Challenges in the Supply Chain Industry?

April 28, 2021 Supply Chain

This pandemic has caused widespread challenges in almost all global industries. And it continues in doing so even in nations that have this pandemic under control. Logistics and supply chains that specifically depend on international trade went bust, as countries started shutting down.

The Grim Scenario

With the progress of 2020, the weaknesses of the supply chain industry were brought into the spotlight, and the companies that had not aligned themselves with the updated trends of the operation were badly hit. With increased controls at borders and mismatched customs regulations, and overnight changes and reduced capacity for long hauls and other sudden developments, the logistics and supply chain industry were stumped in the past quarters. The global economic slowdown impacted the freight and logistics industry adversely, and experts believe that this impact is likely to be experienced well into the future.

The challenges facing the supply chain industry

The challenges faced by the supply chain industry are many, but there are specific strategies to tackle these challenges effectively.

Limitations set in the sea and air freight

With countries gradually shutting down its borders and economy, it was the freight and logistics industry that faced the first effects of COVID 19. With all the cancelled flights and grounded airplanes, the market experienced the shortages of various supplies. However, with time as the nations started opening up and the flights were resumed, the cargo business stepped up to an extent. But still, it is not sufficient to be meeting the demand of the market. Alongside COVID-19 related complications and regulations have led to persistent delays.

Adverse Impact on Land Transport

The supply chain industry does not stop by only international shipping, but rather in transporting the goods finally to the end consumer. Land transport was severely impacted by the pandemic, and as a result truck drivers needed extra permits to operate as the provider of essential services. Increased demand has been felt in groceries and supplies of medicine, and this together has led to the overworking of the truck drivers. This has also caused delays.

Closed Country Borders

Businesses that imported raw produce from other nations were severely impacted in this pandemic. Even prior to COVID, due to politics, suppliers from China were taking a hit. And now, due to speculation regarding the origin of the virus, it is unlikely that the situation will improve. Hence, as a result of this, a number of supply chain businesses dropped their communications with the questionable countries. And this has brought a hit on the overall business and revenue generation of the industry.

Shortage of Labour

Massive layoffs and termination have happened since the onset of the pandemic as companies stopped producing and operating, and therefore it was not possible to support their employees. Work structure has dramatically changed, and the fear of viruses has led to a large number of the qualified workforce to adopt work that would allow them to work from home. The supply chain industry is worst hit in this aspect, as the majority of the work they provide is on the ground and not from home. This shortage of labour has automatically posed a severe challenge to the logistics and freight industry.

Lack of Appropriate Contingency Plan

The businesses in the supply chain industry were hit as contingency plans for such a situation were never in place. Ideally, it is suggested that businesses, in order to remain afloat, must have several strategies in place. However, the pandemic only showed how little of that was followed in the business world. Over half the companies in this industry have been compounded with the blackouts of the supply chain along with their stakeholders. This led to a grave impact on the economy as well as to the consumers.

The Road Ahead

The global supply chain industry consisting of the logistics and freight industry, is expected to grow at a CAGR of 5% in the period from 2020 to 2025. But this will only be possible if the industry can devise strategies to effectively deal with the pandemic posed challenges. Strategies like increased stakeholder collaborations, using strategies of emergency and mitigation enforcements and overall embrace of technology would help the industry in future.


Frequently Asked Questions

1. What is a supply chain industry?

Answer: Supply chain industry consists of the shipping, logistics and freight industry of the world.

2. What are the key challenges?

Answer: Limitations of sea and air freight, land transportation, shortage of labour and lack of contingency plans are the key challenges.

3. What are the survival strategies?

Answer: Focusing on innovative technologies, meeting customer expectations and collaborating with stakeholders will help logistics businesses to overcome the challenges.

Newage’s mission is to assist global freight forwarders by streamlining their operations and helping them scale up their business with a state-of-the-art freight management system.