The shipping and delivery industry seems a perfect niche. Based on different estimates, the size of the global logistic market ranges from $8 to 12 trillion annually. Leading US logistics companies earn billions of dollars and boast international branches with thousands of employees. In 2020, XPO logistics declared $6.4 billion net revenue outperforming UPS Supply Chain Solutions and DHL Supply Chain with $5.5 and $5.2 billion revenue respectively.
But if you dig deeper, you’ll realize that logistics companies face many everyday and strategic challenges. They depend on external conditions like seasonality, lockdowns, and fluctuating demand. Logistics businesses also have to adopt automation software and optimize business processes to join digital transformation trends. High demand always entails significant challenges.
That’s why in this article, we are offering some solutions to the most common logistics challenges. Keep reading for logistical issues examples and professional tips on solving them.
Eight Logistics Challenges Most Delivery Companies Suffer from
Some of these logistical issues examples derive from the nature of the logistics industry. Shipping and delivery have always been complex processes involving many elements and teams. The other logistical issues examples show how the modern tech and market trends impact shipping and delivery. The high competition and increasing automation create immense pressure on logistics businesses.
Logistics Challenge #1. Cost-Efficiency
51% of consumers want to get a refund on shipping if the delivered package arrives too late. Late delivery dates come short of customer expectations and mean poor service. Moreover, many shipments never reach the destination because of misdelivery or theft. This undermines the profitability of logistics companies and results in considerable financial losses. Given the rising fuel prices, freight rates, and other expenses, cost-optimization is one of the primary logistical issues examples.
Logistics Challenge #2. Low Quality of Address Information
Consumers often change their place of residence or don’t provide shipment details in the proper format. As a result, logistics companies have a database of unreliable contact details and are more prone to misdelivery. Dealing with this shipping and delivery issue is hard unless you have reliable address verification software.
Read About Postal Address Verification for Optimized Logistics
Logistics Challenge #3. Large Volume of Invoices and Bills to Manage
Logistics services providers need to run supply chain management and communicate with many people across it. They have to pay salaries to truck drivers and other staff, charge their customers and do record-keeping. This involves many documents to generate, store, and manage. Without proper software, it’s one of the most significant logistics challenges.
Logistics Challenge #4. Seasonality of Deliveries
In some periods of the year, like Christmas or Black Friday, people consume more goods. This forces logistics companies to increase capacities and hire extra resources. Despite their efforts, it’s not always possible to predict the demand and prepare for it.
Logistics Challenge #5. Pressing Need for Digital Transformation
As AI, big data analytics, and full automation enter the logistics industry, more and more companies invest in digital transformation. This makes less successful or well-off businesses start lagging. Logistics companies cannot afford to upgrade their software and hardware at once. In many cases, they aren't even sure how to properly do it.
Logistics Challenge #6. The Need to Combine Online and Offline Invoicing
The balance between paper and digital documents is the next of the challenges facing the logistics industry. So far, shipping and delivery companies cannot eliminate paper documents. They need to enclose print copies of invoices with orders to ensure quality customer service and stay compliant. At the same time, shippers have to generate electronic invoices to send them by email with order confirmations. This requires multiple software integrations and complicates document logistics management.
Logistics Challenge #7. Poor Connection Between Multiple Teams
Since shipping and delivery companies have an extensive structure with many teams, from the financial department to truck drivers, internal communications may become a problem. When each team handles different information, this causes data silos and disrupts business processes. Because of inadequate or delayed information exchange, a customer support team may fail to inform customers what’s happening with their order. Unfortunately, that’s one of the most common logistical issues examples.
Logistics Challenge #8. Expensive Software Development
Logistics businesses that decide to develop custom software solutions risk overspending. Shipping and delivery solutions have many complex features, like GPS tracking, real-time messaging, and document rendering. Creating such functionality takes a lot of time and money. A company that doesn’t consider the hidden expenses will exceed the budget. If the development team doesn’t have the necessary expertise, the consequences may be devastating. The developed solution just won’t match the needs of the business and will soon become outdated.