It plays a vital role in delivering efficient supply chain and consumer operations, but logistics is facing increased pressure for greater efficiency and environmental improvements, writes Steve Agg
The economic slowdown of the last five years has forced every industrial sector to look at how operations can be carried out in a smarter, cheaper and quicker way. At the same time, the increasing awareness of climate change and the demand for reduced carbon output has added “greener” to that list. The operation of the supply chain has been no exception to this.
The role of the logistics manager is to maximise the efficiency of all modes of transport available – road, rail, sea and air – and to adopt the most effective method, minimising both cost and CO2 emissions, while delivering excellent customer service. Solutions include stepping up the creation of collaborative supply chains through data sharing, standardising business processes, and sharing vehicle fleets and warehousing capacity.
Improvements in automated warehousing will also become available to speed up order processing, and new market-matching mechanisms – such as web exchanges – are being developed where shippers and enablers can match routing and capacities, so small and large companies can consolidate deliveries. Major corporations in a number of different industries, including automotive and consumer goods, already use third-party logistics companies as enablers to make such new arrangements work.
It is significant that most major retailers have developed their use of rail freight in the recent past
Differentiation in the supply chain, channel management (where supply chains are segmented according to the service and cost requirements of the customer) and collaborative partnerships between logistics operators will increase the opportunities for multimodal transportation. This takes advantage of the availability of the most appropriate mode for the individual commodity at the required moment. These include the use of short sea-shipping facilities, barge freight and rail, each contributing to valuable reductions in emissions and road congestion.
The ever-increasing arrival in the UK of “Made in China” produce has generated increased intermodal operations linking the key container ports of Liverpool, Southampton and Felixstowe with national distribution centres and regional hubs.
Many pioneering logistics operators have also emerged, with dedicated rail freight operations integrating rail movements into a seamless door-to-door service for customers. These companies have largely provided services between the Midlands and Scotland, but are able to broker train space to other customers unlikely to have the volumes of traffic to consider rail freight independently.
Incessant competition in the supermarket sector has meant that retailers have been among the leading and most innovative supply chain operators, and it is significant that most have developed their use of rail freight in the recent past. To varying degrees, all the major chains are increasing their use of rail, as well as developing interest in waterborne freight.
A key issue with rail is capacity for freight traffic, as it competes for space with an ever-increasing demand for passenger movement. Retailers cite increased train availability, seven-day working, flexible timetables, improved capacity and greater investment as requirements that would enable them to do more. Of course, the door-to-door facility provided by road means that it will remain the dominant mode for moving goods in the UK. Increased collaboration, including that between seeming competitors, producing and distributing the same product range, will be key to reducing empty running, which remains a major obstacle to efficiency. Despite intensive use of joint ventures, collaboration, advanced IT and shared deliveries, a degree of this sadly remains inevitable.
All these opportunities and challenges are present now, and must be grasped to ensure that our supply chain of the future is not stretched to breaking point. The lesson of the Chartered Institute of Logistics and Transport’s recent report, Logistics and Transport Vision 2035, is that major investment and behavioural change must be made to ensure Britain’s transport infrastructure remains fit for purpose in 25 years’ time.