Challenges in Logistics Industry

April 24, 2021 Logistics

Regulatory Constraints

Logistics processes need to comply with government regulations. The suppliers/carriers have to comply with various federal & state guidelines. For example, carriers who are involved in the supply of goods via heavy vehicles need to comply with various road & transportation regulations. Getting safety accreditations for heavy vehicles is also a concern for logistics firms.

Environmental Safety

The emissions from vehicles & transportation mediums do harm the environment. There are various state & federal regulations regarding environmental safety. Top firms in the logistics industry hire an expert EHS (Environment, Health, and Safety) officer to help them in complying with the environmental protection laws.

Employee Recruitment & Retention

It is generally hard to find skilled drivers for fast-paced & safe delivery of goods from the point of origin to the point of consumption. The managers/recruiters in the logistics industry have to find reliable talents who can pace the logistics process.

Real-Time Delivery Information

Customers have been more demanding in terms of transparency while expecting their delivery of goods/services. Package delivery personals may receive calls from customers four times in an hour regarding their package. Your employees should be polite while adhering to customer guidelines. Nowadays, customers can track the location of their packages in real-time. Reports also have shown that more than 50% of customers are ready to pay a little extra if their delivery can arrive a little early. Keeping up with customer expectations can give rise to many spontaneous challenges. Logistics professionals have to ensure that full transparency is provided to the customers.

Natural Restrictions

Natural disasters or mishappenings in any particular geographic location can halt the logistics supply chain. The recent pandemic also created many supply chain restrictions, including workforce shortage, lack of contingency strategies, and sealed borders. The logistics industry needs to have good resilience plans to overcome any naturally occurring hindrances.

Business Process Management

If you are operating a logistics firm, then you need to have robust business processes to manage the supply chain & material movement. Many firms involved in the manufacturing of goods tie-up with a third-party logistics firm to help them in transporting the goods/commodities to the consumers. Logistics firms have to bring innovation to their business processes to stay at the top.

Cost Optimisation

The rise in fuel prices is a major concern for the logistics industry. Besides fuel costs, there are many small & big costs involved like vehicle management and toll taxes. One has to cut costs whenever needed and has to allocate resources properly to gain maximum output. The lack of demand due to the falling economy growth rate, brand value, etc., also concerns the logistics industry.

Technological Enhancements

As a logistics firm/professional, you have to cope with the technological enhancements that are improving the processes involved in the logistics industry. The top technologies that are currently being used to enhance the supply chain management system are shipment tracking system, IoT (Internet of Things), GPS tracking system, drone delivery, RFID (Radio Frequency Identification), etc.

Steps Required to Cope up with the Challenges

Some of the steps that can be followed in the logistics industry to cope up with the changes & challenges are as follows:

• You must be able to create collaboration opportunities for cost optimisation. For example, two third-party logistics firms can share storage space if needed.

• You should have dual sourcing of raw materials for reducing delivery failures.

• A logistics firm should have employees who can help them in coping up with technological enhancements. Usage of new-age technologies can help in speeding up logistics processes.

• You should be able to create a habitable environment for your employees to retain the top talent.

• Standardisation of processes/actions in a logistics firm can help in complying with the safety & environmental regulations.

In a Nutshell

The logistics industry has been continuously subjected to reforms and will continue to face challenges. Logistics professionals must be able to identify risks and manage them in due time. To stay afloat amidst huge competition in the logistics industry, digital reform/innovation is the best choice. You can save your money, human resource, and time by adapting to technological advancements in recent years. Start automating supply chain processes.


Q. Will autonomous vehicles make an impact in the logistics industry?

Autonomous vehicles can address the shortage of skilled drivers. It will not completely disrupt the use of the human intervention. The logistics industry will still need skilled

professionals to handle processes.

Q. How to enhance supply chain transparency?

Auditing, remediation, standardization of policies, etc., can help you in improving the supply

chain transparency. You should develop an effective governance system in your organization to increase supply chain transparency.

Q. How is blockchain used in the logistics industry?

Blockchain is used to enhance the security of the supply chain database. It can also help in customs documentation, record-keeping, record-tracking, etc.

Q. What are the challenges encountered in reverse logistics?

Some of the common challenges faced in reverse logistics are high costs, inability to signify the rationale of returns, poor product visibility, labour shortage, etc.

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