Now, of all time! Christmas is just around the corner – and logistics comes to a standstill? After more than a year and a half of pandemic, the global economy is recovering and demand for goods in industry and commerce is increasing. On the other hand, manufacturers reduced their capacities during the pandemic and thus have difficulties meeting this higher demand. This poses certain challenges to logistics – an overview of the situation in Europe.
Europe's Logistics in Crisis
Good news first: everyday goods will continue to be available in Germany – a shortage is currently not to be expected. Nevertheless, 74 percent of all retailers faced difficulties in delivery in September, and as many as 100 percent in the bicycle retail sector. In consumer electronics, 97 percent reported problems and in the automotive sector still 88 percent, with electric cars being particularly affected. The result: longer delivery times and / or rising prices.
Truck drivers needed in 2021
As global demand for the delivery of goods rises again, another challenge is becoming apparent: the insufficient availability of truck drivers. In the UK, the situation is devastating – at times, even service stations run out of gas and cars are left with empty tanks. Supermarket shelves are increasingly lacking a wide range of products.
The situation is still different in Germany, but it does not have to stay that way: Germany already has an estimated shortage of 80,000 truck drivers. While 30,000 retire each year, only 17,000 are newly trained, according to the umbrella organization of German transport logistics companies, BGL. There is a tendency towards an increasing shortage of truck drivers and a growing demand for labor from abroad.
Rising Demand Meets Insufficient Capacity
Yet the difficulties are not limited to missing drivers: there are production losses in the industrial sector on the one hand and limitations in international transport logistics on the other. Increasing demand is becoming a mammoth task for industry, trade, and logistics alike, and solutions are desperately needed.
Air freight cannot provide sufficient capacity to cope with large transport volumes, and transportation by water is also no viable alternative – due to countless ships waiting to be unloaded and a shortage of containers. Rail is also well utilized. However, thanks to recently expanded capacities, there are now good opportunities on various rail routes between China and Europe, which at the same time reduce the need for transport from inland China to the coast. Still – and despite the lack of truck drivers – road freight is the only short-term solution to transporting enough goods (at least) across Europe.
Current Challenges in the Road Freight Sector
Nonetheless, the road freight business, like that of the other modes of transport and like logistics in general, is in crisis. Demand is simply too high and cannot be fully met. There are various reasons for this:
- Global parcel shipping volume is on the rise. In Europe in particular, the e-commerce market is expanding rapidly – as a result, more and more parcels are being dispatched and transported by road. An APEX study identified an increase in parcel shipping volumes in Germany of between 9 and 14 percent last year. In the future, growth is forecast to range between 6 and 7.4 percent annually. In 2020, the Deutsche Post alone delivered an average of 4.4 million parcels per day – a total of 1.614 billion parcels were delivered this year.
- A worldwide container congestion is hampering transport by ship. This is caused by the current shortage of containers for freight transport. Often, they are in the wrong place at the wrong time. When China went into lockdown last summer, for example, many containers stayed in the west. And it is not just containers that are in short supply. The available storage space on the ships themselves is also being fully utilized. For financial reasons, shipping companies cut capacity during the pandemic – and exactly this capacity is now lacking. And if, despite all this, a transportation opportunity arises, it is relatively expensive, and the ports cannot keep up with the work.
- The pandemic is not over yet. Time and again, freight terminals in China, for instance, are closing due to occurring corona cases. This leads to delayed unloading of ships and ultimately congestion of those same ships, increasing pressure on road freight as an alternative option. Likewise, the North Sea ports are working to full capacity and cannot keep up with the number of ships. However, not only the shipping companies are affected, but also the road freight forwarders, whose transit times are increasing in accordance to the delays in ship transport.
- The peak season begins, which in logistics, as every year, lasts from October to January. This is mainly due to the holidays, on the occasion of which many goods are ordered: Golden Week in China, Black Friday, Christmas, and finally Chinese New Year. The sales intensity for this year's festive season is not yet predictable. Due to the pandemic, we experienced an initial peak with garden furniture and building materials in April – correspondingly, further shifts are possible this year.
- There is a lack of personnel. Not only truck drivers are missing, but also personnel taking care of the goods handling on site. When capacity was downsized at the beginning of the pandemic, many employees left their logistics companies and moved to a new job. This staff is now missing and cannot be recruited at the same pace.
The question emerging from all these challenges is evident: How do we deal with the current market situation and how do we master it? The first task against this background is equally obvious: to address the capacities of the logistics network and the volumes to be handled at an early stage. Since the beginning of September, we have already been discovering almond cookies in the supermarkets – in other words, Christmas is fast approaching and, especially in the current crisis, it is crucial who sets the course for reliable logistics first.
Out of the Crisis with an Individual Road Freight Concept
It is important to critically question how a company is positioned and what specific support it needs. Are the solutions that help in the given condition already understood and thus only need to be implemented? Or does the current situation perhaps require a holistic logistics concept, and even beyond that, a shift in entire freight flows? An honest assessment of the circumstances will help to get the logistics up and running as quickly as possible, to adapt them and to find the ideal partner for this – a partner with experience in managing this kind of task and with the strength to withstand such crises.
This is not the first global crisis that Deutsche Post DPDHL Group has experienced – after all, the Deutsche Post, as an integral part of the consortium, looks back on a history that dates back to 1490. There are constantly new challenges for which new and innovative solutions must be developed. All with one goal: to get customers' goods to where they are needed. Securely, quickly, and efficiently.
Many years of experience in the road freight business help DHL Freight to maintain supply chains, especially now. Decades of partnerships built on trust have created stable processes and supply chains that logistics providers benefit from today to get freight to its destination.
For logistics that keep running – and lots of presents under the Christmas tree.
