The challenges of logistics #2: An economic challenge

In recent years, the world of logistics has undergone constant change and has been faced with a host of challenges. 

In this series of 6 articles, we analyse the issues and their impact on businesses #2.

‍An economic challenge

The rise of e-commerce and the advent of the industrial digital revolution of interconnectivity have led to exponential growth in the world of logistics.

"The three pillars of the new economic equation: meeting needs, generating profit and resolving societal issues." Jérémi Lepetit, co-founder of Retreeb and a pioneer in ethical payment, tells La Tribune:

The health crisis 

The Covid-19 health crisis accelerated this phenomenon and triggered an explosion in online commerce, which also led to a transformation of delivery models. In just a few months, we have managed to gain 3 to 5 years in terms of progress.‍

The emergence of new competitors

European economic strategies have been effective so far. However, the emergence of competition, particularly from China, on the global economic stage is redefining new production and distribution strategies. In response, transport companies are having to redefine their logistics missions. 

This Chinese competition is also present in Europe with the Silk Road construction project. This project is reinventing logistics and economic strategies from Asia to Europe, given that European countries have signed up to this agreement.

China wants to make logistics its national priority through the China Logistics Industry Plan 2014-2020. The objective is clear: to achieve "better integration of the logistics and manufacturing sectors", as well as "the development of new technologies in logistics processes".‍

Inflation in the transport sector

The economic stakes don't stop there, as rising prices are playing a major role in the shipping sector. Inflation and congestion in ports are further contributing to the rise in the price of sea freight. This price increase will therefore have an irreversible impact on the economy of this sector.

‍The employment market

The employment market also represents an additional economic brake. The arrival of artificial intelligence (AI) and new technologies requires specific skills that few companies possess. Demand for qualified supply chain employees is growing. The COVID-19 crisis has exacerbated the situation, creating a drastic shortage of skilled labour. 

As a result, companies are having to invest financial resources to recruit new employees while supporting and training their existing staff to adapt to the new positions being created.

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Over the next 5 years, more than 35,000 jobs will need to be filled in the logistics sector, including around 25,000 operational positions (drivers, warehousemen, etc.) and 10,000 management positions, according to the latest study by the French Ministry for Ecological Transition and Territorial Cohesion.

In conclusion, the logistics market has been heavily impacted by the health crisis, which has led to inflation in the transport sector, the emergence of new competitors, and the need for manpower in the supply chain. Faced with these challenges, companies need to take these changes into account and rethink their supply chain.

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Last episode : The challenges of logistics #1: A political challenge

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