What in the world (of logistics) is happening in 2024?
Why the need for resilience and agility dominates the global logistics landscape.
Ever since the notion of the “global village”, the world of commerce has literally been getting smaller and larger at the same time. Now with the skyrocketing technological uptake, increasing international demand for goods and services, and the pursuit of ESG goals, the global supply chain landscape is morphing at an unprecedented rate. In this industry trends article, we explore what has recently occurred on the global supply chain front, what is happening now and what may lay over the next horizon.
For those that maintain a keen interest in the who’s who of global logistics it will come as no surprise that United Parcel Service inc., Deutsch post AG, FedEx Corp, and entities such as AP Moller Maersk AS and CEVA Logistics dominate the logistics world’s revenue ranking. We also know that out of the top ten global logistics entities, 4 are based in Europe, three in Asia, and a further three are based in North America. Looking at how these operations approach integration of information, transportation and visibility, inventory, warehousing, material handling and packaging, in a multinational network, provides important insights into issues that affect time, cost and quality.
The difference between then and now in global logistics
It’s important to note that the demands and pressures placed on international supply chains increased at a gradual and often predictable rate up until the advent of ecommerce. Once the idea of the global village became one with the universal realisation of benefits around ecommerce, traditional expectations of global supply chains increased exponentially. Goods and services that became popular in one country or across a particular continent quickly gained notoriety, popularity and traction in other parts of the world.
From there, it was only a matter of time before expectations grew to the point where what was available in one market was expected to be almost instantly available across the globe. And with those expectations came a huge increase in demand. However, along with the increased demands and complexities of today’s markets come increased complexities of modern-day global supply chains and associated issues. These issues are too numerous to look at in detail, but for the purposes of a broad-brush insight, we can point to a number of drivers of success/complexities that trends.
5 complexities that need to be identified, managed and overcome
Aside from the economic forces, technological advancements, and political and social factors that need to be taken into account when considering the global logistics landscape, there are a number of complexities that are worth keeping top of mind:
1. Unforeseen disruptions can take the form of political instability, trade wars and associated delays, shortages and increased costs, and the unpredictability of natural disasters.
2. S for sustainability. The increased demand that necessitates an increased logistics footprint also impacts the environment in which we all live and work. This is obviously a growing concern in relation to the recognised importance of ESG.
3. Ethical concerns and transparency. Here, the focus is on ethical sourcing and what that means in terms of resource acquisition and of course, warranted concerns around modern slavery, particularly in developing countries.
4. Compliance and associated complications. The business of international trade and customs can be fraught with complications as regulations may and do vary from one market to the next and from country to country, and region to region.
5. Innovation is an interesting one because increased customer/client/end user expectation demands the supply chain maintains service levels and while anticipating service expectations.
Another critical question we often ask in order to navigate our way to a solution is, how did we get here? So, let’s look at some of the issues of today that will most certainly continue to impact the global logistics landscape tomorrow.
What’s happening and what’s next?
As mentioned, the preceding five points are broad brush indicators of the complexities and concerns that need to be addressed by today’s global logistics companies. But for context, let’s add a layer of detail to some of them and dare to suggest possible outcomes:
Climate change and geopolitics are conspiring to make things challenging for global logistics. Traditional shipping routes like the Suez Canal are being avoided by some because of the crisis in the Red Sea. While simultaneously, certain carriers are having to make decisions between long waits in queues versus rerouting because of sub-optimal water levels in the Panama Canal. Predictably, or unpredictably, the result is and will be, longer lead times with knock on effects across many of our leading industries.
Labour disputes are affecting North America-based supply chains from the Port of Montreal down through to the US East Coast and Gulf Coast dockworker union-controlled operations. Again, the result is longer lead times.
Stricter regulations are not only fortifying ethically vulnerable sections of the supply chain, but they are also positively impacting the environment. Goods travelling to or from the European Economic Area are subject to the EU’s new Emission Trading System. This will undoubtedly favour logistics companies who are investing in diversification and ESG principles within their supply chains.
Finally, a recent survey by Accenture suggested that 78% of companies plan to use multiple sites to produce products compared to the 41% that were prepared to do the same in 2023. That’s a fairly steep increase in trajectory by any measure and one that suggests that this will be the way of the future, especially seeing as the current surplus of container ships may be used to help insulate the global logistics landscape against disruption in the future.
Here at the EPSA, we will continue to monitor the industry trends that impact and influence the way we all conduct our operations, and we hope that these insights focused on the global logistics landscape will be useful to you.