logistics and freight sector will face in 2022. While next year will probably not be the time when we can take a breather and regain our strength, it will be full of exciting events and unexpected turns.

Author: Rolands Pētersons, logistics expert

Image: www.pexels.com

The post The three main trends in logistics and freight in 2022 appeared first on Cargo News Today.