The COVID-19 pandemic has disrupted supply chains all over the world. Since it started, technology has become a the number one tool for everyone. The nature of logistics has been changed and highlighted by the crisis. Therefore, some challenges have come with it.
These challenges go from much less cargo capacity to high demand due to e-commerce services. So, businesses and consumers have had to adjust to this new reality, and try to improvise and innovate quickly. Here are 3 of these challenges during COVID-19 in 2020:
Before the crisis hit, 90% of global trading was done across the ocean. After that, challenges over capacity started.
Ocean carriers had to cancel sailings on several ports due to the reduction of the supply of manufactured goods out of Asia. Meanwhile, air freight capacity dropped because of cancelled flights and driver shortages started happening due to cross-border restrictions which led to long backups and delays.
In order to fight this, while some capacities like the ocean start to stabilize, companies all around the world have come up with some solutions, such as:
- Shifting the ocean cargo to air cargo: despite higher shipping rates, the demand of technological products increased. In order to meet the demand and supply curve, makers decided to shift from ocean to air so millions of people around the world could work from home for long periods of time. Something that continues to happen.
- Air charters for urgent cargo: another solutions was to use aire charters for high-value cargo that would otherwise go in the belly cargo of passenger flights;
- From empty passenger aircraft to passenger-freighters: this way, empty spots can carry cargo, in addition to belly cargo;
- Charter sharing amongst competitors: charter sharing and freight consolidation among shippers and forwarders competitors in order to move more commodity.
- Alternative modes: such as rails from two different spots in the world, maybe airports, ports and trucking routes with extra capacity.
The coronavirus has made consumers buy online, more than ever today. It has changed everything: people now buy cars online without even visiting a showroom, they buy clothing without putting them on and prefer going to a virtual supermarket than steeping foot in a real one.
So, businesses all around the globe have been weathering the storm including new omni-channel inventory strategies that have led to BOPIS models. It has also make every firm rethink their digital participation and helped businesses to transform their websites into points-of-sale. Introducing themselves into the delivery world.
E-commerce demands quick fulfillment and delivery and that is also not that expensive for consumers. Mostly when it comes to retail kind of businesses. Amongst the solutions is alternative inventory storage for these challenges.
- This means more warehousing.
- Warehousing close to point-of-origin or destination.
- Conversion of stores into storage as distribution hubs.
- Conversion of stores into storage as fulfillment hubs.
- Strategic use of ocean freight as “floating storage” through timing orders and deliveries.
The changes, therefore challenges, in consumer‘s demand have created long-term problems for production and supply. This means that as in today, there are stockouts or excess of inventory depending on the products. From goods delayed to goods unwanted, there is chaos.
So, in order to fight this, some solutions exist are:
- The improvement of visibility tools.
- Using advanced data analytics for better modeling.
- Moving warehousing filled with stock closer to key markets.
- Working out smaller volumes of inventory in order to be more responsive to trends.
- Demand planning according to the market.
- Ordering stock in shortened, more frequent cycles.
One lesson of the COVID-19 crisis is that without people, technology is of little value. So, companies around the world have reacted quickly to the challenges of the supply chain disruption to help and serve their costumers.