Introduction
The future of our industry is promising; however, 2023 won’t be easy for our segment.
The consequences of the economic crisis the whole world is facing will impact not only the Freight Forwarder segment but also consumers – that are at the high end of the chain.
Due to external issues happening this year, including inflation and supply chain disruption, the logistics industry will have to tackle several challenges in 2023. Even though our segment is expected to grow to approximately $171.9bn by 2027 and increase its workforce by 4.6%, we know the scenario is not as optimistic for consumers or different industries in general.
The industry needs to be prepared to face all the challenges we are going through as a society: rising costs of living, natural disasters, high inflation, cybersecurity risks, and a few examples to be considered.
How can we anticipate and be prepared to thrive in Logistics Industry?
It’s highly important to be prepared to deal with the most significant challenges listed below:
- Transportation Costs: transportation costs continue to increase worldwide each year, making maintaining profit margins difficult. What affects the most the transportation costs are the rising fuel prices. Petrol costs increased in the major capital cities. Rising prices will lead to higher freight costs in 2023. While carriers will absorb as much of these costs as possible, consumers will see a slight increase in delivery costs.
- Supply Chain Visibility: with so many suppliers involved in the supply chain, tracking the movement of goods from one point to another can be challenging. This lack of visibility can lead to delays, lost products and customer dissatisfaction. Managing the customer expectation, in B2C segments, is also challenging, as we see behaviours and expectations have emerged in the last three years. Most significant is the expectation for faster delivery, which is putting additional pressure on the industry.
- High Cost of Workforce: How do we keep or maintain the workforce with all the rising costs we are facing? We had to scale up the level of employment over the covid years and pay high salaries even having a lot less money coming into the pipeline. Unfortunately, the market will suffer. Our industry will suffer also due to a direct correlation to product importers, if companies are not increasing in revenue, they are not importing as much, and we are directly affected by this snowball effect.
- Reducing activities: finding new suppliers from a freight industry perspective will be easier. With less volume of products, the capacity will be freed-up.
- Rising Costs of warehousing: Industrial rent has increased an average of 14.9% year-on-year in Australia. Retailers will need to look for more cost solutions, because, as we can see, neither building a warehouse nor renting a new space, might not be economically viable for many retailers.
- Competition will grow: we might see an increase in competition in logistics, with companies offering services for lower prices/fees. We are going through a decrease in market activities, and facing the reducing activities some logistics companies will need to minimize their losses and readapt to their new scenario, and it might interfere with the quality of the services they were providing. Be in touch with your providers and be aware of any changes they are making in their company. Be close to your logistic company to guarantee they will maintain high standards.
Check the latest video we’ve posted on TGL YouTube Channel most recent video where LA Chang, our CEO, is talking about how the crisis is impacting our segment, as a freight forwarder company, but also how it will impact our clients.
Investments will be demanded by our Industry.
Logistic Industry is investing a lot in new technologies to provide a better service to all customers involved in the chain process. But the challenge is, keeping up with the latest technology is very expensive, and it affects directly all small companies that are facing crisis challenges due to the decrease in freight forward demands. Even though the crisis is out there, we are very optimistic about the industry and how it’s evolving. We understand that investing in technology and team development is essential to maintain the high standards of quality we offer our customers. Shipping and logistics can make or break your business. Seeing your logistics company as an investment will guarantee the success of your business and might save you some big money in the future.
The eCommerce market is projected to reach US$43.21bn in 2023 Australia. It’s projected 76% of the Australian population will utilise eCommerce services in 2023.
And that is a huge opportunity in our segment. But we know, with all the topics listed above, we will have to embrace some extra costs, invest in people and technology, and meet some 3rd party suppliers to thrive and follow what the market expects from us.
Not only regarding our industry but also related to sustainability. How can we be on track with all the trends is also a challenge for this industry, investing in automation, clean energy, amplifying the number of dark stores, etc.
So many challenges to face can be either exciting or desperate, it’s just a matter of perspective. What are you doing to anticipate all this new reality?
For us is just part of our development as a business. This is what keeps us motivated to be evolving in our segment.
You can check out our YouTube Video to keep our discussion live. We love when you share your opinion with us.
