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What Are the Current Challenges In the Shipping and Logistic Industry?
Shortage of skilled staff
Offloading the goods quickly into the port minimizes the storage time in the warehouse. It means there is no congestion in the shipping process, and products can be delivered on time. But in recent times, the shortage of staff in the shipping and logistics industry have witnessed the slowing down of the offloading process and put more strain on the employees to do their job faster.
Not going digital
The shipping and logistics industry has a complex structure and involves many segments. Although stakeholders and managers have a strong urge to digitalize the entire shipping process, there are still blockages on their path. Low internet bandwidth, lack of infrastructure, hesitation towards new technologies, etc., are a few reasons that prevent them from going truly digital.
Unexpected demand for goods
Dealing with the unexpected flow of goods due to seasonal festivals or events with a limited warehouse capacity is a painstaking task for the shipping and logistics industry. It gets even more challenging if the warehouse doesn’t have skilled manpower and a transportation facility.
Warehouse Capacity
Insufficient warehouse space has been a major problem for the shipping and logistic industry as businesses are gradually resuming back to the pre-covid stage. Unable to sort goods quickly due to labor shortage and high volume of incoming goods have blocked the warehouse space. If the lack of warehouse space continues, it could further impact the supply chain.
Fluctuating freight rates
Freight rates are the price at which the cargo is transported from one point to another. The mode of transport could be truck, train, ship, and aircraft. The rise in crude oil prices has a direct impact on freight rates. Besides that, geographic location, transport vehicle capacity, and seasonal trades can influence freight rates.
Rising shipping costs
During Covid-19, the ports were shut down temporarily, and when they opened, there was a flood of shipments. The imbalance in demand and supply caused the rise in shipping costs, and it has almost doubled. On top of that, the shortage of shipping containers is also responsible for the increase in the costs.
High carbon emission
From large cargo ships to in-road transportation during the entire shipping process, they rely on fossil fuels, which lead to high carbon emissions. As per an MIT report, freight transportation makes up to 8% of global greenhouse gas emissions and as much as 11% if warehouses and ports are included.
Lack of visibility
Lack of visibility in the shipping process often causes conflict between the buyers and sellers.
What Are the Technologies and Strategies That Would Make the Shipping Process Seamless and Fast – Currently and in the Future?
Automation and Robots
Automation can have a significant role in shaping the logistics and supply chain. As per McKinsey, transportation, and warehouse possesses the third-highest automation potential of any sector. One of its many applications includes using robots to offload the goods automatically. It can increase the speed of offloading and save labor costs. Increasing offloading speed through robots could be one of the ways to deal with dock congestion and controlling shipping costs.
The shipping and logistics industry that is facing the issue of labor shortage can mitigate this problem by utilizing robots and autonomous vehicles. Large enterprises like Amazon use robots such as Pegasus, Bert, Scooter, and Kermit to navigate goods in their fulfillment center. But the most innovative piece of Amazon’s robot family is Scout, used for last-mile delivery. It doesn’t end there; they have also designed an AI-based drone, “Prime Air” for aerial delivery.
Use of shipping software solutions
End-to-end visibility in the shipping process can reduce the costs associated with warehousing and storage. It is even helpful in reducing the conflict between suppliers and buyers by having a minute-to-minute update on the shipment. Shipping software provides users complete visibility of the shipping process from a single dashboard.
It further streamlines the shipping process by availing various features such as workflow automation, customization of shipment packages, automated insurance payment, shipping rate comparison, third-party logistics integration, return management, etc.
Rise of Third-party logistics
Third-party logistics or 3PL helps to solve common issues of business enterprises of managing stocks and distributing them. Since 3PL providers have their units in multiple places, it allows customers or sellers to reduce the product delivery time. But as businesses are becoming complex, third-party logistics have become more advanced in their approach. They are now using software, sensors, and devices to track products in real time. In the future, there could be more 3PL distribution centers handling shipments and taking pressure on business owners to store or track products.
Cut carbon emission
In the coming days, the shipping and logistics industry can put more effort into reducing carbon emissions and switch to an environmentally friendly transport system. Taking the initiative towards it, global carriers Maersk and X-press feeders have ordered the world’s first container vessel that will run on renewable methanol. The other alternatives to reduce greenhouse gas emissions are running ships on ammonia, hydrogen, or battery. However, most ammonia is produced from a highly carbon-intensive process, so many experts do not consider it an environmentally friendly fuel unless it is produced using a carbon-neutral method. Whereas the battery operated cargo vessels are considered more eco-friendly, and it is likely to pick up the trend.
Data-analytics
Analyzing data at every touch-point of the shipping process can help the shipping and logistic industry get in-depth ideas about the various issues in the process or track the performance. It allows them to view the shipping process in real time and take action accordingly. For instance, if there are more demands for goods during the festive season, the managers can prepare a plan in advance to avoid a shipping backlog. They can re-route the shipments or change the delivery time. Data analytics helps the shipping industry to become more proactive than reactive.
For instance, Amazon is taking data analytics to another level. Amazon wants to ship products to the customer before they place the order using “predictive analytics.” The idea is to stock the product closer to the customers based on their previous buying history and behavior. So when a customer places the order, it can be delivered on the same day or less. There is a wide application of predictive analytics in shipping, and as the technology gets better, new possibilities will unfold in the future.
Blockchain
Blockchain technology is a ground-breaking technology to solve the current issues in the shipping process. B/L or bill of lading is an essential document in the shipping process that tells about the product type, quantity, destination, details of shipper, details of the buyer, etc. B/L acts as a receipt, contract, and title to goods. Most of the time, it is a physical document, and there is a high risk of fraud if someone alters the document details.
Also, if there is any delay in receiving the B/L, it can become difficult for a carrier or buyer to claim the shipment. Blockchain can solve these issues by enabling B/L access through a distributed ledger. It prevents unauthorized access to the document and speeds up the shipping approval process. Another area where blockchain can be critical is signing smart contracts and approving payments automatically. It can be pretty valuable in eliminating the delay in deliverables due to delays in payments. Maersk and IBM’s blockchain venture “Tradelens” is currently used by many shippers to have better visibility and transparency in the shipping process. Around 234 marine gateways have agreed to use the platform.
Hyperloop transport system
Hyperloop transport system is also envisaged as a possible alternative to traditional shipping. With a speed of 700mph, it can be helpful to transport lightweight and palletized cargo between the port and industrial zone. Besides saving time and operational costs, the most significant advantage is that it can help to reduce greenhouse gas emissions.
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