A survey carried out by booking portal Freightos found that 46% of air cargo carriers now enable instant rate searches for quotes on their websites compared with 10% in 2019.

Meanwhile, 33% offer e-booking with instant confirmation compared to 25% in 2019.

But there is still room for development, with 21% offering instant allotment booking and 4% allowing payments to be made online.

Freightos said that the most widespread digital stride among air carriers was the leveraging of third-party platforms to extend their online reach.

The research shows that 46% of leading air carriers provide instant rate search through third-party platforms and 42% also enable e-booking through these channels.

Shipment tracking is also widely available, with 42%providing this as an option.

Freightos said the adoption of third-party platforms was higher in air than ocean, where just 18% offer e-booking on portals.

“In the fragmented air market – compared to the consolidated ocean market and the growing leverage the pandemic has shifted to ocean carriers – airlines are eager for the low-touch access to new customers, new segments and new geographies that platforms represent, even at the cost of making price and service comparisons easier,” Freightos said.

“And the volatility of air cargo during the last two years served as a catalyst for this trend.”

The overall shift to digital booking was accelerated by the pandemic, the company said.

“The rush on PPE early in the pandemic, just as passenger travel plummeted, was an extreme example of the volatility in the air cargo industry over the last two years.

“The fast pace of air transport only quickened as labour shortages and ever-shifting quarantine requirements led to frequent operational changes.

“This environment accelerated the ongoing search many carriers had already been engaged in for improved internal efficiency and faster ways to communicate and transact with customers.

“Like in ocean freight, the pandemic accelerated the pre-existing trend toward digital connectivity.

“While carriers made gains in their website offerings and API connections, the biggest shift was in leveraging third-party platforms to extend their reach.”

Johnny Rubio, chief commercial officer of Silk Way West, said that online booking portals allowed carriers to introduce e-booking without a massive amount of investment in resource and capital and also makes its services more visible to a wider customer base.

IAG Cargo head of distribution Peter Roberts added: “Not only have our e-bookings increased, but the average weight per e-booking has too, suggesting that customer trust is growing.

“In addition to improving both customer satisfaction and our reach, the data unlocked through e-booking enables better business intelligence and a data-driven strategy.”

Source: www.aircargonews.net

Image: www.pexels.com

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As a result, many flights are diverting south, but with some airspaces in the Middle East restricted or closed, airlines are limited in their options.

Diverted routes can lead to lengthy blockages on key flight corridors, which in turn causes cancellations, limited capacity for freight and potentially increased costs.

Various flight times have also increased due to the diversions, which can result in increased fuel usage and potential further increased costs, which may need to be passed on to the end customer.

Since the crisis, fuel prices have been rising; for the week ending March 4 2022, jet fuel (kerosene) cost $1,119 per tonne – an increase of 28% from the previous week, and a 45% increase since the start of 2022.

This is a concern for an industry which has already seen airfreight prices rise to two and a half times higher than pre-pandemic levels, and is still recovering from the impact of Covid-19.

Passenger travel and airfreight are intrinsically linked and in 2020, with only limited numbers of passengers flying, UK airfreight volume fell to 2,002,000 tonnes, a 21% drop in comparison to the 2,535,000 tonnes in 2019.

The sector started to see green shoots of recovery in November 2021 – according to the Civil Aviation Authority, total UK airfreight tonnes increased by 5.9%, compared with November 2020 – but, just as it starts to recover, these latest developments could once again see turbulence on the horizon for the sector.

Air cargo and road transport capacity are needed urgently to move donated food, medicines, clothing and other items to Poland and Ukraine-surrounding countries to support those affected by the war.

If capacity is to become constrained, humanitarian aid must be prioritised.

Despite the challenges facing the airfreight sector, it has a reputation for facing and solving complex problems, as highlighted in recent years.

As when transporting medical supplies throughout the pandemic, the sector will adapt to prioritise essential goods, while also ensuring the rest of the supply chain is maintained.

Logistics UK is working with the CBI to link members able to transport donated goods either via air or road and is urgently seeking air capacity to help the lift of aid to Poland, Germany and Moldova.

If any members can pledge their support, please email supplyukraine@logistics.org.uk

Source: www.aircargonews.net

Image:

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The past year has opened the door to many risks—and response strategies—that supply chain leaders must now keep top of mind when making critical inventory, demand, logistics, and pricing decisions.

STOCKPILING AND DEMAND VOLATILITY

A wave of organizations took up the practice of stockpiling over the past year to mitigate demand and offset transportation shortages and rising prices. However, this practice can often create more headaches than it alleviates. There are costs associated with stocking extra inventory, which may very well end up being passed on to the consumer.

In this scenario, supply chain leaders should look to a more active approach to demand management to help mitigate excess inventory and avoid passing added costs on to the consumer. Identify the demand signals that are critical to your business—whether raw point-of-sale data, social sentiment, or socioeconomic data—and then align on the actions you can take to actively shape demand to account for your increased inventory.

The challenges of the past year have also demonstrated how reliant organizations across industries are on a well-run ecosystem of suppliers, manufacturers, and logistics providers.

This ecosystem is often a global one, and while that can help with supply chain diversification, it can also lead to bottlenecks and disruptions—from tariffs and political negotiations that impact trade routes, unplanned weather events, or COVID flare-ups that can lead to factory or border closures, or temporary reduction of capacity.

Supply chain leaders can better prepare for unplanned disruptions by embedding more agility and visibility into their global ecosystem. Leveraging end-to-end supply chain management technology to share data across the supply chain in real time can help replan if downtime hits a supplier, or a factory is closed in a region. It is easier to change course on the fly, mitigate potential risk, and drive forward.

FREIGHT AND LOGISTICS

While it may have worked in the past, making assumptions at the beginning of the year about freight capacity, driver and warehouse availability, or associated costs, is no longer an option. Instead, supply chain leaders are tasked with navigating increases in shipping volume and diesel prices, a capacity squeeze, and a driver shortage—and that doesn’t account for unplanned disruptions.

Strong forecasting capabilities can help supply chain leaders more accurately predict their freight needs, and when combined with real-time visibility, can help make trade-off decisions to expedite or change lanes. They can also use more accurate forecasting to make pricing and promotion decisions that shape prime shopping windows and alleviate a potential logistics crunch in the future.

INTERACTION EFFECTS AND SCENARIOS

Often, these risks are scored or assessed independently, but never frequently compounding at the same time. Traditional risk management approaches often do not assume interaction effects, which leaves businesses more exposed when their often linear, discrete assumptions interact and produce far higher, or lower, outcomes than anticipated.

To counter, a robust and configurable scenario management approach that hinges on identifying “potential” interactions and elevating them for CXOs to review can help business leaders understand potential interactions and prepare for destabilizing options.

Author: Evan Quasney, Global VP of Supply Chain Line of Business, Anaplan

Source: www.inboundlogistics.com

Image:

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The fragility or brittleness of a global marketplace so deeply dependent on just-in-time inventory. Any event, whether a pandemic, hurricane, or a container ship stuck in the Suez Canal, creates immediate disarray. In response, retailers have reverted to “just-in-case” practices, building up large safety stocks. It has become a choice between risking a stock-out or keeping costly excessive inventory. Where is the balance?

—Joe Dagnese
President and CEO
PECO Pallet

Supply chain professionals should use the experiences of 2020 and 2021 to take a fresh look at their supply networks, understand their vulnerabilities, and then take the appropriate actions to improve resilience. Doing so can create competitive advantage; failing to do so leaves an opening to the competition. Supply networks may contain potentially crippling risks, and organizations must identify and remediate them.

—Oliver Lemanski
CEO
OnProcess

Close coordination and support throughout every point of the supply chain is the new normal. Disruptions have had a lasting impact on customer confidence. Detail-oriented supply chain management, enhanced customer service, and data-driven inventory decisions are essential to reestablishing a chain of confidence.

—Angela McNally
Vice President, Global Provider Solutions
Owens & Minor

The supply chain is ripe for innovation. A singular disruption impacts a sequence of events, creating inefficiencies. The positive outcome of this unprecedented market cycle is collaboration across the supply chain resulting in technology solutions. This improves productivity by getting goods to shelves efficiently on a go-forward basis.

—Blair Blake
VP, Carrier Strategy
Arrive Logistics

I’ve learned not to take consistent air and ocean supply chains for granted. The past two years have been inefficient, making delays commonplace and causing deficits and surpluses of inventory due to increased freight costs. The solution is to stay informed and listen to suppliers, freight forwarders, and consumers.

—Richard Huang
CEO
Cloudious9

Flexibility in planning beats perfect execution. The market is in flux; the businesses succeeding are the ones adapting to what is being thrown at them. If I’ve learned anything over the past two years, it’s that perfectly planning for the long term doesn’t necessarily lead to success.

—Sean Elliott
Chief Technology Officer/Chief Digital Officer
Körber Supply Chain

Our reliance on a few key ports and jobs (dock workers and truck drivers) highlighted our supply chain fragility. It only takes one or two bottlenecks to have ramifications and ripple effects throughout the entire economy.

The recent supply chain challenges also demonstrated how critical the ports of Los Angeles and Long Beach are specifically to the United States—these ports are in earthquake-prone regions, and a large earthquake impacting one or both of these ports could make COVID-19 related challenges seem more like a nuisance than a major disruption.

—Megan Linkin
Senior Parametric Nat Cat Underwriter
Swiss Re Corporate Solutions

The companies that succeed are the ones that communicate most effectively. Because there are so many players (vendors, manufacturers, 3PLs, carriers) and software all working together to run a supply chain, the companies that create a common vision, communicate the vision, and hold all parties accountable to the same standard are the ones that have adapted to the pandemic successfully.

—Keith Moore
Chief Product Officer
AutoScheduler.AI

Inventory is not necessarily the “evil” that supply chain professionals once thought. Having distributed inventory in strategic locations at an inventory carrying cost that does not burden your balance sheet can be the key to supply chain resiliency and winning.

—Tom Nightingale
CEO
AFS Logistics

Having the right systems and technology matters. The supply chain changed in a hurry, our systems and technology helped us to adapt quickly with it. We were able to quickly identify obstacles and overcome them. By embracing forward thinking, we were able to limit the impact of supply chain issues.

—Lonny Holston
Export Operations Coordinator
Mickey

Two things we have learned: We must: 1) understand data to minimize risk and 2) identify weak spots in the supply chain to improve workflows. Organizations that have met the challenge of the past two years have done so by making calculated investments in technology and processes to limit disruptions.

—Mark Casiano
SVP, Sales, Marketing & Customer Experience
Odyssey

The past two years exposed infrastructure cracks in our industry—specifically when looking at effective capacity at ports and equipment availability. Simply adding more ships and more containers will not get us anywhere if there is not more capacity in the system to receive those containers.

—Nathan Strang
Director, Ocean Trade Lane Management
Flexport

Visibility is vital. The shortages of raw materials and extended supplier lead times have drastically increased stock-outs. You need complete visibility of 1) inventory indicators to ensure you can meet demand and 2) knowing how well your suppliers perform.

—Ara Alec Ohanian
Group CEO
NETSTOCK

We need to fully digitize our supply chains if we want them to be resilient in the face of unexpected disruptions. By unifying our digital systems, applications, and processes, we will be able to efficiently manage supply chain operations.

—Antony Francis
Supply Chain and Logistics Consultant
Endava

Retailers need better information to navigate quickly. As supply chain bottlenecks have impacted every retail touchpoint, winning means knowing your options and what the market is doing. With AI-driven market intelligence, brands can make better and faster decisions to deliver great customer experience and grow revenue.

—Juliana Prather
CMO
EDITED

We learned how to stand up brand new distribution operations in new markets at warp speed. In some cases, we went from no market presence at all to lease, equipment, and team in place and completely RF-integrated in just three weeks. We also delivered a building five months ahead of schedule.

—Dale Young
Vice President
Warehousing & Distribution
World Distribution Services LLC

The pandemic is by no means a short-term crisis event. Its impact on the work of people and the functioning of the supply chain in the organization will be long term. Therefore, in order to effectively confront the challenges of the future, the business must increase long-term resilience along the entire supply chain. To do this, supply chains must leverage platforms that offer access to applied analytics, AI, and machine learning solutions, and provide end-to-end transparency.

—Dmitri Fedorchenko
CEO and Co-Founder
Doft

The retail supply chain can no longer be protected from the impacts of omnichannel. The volume of omnichannel purchases and fulfillment has grown to the point that retailers can’t treat it like a rounding error. They must make supply chain strategy and network changes or risk losing their shirt—literally and figuratively.

—Nikki Baird
VP, Retail Innovation
Aptos

The most surprising lesson I learned was how much the supply chain relies on commercial uplift. The airlines fly passengers all over, and airline companies reserve space for cargo on commercial flights.

We saw firsthand how much companies relied on airplanes, so when the pandemic hit, and there were fewer flights happening, that contributed to the bogged down supply chain. As more passenger flights come back, that has the potential to ease supply chain challenges.

—Dustin Hansen
CEO
InXpress

The magnitude of disruptions supply chains faced over the past two years demand rapid innovation. The world around us has changed fundamentally, so legacy systems and their outdated approaches no longer serve supply chains well.

Adapting an adage, futility is doing the same things and expecting the same results, even when the underlying assumptions have shifted. Supply chain leaders who have digitally transformed their organizations are the ones positioned to address emerging trends, mitigate risk, and identify new opportunities.

—Polly Mitchell-Guthrie
VP, Industry Outreach and Thought Leadership
Kinaxis

Adaptation is absolutely critical. You have to offer substitutes, source creatively, have a plan B and maybe even C, and be vigilant in getting accurate data.

—Kevin Ledversis
Sales Director
Newcastle Systems

It’s more important than ever to “architect” agility into processes. The growing complexity of supply chains introduces plenty of opportunities for things to go awry. The more shippers can digitize and standardize manual operations, the better equipped you are to pivot when needed and keep shipments moving.

—Virgil Ferreira
COO, Rate Management
Magaya

The pandemic highlighted the need for a much closer relationship between manufacturers and their 3PL partners. We are working more closely with our partners than ever before—developing innovative and collaborative approaches to tackling these new, longer-term challenges.

—Jim Saponaro
President, Life Sciences & Healthcare
DHL Supply Chain

Relationships now are more important than ever. Whether it’s developing partnerships with secondary and tertiary suppliers to meet rising demand, or managing the expectations of vendors and customers during challenging times, the importance of establishing and cultivating strong, lasting relationships cannot be overstated.

—Jonathan Parks
Senior Vice President, Supply Chain
iGPS Logistics

Amateurs hunt dollars, professionals hunt relationships.

—Whit Smith
Director of Operations
TA Services

We need to be able to plan and face the consequences that result from the consolidation trend of brands and businesses. Consolidation has caused massive inefficiencies and created a lack of options due to the absence of competition. Many companies have benefited in the short term from these mergers but do not recognize their role in the supply chain or do not plan accordingly.

This has resulted in practices that can be monopolistic in nature and can have disastrous results in the operation of the chain, especially for smaller brands and product lines. However, big actors, who have actively promoted mergers and consolidations did not realize—maybe until very recently—that their operations are at risk as well. Until these larger groups and brands realize that their practices have affected the overall functioning of the global supply chain, logistic partners need to be prepared for disruptions.

—Eric Gomez
CEO
maxiaNET

Source: www.inboundlogistics.com

Image: www.pixabay.com

The post What is the biggest supply chain lesson you learned from the past two years? appeared first on Cargo News Today.

Let’s look at some of them:

The pandemic

COVID has changed the way we do business. Companies that had moved to the cloud before the pandemic had an advantage over those that had not. Matt Twomey of Electrical Terminal Service explains why being in the cloud helped him and his employees when the pandemic hit in this video. Having systems like email, ERP, and customer relationship management (CRM) in the cloud allows employees to work from anywhere with internet access.

According to an article on The Techportal.com: “It is estimated that at least 1,000 new variants of ransomware were detected on a daily basis, and some nations were subjected to a dramatic increase in attacks. The United States has seen a rise of at least 125% in ransomware attacks, while the UK surpassed that with a surge in cases that exceeded 225% compared to previous years.”

Moving your systems from on-premises to the cloud allows you to take advantage of the billions of dollars the major hosting companies like AWS spend on digital security.

Growth & costs

A cloud-based system grows as the company grows. You only pay for what you use. With an on-premises solution, your company is responsible for purchasing and maintaining the hardware necessary to store your data.

As the business grows, the need for additional hardware and IT professionals to maintain them increases. Distributors can save upward of 30% or more on total cost of ownership by moving to the cloud. This move frees up valuable IT resources to drive innovation in other areas of your business like improving customer experience. Lastly, growth with innovation like artificial intelligence or AI is easier and less expensive in the cloud.

Always operate on the most current version

With a cloud-based multi-tenant system, you always have the latest version with the newest capabilities. Bringing an on-premises system down to upgrade to the next version introduces unnecessary risk into a distributor’s business.

Real-time access to data and inventory

How often do sales reps have to call the distribution center to see if an item they are trying to sell is in stock when levels are lower? How often is customer-specific pricing not immediately available? Storing your data in a data lake for immediate updating and retrieval makes your people more efficient and enables them to serve your customers better.

At the NAW 2022 Executive Summit in Washington, D.C., I asked Adam Isenberg, VP of Strategic Partnerships at the National Association of Wholesaler-Distributors, why he thought it was important for distributors to move to the cloud. He said, “Distributors find themselves squarely in the center of the supply chain. As technology demands from both customers and suppliers continue to increase for distributors, their ability to adapt and invest in new technologies to maximize efficiency, transparency, and profitability is key. Many firms throughout the $6-trillion distribution industry have migrated their technology to the cloud with measurable success.”

The bottom line

To cloud or not to cloud? The benefits of cloud are compelling: the ability for employees to work from anywhere, data security from ransomware attacks, ability to grow and only pay for what you use, no upgrade disruption, and access to data in real time. You decide.

Source: www.inboundlogistics.com

Image: www.

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The COVID-19 pandemic shined a spotlight on the frailty of the global supply chain. As a result, business leaders have spent the better part of two years pursuing solutions and strategies that can help build more resilient supply chain operations. This enhanced focus on agility and resiliency has also driven increased interest in supply chain sustainability efforts—and for a good reason.

Companies that already had robust sustainability programs in place before 2020 learned that supply chain resiliency was an inevitable side effect of those initiatives. As a result, advocates of environmental, social, and governance (ESG) programs may now find it easier to get support from the boardroom as the world moves beyond the pandemic.

WHY DOES SUSTAINABILITY CREATE RESILIENCY?

In a Stanford Graduate School of Business study, 63% of buyers and 73% of suppliers said their sustainable procurement practices helped them endure the pandemic. The same study showed 70% of procurement leaders saw supply chain resilience as the desired outcome for their sustainability efforts. In addition, MIT’s State of Supply Chain Sustainability report showed many companies maintained or increased their sustainability investments throughout the pandemic.

• Responsible partnerships. When suppliers, carriers, logistics partners, and other stakeholders willingly share data about their operational practices, it becomes easier to identify risky partnerships. Building a sustainable operation requires eliminating contracts with businesses that behave in risky ways. When markets become volatile, the company can then rely on a more robust partner network to help it weather the storm.
• Established visibility. Sustainable companies already have visibility in their supply chains, and visibility is a cornerstone of resiliency. With transparency between supply chain partners, all parties can identify mutual risks and implement measures to mitigate them. As a result, sustainable companies communicated with partners and reacted more quickly to disruptions caused by COVID-19.
• Climate change. The effects of climate change have already begun showing themselves in the form of more frequent storms, flooding, wildfires, droughts, and more. These events have a disruptive effect on the supply chain, meaning decarbonization efforts tie directly into future supply chain resiliency.

DOES YOUR LOGISTICS PARTNER SUPPORT YOUR ESG EFFORTS?

Third-party logistics (3PL) companies play a crucial part in supporting broader corporate sustainability initiatives. Your 3PL can support your ESG efforts in the following ways:

• Transportation. Logistics providers can optimize routes to use less fuel, locate inventory nearer to your customers to minimize delivery distances, and consolidate shipments to reduce the number of trucks on the road.
• Packaging. A 3PL can help you identify greener packaging options for your shipments to reduce landfill waste.
• Energy-efficient warehouses. Simple adjustments such as climate control, LED lighting, and solar panels optimize energy usage in the warehouse.
• Reverse logistics. Your 3PL can optimize your reverse logistics practices, keeping usable inventory out of landfills and allowing you to resell or dispose of returns responsibly.
• Fair labor practices. When it provides a good work/life balance, fair wages, and responsible labor practices, your 3PL functions as an extension of your ESG initiatives.
• Data transparency. Sharing data allows you to work with your 3PL to identify risks and areas for improvement.

If you want to have a sustainable supply chain, choosing a logistics partner that can align with your company values and practices is essential.

Source: www.inboundlogistics.com

Author: Robert Kriewaldt, Senior Vice President, Phoenix Logistics

Image: www.pixibay.com

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The new guidance is designed to help to accelerate the transition towards safer and more resilient supply chains, while supporting Covid-19 response and recovery efforts.

Digital innovations are helping the air transport sector to transition away from paper-based documents used to facilitate the movement of global airfreight, promoting a contactless air cargo environment and greater cross-border trade resilience in the face of future pandemic threats.

In line with the recommendations of the ICAO Council’s Aviation Recovery Task Force (CART), the specifications aim to help reduce physical contact among international trade and transport professionals, and in so doing better protect the fluidity of cross-border trade and international transport operations from pandemic-related restrictions.

“The latest innovations reflect ICAO’s integrated, collaborative, and multilateral approach to transport policies encompassing air cargo and mail supply chains, and will play an important part in addressing both current and future pandemic risks,” highlighted ICAO secretary general Juan Carlos Salazar. “It’s our expectation that they will help address the tremendous double strain now being placed on global supply chains, whether by the COVID-19 pandemic itself, or the incredible surge in international e-commerce which has accompanied it.”

ICAO’s collaboration with UNECE on supply chain digitalisation is an outcome of the Joint Statement on the Contribution of International Trade and Supply Chains to a Sustainable Socioeconomic Recovery in COVID-19 Times, which was signed by eight UN agencies in September 2020.

Digital specifications will now replace the formerly paper-based Air Waybill (AWB), Dangerous Goods Declaration (DGD), and the Consignment Security Declaration (CSD). These in turn form part of a broader suite of deliverables for multimodal transport data sharing, applicable to air, road, rail, maritime and inland water transport.

Source: www.aircargo.com

Image: www.pexels.com

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The Omicron virus may be less deadly than prior variants of the virus, but it is taking a heavy toll on businesses and their supply chains.

The air cargo sector is being hit particularly hard. Schedules are in disarray as flight crews are unavailable because of infection, a patchwork of national policies shuts down routes at short notice, and infections and quarantine measures are decimating ramp and warehouse crews, affecting the flow of cargo.

In probably the starkest example of the impact of Omicron, Cathay Pacific stopped longhaul freighter flights for seven days altogether.

It has since resumed all-cargo service to the Americas at a much reduced level, but management does not expect to be running freighters to Europe through March.

For forwarders, these developments have made finding and booking flights a time-consuming slalom through quicksand.

Like airlines, they have been stretched to the limits since the pandemic started and have little leeway to absorb further complications and hurdles.

In the face of the pandemic this industry has shown remarkable flexibility and an ability to re-think the business, coming up with new solutions that often involved collaboration with other parties, including competitors.

Operators have shared resources and facilities with their rivals to keep cargo flowing.

A second crucial part of the struggle has been the effort to streamline processes and automate repetitive, routine functions.

Most firms are understaffed and can ill afford to waste their precious human resource on activities that a computer can perform. And in the current chaos of schedules and pricing, they do not have the time for this either.

Start with bookings. Before Covid it made sense for forwarders to send out blast e-mails to multiple airlines requesting quotes for a shipment.

How many carriers have the time to respond to this today? There is no reason why pricing queries, and indeed the full booking process, should not be performed online.

Of course, this can only happen if the airlines do their part to make this avenue viable. Posting last month’s rates on their website is not adequate.

They must offer fully functioning booking capability with the latest schedule and price information – ideally through multiple channels, but at least on their websites.

Source: www.aircargonews.com

Image: www.pixibay.com

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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

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The latest statistics from the Association of Asia Pacific Airlines (AAPA) show that during the month cargo demand at the region’s airlines increased by 16.5% year on year and stayed above volumes recorded in the pre-pandemic months of 2019.

The international freight load factor remained “elevated”, averaging 73.2% for the month, after accounting for an 11.8% year-on-year expansion in offered freight capacity.

Subhas Menon, AAPA director general, said: “The resilience of the cargo sector continues to be an important lifeline for the region’s airlines during this pandemic.

“On the other hand, oil prices have risen significantly, with jet fuel prices averaging US$92 per barrel in November, almost double of the corresponding month in 2020, adding to the challenges airlines face in a bid to restore profitability.”

Menon added the spread of the Omicron variant would impact aviation’s recovery in the region.

“Overall, full restoration of international air travel remains some way off. The abrupt re-imposition of travel restrictions by many governments in the face of the rising spread of the Omicron variant threatens to hold back the long-awaited revival of Asia’s travel and tourism industry.

“Collaboration and coordination of industry stakeholders across borders are critical to the safe and sustained resumption of international air travel, without which, the recovery journey will likely be volatile and uneven.”

Source: www.aircargo.com

Image: www.pexels.com

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