Freight and transport managers encountered both old and new problems in 2022. And many of these started during the pandemic or earlier. The industry had to fight against inflation, worker shortages, tougher regulations, and cybersecurity problems - just to mention a few.
Unfortunately, many of these are getting carried over to the next year. As the market is evolving to keep up, newer problems are popping up as well. The trends suggest that 2023 will be a similarly challenging year.
To learn more about what’s causing these changes in the market, check our article The future of Freight Forwarding in Europe.
Understanding these is the first step in preparing yourself to deal with these problems and guarantee transport efficiency in 2023.
Let’s look at the top 3 challenges transportation companies will face in 2023 – and what you have to do to overcome them.
Worker shortage and high transportation rates
In 2018, there was a shortage of 50,000 truckers in the USA. This happened because the job conventionally had high work stress and low pay. Plus, truckers have to stay away from home for extended periods.
However, if we fast forward to after the pandemic, it’s gotten much worse. According to a IRU research, unfilled truckers' positions increased by 41% in 2021 across Europe. Warehouses are facing similar issues as the cultural shift is also playing a role here.
Combine this with the boom in e-commerce and consumption and you can see the demand has exceeded supply, impacting the entire supply chain, but especially transport.
- Implementation of measures to improve wages and work conditions, attracting the available workforce from other industries - important initiatives, but that in some cases can’t be put in place so fast;
- So, companies must focus on automation and outsourcing. These can help mitigate the issue;
- Route optimization and more practical routing can help. Route optimization software can help reduce driver stress and increase retention.
Increased Transport Cost
The Russia-Ukraine war, inflation, Brexit, shipping delays, labor shortage causing operational costs, and the increasing energy fuel prices have all caused transportation costs to soar. Gas prices went up by 40% during 2020-21 and hit a record high of $5 per gallon in June. The whole logistics industry is suffering, but there are ways to optimize it.
- Although this might feel like a lost battle, technology can help alleviate the issue. Proper data research can allow for more efficient and consolidated shipments, with cargo usage and route optimization. After all, decreased mileage equals decreased fuel consumption and less operational risks.
End-to-end Transparency and Cyber Security
As the economic landscape kept changing during covid and the Russia-Ukraine war, companies felt the need, more than ever, to automate everything as it cuts costs, reduces logistical issues, and makes navigating through these confusing times easier. However, companies soon realized it’s harder than they thought – and the reason for this would be the lack of end-to-end transparency.
So, what does it mean?
Knowing what’s happening in every part of your chain with 100% certainty and tracking all of them in real-time is end-to-transparency. This allows data based decisions in every part of the transportation process and better reactions to unforeseen events and market demands.
The modern logistics market requires companies to know exactly where the shipments are to collaborate with outsourcing suppliers in real time. This is practically impossible without end-to-end transparency and data visualization.
Companies that had previously worked on international shipping have realized that their investments in visibility have more uses. They are gaining more profit with better rates, efficiency that results in time to focus on costumer experience, and reduced operational risks – especially during disruption moments like the ones mentioned before.
- Investments in internal process digitization to allow strategic market partnerships;
- Outsourcing with Transport Management Platforms which can provide real-time data and allow intelligent freigh forwarding decision making.
While digitalizing, a challenge faced by companies is cybersecurity - and the logistics industry does not scape it. Data shows there was a 51% increase in attacks on the supply chain by hackers. This trend will keep increasing as companies focus on automizing their processes and, since our industry is inexperienced in this sector, it’s can be a low-hanging fruit for malicious attacks.
So, a transport management challenge would be in 2023 would be cybersecurity.
- Hiring specialist information officers, training existing employees, and investing in 3rd party secure softwares can give the much-needed edge over hackers.
Going Green and Sustainability
2022 - 2023 scenario
The ongoing global crises have a price hike in all sorts of commodities, the Institute of Supply Chain Management (ISM) reported. Supply and labor shortages have played a key role in this. However, these slow deliveries and rising prices have strained the relations between consumers and sellers.
A challenge for transport managers would be to make themselves more flexible and give reasons to customers to choose them over others.
- Transport and supply chain players must sync with market demand and be more efficient regarding storage practices;
- A more diversified list of backup suppliers can be useful;
- Embracing electric trucks can result in lower transport costs and emissions.
Pressure to Go Green
This brings us to the final theme of this discussion and one of the central themes of this decade – environmental awareness. Consumers and governmental regulations are pressuring companies to be mindful of the environment and adopt eco-friendly solutions.
Following the increase on consume around the world, researches show that the emissions of CO2 from the transportation sector in Europe went up by 7,7% in 2021 - with the tendency to go even higher until 2025 if the industry doesn’t apply additional measures. Some of them can be implemented now and generate quicker development:
- Supply chain process should adopt circular economy practices - and companies outside the logistics industry should also follow it;
- Adoption of inter and multimodality to optimize truckload capacity and routes, that can result in a reduction of about 60 to 90% of CO2 emissions compared to unimodality;
- Usage of freight forwarding platforms that guarantee CO2 footprint visualization as a part of the transportation decision making process.
To Wrap It Up
Managing a transportation chain is hard, no matter the year. Even though transport managers are no strangers to external and internal challenges, understanding the disruptions about to come is the first and most important step to stay ahead of them.
During this article we talked a lot about making important logistics partnerships and outsourcing to gain operational efficiency. rouvia is the first transport planning and management platform for freight forwarders and logistics teams that integrates all modes of surface transport, with route optimization and CO2 footprint data visualization to guarantee you’re making the best decision for your process. Get started now.