2021 saw many major challenges for logistics and supply chain professionals. With capacity constraints, ecommerce growth and driver shortages creating dilemmas for many as well as the increased focus from the industry on environment and machine learning, it was a year that was definitely not without its tests.
While reflecting on some of the ways the industry sought to overcome these challenges, Chris Jones, Executive Vice President, Industry & Services at Descartes Systems Group, takes a look at what to look out for in 2022.
Global supply chains will be busy, congested, and chaotic.
The challenges facing global supply chains show no signs of slowing down, with UK businesses left to navigate the complexities of Brexit and the subsequent delays to their operations, alongside the extra administrative burdens. Whilst some of the uncertainties surrounding the transition are beginning to ease, many firms remain concerned about how delays could impact their operations post-Brexit.
The key to navigating customs clearance is undoubtedly preparation. Planning is crucial not only for compliance – but also for growth and resilience – and businesses that are yet to lay the groundwork risk accidental non-compliance and further congestion at ports. With full UK customs changes now in effect as of January 1 2022, businesses should prioritise the implementation of supply chain software solutions to take back control and handle customs declarations in-house or ensure they work with a customs partner who can provide full transparency at every step of the process.
The pandemic saw an increase in ecommerce that is set to continue in 2022 as the changes in consumer buying behaviour become more structural. This clearly presents both an opportunity and challenge for retailers and last mile logistics companies. The increase in volume will increase the challenge on an already tight last mile delivery capacity. Speed and reliability of deliveries will either come with a premium price, or remain as uneven as it has been over the last two years. For example, Amazon’s Whole Foods business is now incrementally charging for delivery to offset increased delivery costs.
We anticipate that more companies will re-evaluate their “free” delivery strategies and look for alternative delivery strategies such as combining deliveries for individual customers or locations, in order to minimise delivery costs and maximise the available delivery capacity.
Whether long haul or last mile, the driver shortage is endemic and will continue to materially impact retail, distribution, and logistics companies. While finding new drivers to replace or add capacity will remain important, it’s also much harder to find drivers now than it has been in the past.
Instead, in 2022, companies will focus more on driver retention and productivity. Lowering turnover – which has traditionally been high – puts less pressure on the number of drivers that need to be hired and keeps the more experienced ones improving delivery performance. Keeping drivers driving and reducing stress will be the top retention priorities. Companies will need to do a better job at reducing wait times and improving driver quality of life through routes that are more realistic to execute, that don’t result in extended wait or on the road time and facilitate more predictable hours.
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Editor, International Trade Magazine
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