SCLM/U2 Topic 3 Distribution Related Issues and Challenges in Logistics Management
- Fuel Costs
One of the highest costs contributing to the ‘cutting transportation cost’ concern is fuel prices. Higher fuel prices are likely to increase transportation costs for US shippers this year by pushing up fuel surcharges. Rising India diesel fuel prices are escalating surcharges added to freight rates, which is reversing a two-year trend that cut into the revenue and earnings of truckers as fuel prices plummeted.
- Business Process Improvement
Not withstanding the need for new technology, which we discuss in number eight on this list, it has become an increasing challenge for the logistics industry to stay on top of new advances in business processes. Taking advantage of these new opportunities sounds enticing but adoption and onboarding can be overwhelming.
- Improved Customer Service
Customers want full transparency into where their delivery is at all times. These days, the location of a package is as interconnected as your social network. In fact, as customer expectations have increased, their willingness to pay for fast shipping has decreased with just about 64 percent of consumers unwilling to pay anything extra for less than two-day shipping.
With high fuel prices comes a greater credit crisis and rising inflationary demands that take a greater toll on the US economy. This industry is then pressured by increasing compliance regulations, declining demand, additional capacity with additional increases in key cost centers.
- Driver Shortage & Retention
Hiring and retention remain an issue despite the lower demand mentioned above.
- Government Regulations
Carriers face significant compliance regulations imposed by federal, state and local authorities.
- Environmental Issues
The anti-idling and other emission reduction regulations brought about by state and local governments has created concern that the compliance costs could exceed benefits.
- Technology Strategy & Implementation
While the industry understands and supports many of the benefits of these technologies, some questions remain as to how they will pay for it and who will help implement the improvements.