Supply Chain Outlook 2024: Navigating transformative shifts and challenges

In the complex realm of logistics and supply chain management, the year 2024 unfolds as a pivotal chapter marked by resilience, adaptability, and technological innovation. Navigating transformative shifts and challenges, the industry anticipates a return to normalcy, propelled by the adoption of elastic logistics, transformative technologies, and strategic responses to issues like labour shortages and sustainability. As logistics managers foresee a transformative landscape, the convergence of technology heralds a new era, promising to meet the evolving demands of a globally interconnected market. In the maiden issue of 2024, we look at some of the key highlights that will drive the logistics and supply chain ecosystem this year.

The intricate landscape of logistics and the supply chain is in a state of perpetual evolution, shaped by the dynamic interplay of sociopolitical and economic forces. Revelations from a CNBC survey underscore the perspective of several logistics managers, over half of which foresee a return to a semblance of normalcy in the supply chain by the year 2024.

As the industry hustles toward this anticipated milestone, it is poised to grapple with not only transformative shifts but also notable challenges. In particular reference to India, V Raju (Head of Contract Logistics, Allcargo Supply Chain) says, “2024 shall see major developments take place in logistics infrastructure throughout the country. Multimodal transport, warehousing and logistics parks will be leading the way in the sphere of infrastructure development.”

However, the ever-changing terrain of the business world is rife with disruptive forces – an immutable reality that resonates acutely within the logistics sector. Here, the consequential impacts of market movements are keenly felt, prompting the industry to navigate a landscape characterized by constant flux.

 Logistics stakeholders must consider a variety of factors when crafting future business strategies, including emerging technologies, evolving regulatory frameworks, and trends within the logistics domain.

Elastic Logistics

The logistics industry is charting a resilient course forward, aware of the multifaceted factors that shape its trajectory. This article discusses a few of these trends.

Elastic logistics is the ability of a supply chain to quickly adapt to changing market demand and external disruptions. It allows companies to adapt to changing demand by shrinking or expanding as needed, making operations more efficient and ultimately saving money. The adoption of elastic logistics is set to revolutionize the supply chain landscape, enhancing efficiency, responsiveness, and resilience. The integration of real-time data analytics, advanced technologies, and collaborative networks will optimize operational efficiency and elevate the customer experience.

Companies that adopt elastic logistics will be better prepared to handle market turbulence with resilience, reducing the effect of disruptions and guaranteeing business continuity. Real-time data analytics play a pivotal role in elastic logistics, providing precise and current information about the supply chain.

Visibility of goods is equally essential, allowing quick responses to demand fluctuations by precisely locating goods and assets. This visibility extends beyond the supply chain, informing partners, customers, and other stakeholders, ultimately improving transparency for timely product delivery.

Elastic logistics necessitates the integration of technologies such as blockchain, the Internet of Things (IoT), and artificial intelligence to enhance visibility, traceability, and communication throughout the supply chain.

As businesses embrace elastic logistics in 2024, they are better equipped to navigate market turbulence with resilience and agility, ultimately transforming the supply chain environment into one that is more flexible and effective.

Shipping

 In the upcoming year, the Transpacific Eastbound (TPEB) trade is expected to experience slightly lower average rate levels due to factors like surplus capacity, persistently weak demand, and a slower growth trajectory in the global economy.

Pallavi Chaudhuri (Director – Procurement, Perfetti Van Melle) said, “Basis market reports, an estimated 3M TEUs of additional capacity is expected to be added Ocean Freight in 2024. Over capacity will lead to continuing flat prices in 2024.The on-going geopolitical situation across Israel, Gaza, Sudan, and Ukraine could drive volatility in oil prices and subsequently impact market rates for Transportation and Packaging.”

Another notable development is the changing behavior of carriers concerning pricing policies. The previously observed unity among carriers in pricing policies is expected to undergo a shift. Some carriers, armed with significant capacity, may adopt more aggressive pricing strategies to weaken the market, creating a divergence in approaches among carriers. This shift is likely to impact the pricing and profitability of carriers as the industry aims to return to prepandemic levels.

Also, “With Shipping Companies struggling to increase freight rates amid over-capacity, they might levy surcharges to maintain profitability. Emission Trading System (ETS) for CO2 emissions will be implemented over a 3-year period starting 1st Jan 2024, with 40% of the declared emissions to be covered by ETS emission allowances in 2024 and ramped up to 100% by 2026. The geo-political situation could also spur companies to levy War Risk surcharges to cater to increased costs for re-routing and security, especially along the Red Sea,” Ms. Chaudhuri added.

Another trend to be observed in the industry in 2024, as per reports will be the increased consolidation. Carrier alliances, which have seen successful cooperation in recent years, are beginning to dissolve. The survival imperative in the face of an upcoming crisis places emphasis on scalability and global reach, leading to the possibility of strategic mergers.

Labour Shortage

The logistics industry is grappling with a persistent global labor shortage, which is likely to continue in 2024.

Shubhendu Das (Managing Director (India), Hellmann Worldwide Logistics) says, “Labour shortages is one of the main obstacles to economic growth. Studies show that 87% of companies are already having trouble acquiring the talent they need or anticipate having these challenges in the future. “

Within the logistics sector, critical positions such as drivers, warehouse personnel, and skilled technicians are experiencing a shortage of qualified professionals. Compounding the issue are demands for specialized skills and an aging workforce.

“The global labor market is being transformed by a challenging combination of many factors such as geopolitical uncertainty, global economic slowdown, automation, and demographic trends,” Das said.

 From automated warehousing processes to experimental autonomous trucking, companies are strategically optimizing their operations to address the scarcity of workers.

AI empowers us by boosting accuracy and efficiency while eliminating errors and saving time and resources. Additionally, IoT supplements our operations by employing beacons, sensors, and RFID technology, providing us with precise insights into the location and condition of items. This not only facilitates better planning but also enhances overall operational efficiency, said Vivek Juneja, Founder and Managing Director, Varuna Group

The global economy is still dealing with the challenges brought on by high inflation, and the subsequent central bank actions designed to reduce it, and high energy costs. These factors conspired to place pressure on consumer activity and thus economies slowed. The prevailing conditions are still not fully normalized but the outlook for 2024 is more positive, Glyn Hughes, Director General, TIACA said.

The key trends I see shaping up are technology adoption from service provides and shippers. Greater usage of blockchain technology to enable end-toend visibility. And, the logistics industry seeing freight rate correction, long term annual contracts and capacity utilisation commitment are expected to shape up for the upcoming year, said Vickram Srivastava, Global Supply Chain Head, Sun Pharma

Considering the inefficiency of stocks and global capacity, demand should ideally rise in Q2 and Q3. Numerous weatherrelated changes in Q1 would also increase prices and cause a capacity shortage. The instability in certain significant parts of the world is causing uncertainty (between various countries). The cost of fuel will rise as a result, perhaps affecting rates once again, Ashish Asaf, MD & CEO, S.A Consultants & Forwarders

Anticipations for 2024 include rising demand for B2B Express services across air and surface modes, addressing the logistical needs of diverse businesses and industries with efficiency and reliability. Addressing the growing demand in smaller cities, Ekart has expanded its first and last-mile delivery capabilities. The expansion aims to ensure seamless delivery across the country, aligning with the evolving dynamics of e-commerce,Mani Bhushan, Chief Business Officer, Ekart said.

Embrace the transformative trends of 2024 including prioritizing Customer Experience by enhancing in-store and digital interactions, investing in staff training, leveraging technology, and creating compelling loyalty programs. Engage in Digital Transformation through the widespread adoption of mobile apps, online platforms, and digital payment options, emphasizing contactless methods for ordering, payment, and delivery services, Vishwesh J Nair, Head of Strategy, Operations and Supply Chain The Belgian Waffle

This is an abridged version of the Cover story published in the January edition of Logistics Insider Magazine. to read the complete story, click here.