Challenges facing the logistics industry

Over time, all companies must adapt to changes within their industry in order to survive.

For the logistics industry at large, there are a few notable factors and issues being faced today (and that will need to be faced in the future) that present problems if not effectively addressed. Whether it’s the changing nature of supply and demand due to the digital age or the greater awareness of climate change, here are some key challenges that the logistics industry needs to address.

Demand

One key challenge that will undoubtedly influence the future of logistics is the nature of supply and demand. As you know, the more a certain item is demanded, the more efforts will be made to have said item in ready supply. But the nature of supply and demand is changing, thanks chiefly to society’s movement towards digital over physical. 

Of course, this doesn’t apply to everything, but things such as movies, TV shows, music and video games and books all have their digital counterparts. People can purchase eBooks over regular books, they can download music on iTunes and Google Play as opposed to buying the physical CDs, most video games can be downloaded digitally, and the same goes with movies and TV shows – often at cheaper prices (the cheaper prices being due to the fact that packaging and postage/handling/logistics no longer are factors).

For Australia, the digital revolution isn’t always to most popular option given our subpar internet speeds and stability, but for products where download sizes aren’t that big (e.g. CDs and books), downloading is certainly removing some of the demand for physical copies.

What this does mean is that in the future when our internet’s infrastructure improves and fast internet speeds and stable connections become more commonplace, any product that can have a digital counterpart may lose some of its demand. Food and beverages will still retain the same logistical demand (you can’t have a digital drink, after all), but there’s an entire product area that could become far less necessary.

Operational costs

It’s not secret that the costs associated with running a business tend to always increase. For the logistics industry, this is just as applicable as any other industry. And when your business involves covering hundreds and thousands of kilometres within a matter of weeks while carefully transporting goods, each and every associated operational cost is more than likely going to go up.

This increase in cost means that businesses need to constantly reassess where their money goes. Should they invest in vehicles that will cost them less to run in over a long-term period? Is there a way to be more fuel efficient? Are there any possible routes that can be mapped out that would require less travel time and fuel consumption? Even the most minor of changes can be solid money savers in the long run. But regardless of how you look at saving money, the assured increase in operational costs mean such money saving measures will need to be employed.

Environment

One factor that will present a very real challenge for many businesses in the future is the environment. While on a governmental level climate change may be on the backburner for the time being, the former Labor government had it as one of its key focuses, which led to the introduction of the carbon tax.

Moving forward, regardless of whether the federal government gives climate change much airtime or not, emerging generations will place a far greater weight on the importance of businesses being more environmentally-friendly. Studies have shown that Gen Y and subsequent generations are more liberally-minded (left leaning) and that issues such as climate change are chief among their concerns.

And with 97% of scientists agreeing that human beings are the chief cause of climate change, it’s not just a matter of a generation-specific attitude. Sooner or later, climate change will face a more sobering need to be addressed, which will have some notable influence on individuals and businesses of all types.

* Image source: Stuart Miles / FreeDigitalPhotos.net