Transportation and Logistics Management: Key Challenges

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The transport and logistics sector plays a vital role in economic growth. Transportation and logistics have a crucial significance in various industries, ranging from food enterprises and other manufacturers to humanitarian organizations. However, transportation and logistics face management challenges related to infrastructure, costs, government policies and regulations, and the availability of human resources and information technologies. The issues differ depending on geographic location, the policy environment, and other contextual factors, so the solutions to them can hardly be universal. This paper aims to identify the challenges in transportation and logistics management and suggest viable solutions to these challenges.

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Literature Review

Challenges faced by transportation and logistics management have been explored by various scholars. Some of them focused on issues pertaining to a particular industry, while others investigated a particular transportation and logistics management problem in different contexts. The following literature review aims to provide an overview of recent studies in the field of transportation and logistics management and identify common challenges encountered by managers dealing with logistics and transportation.

Challenges Causing Transportation Delays

One type of challenge faced by transportation and logistics management is various issues causing transportation delays. Lags in the delivery of raw materials and goods may result in company losses and product spoilage, which is particularly relevant to the food industry (Mangla et al., 2019). In humanitarian organizations, a failure to provide timely assistance to beneficiaries may threaten the success of the entire relief operation (Azmat & Kummer, 2020). Thus, challenges resulting in late deliveries negatively affect the financial and operational performance of organizations.

Delays in the transportation of goods can be caused by several factors. Azmat and Kummer (2020) name such impediments as a lack of transport infrastructure, rugged topography, limited transport capacities, and a lack of vehicles and drivers. Inadequate transport infrastructure is an issue pertaining mostly to developing countries. For instance, in India, most roads are unsurfaced, which makes them inconvenient for use by automotive transport in rainy seasons (Mangla et al., 2019). While poor transport infrastructure is usually characteristic of developing countries, it is not limited to them. Researchers point out that the proper functioning of transport may be hindered by natural disasters, such as floods and landslides, which damage the infrastructure and make the affected areas inaccessible for specific types of vehicles (Azmat & Kummer, 2020; Mangla et al., 2019). A lack of accurate weather forecasts is another environmental factor that influences the timing of the delivery of goods (Mangla et al., 2019). Thus, poor transport infrastructure and the risk of natural disasters constitute a challenge causing delays in transportation.

The way in which road networks are operated also has an impact on transportation and logistics. For example, Mangla et al. (2019) state that toll taxes and check-posts, mixed traffic, and a lack of roadside facilities, including first aid centers and repair shops, slow down the traffic and cause inconvenience to transporters. Unpredictable times of customs clearance pose a challenge to organizations dealing with international transportation (Azmat & Kummer, 2020). These issues can also lead to shipment delays and take a toll on the organization’s performance.

Challenges Related to Carbon Management

Recently, many scholars, along with authorities and the general public, have raised concerns about environmental pollution caused by carbon dioxide emissions. According to Herold and Lee (2017), transportation is responsible for 23% of global carbon emissions. Given this large contribution of transportation to environmental pollution, transport and logistics managers are faced with the challenge of reducing their organizations’ negative impact on the environment and complying with government policies regulating carbon emissions.

Carbon reduction in transportation and logistics is concerned with several challenges. Although there is evidence that the transition to electric vehicles may lead to a decrease in carbon emissions, transportation and logistics companies have been slow to reorganize their fleets by adopting electric vehicles (Herold & Lee, 2017). This is because top managers of such organizations are uncertain about battery technology, so they do not consider electric vehicles a better option (Herold & Lee, 2017). Further, as a result of carbon reduction, transportation and logistics companies risk incurring high costs. It has been found that, in order to limit the impact of carbon reduction on total cost, companies can set only moderate targets of carbon emission reduction (Herold & Lee, 2017). Finally, although transport and logistics managers realize the importance of energy efficiency, they do not make efforts to improve it because customers do not attach much significance to it (Herold & Lee, 2017). As a result, even though carbon emission is a topical issue, it does not receive enough attention from transportation and logistics management because of a lack of resources and knowledge.

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Current government policies directed toward carbon reduction appear to be not sufficient to encourage transportation and logistics companies to decrease their carbon emissions. According to Herold and Lee (2017), carbon pricing, a policy designed to reduce carbon emission by charging a price for it, causes only a minor rise in logistics costs. So, it is a poor motivation for companies to decrease their carbon footprint.

Warehousing Challenges

Warehousing is an important part of logistics management, responsible for accepting, storing, and shipping goods. One warehousing issue encountered by transport and logistics managers is the high costs of components required for the effective functioning of warehouses, which include labor, information systems, and capital (Karim et al., 2018). Further, warehousing presents challenges in terms of labor productivity, which include decreased job satisfaction, insufficient communication between management and employees, and a lack of consistent employee training (Karim et al., 2018). There are also such problems as bad inventory management, mistakes in order picking procedures, and late completion of shipping operations (Karim et al., 2018). These issues cause delays and negatively affect the overall performance of companies.

Another challenge is concerned with transport productivity and warehouse utilization. According to Karim et al. (2018), about 25% of vehicles drive almost empty because of the wrong destination or ineffective backhaul management. Not only does it affect the productivity of warehousing, but it also has a negative impact on the environment because of increased emissions of carbon dioxide (Herold & Lee, 2017). Furthermore, the capacity of warehouses is underused due to the small value of orders and items per hour (Karim et al., 2018). It leads to the lower overall productivity of the transportation and logistics sector.

Finally, there are certain challenges related to equipment and inventory management. Inefficient or insufficient equipment leads to reduced productivity in such operations as unloading, as well as reduces the storing capacity of warehouses (Karim et al., 2018; Mangla et al., 2019). Mangla et al. (2019) also mention the problem of a lack of temperature control, which is particularly relevant to the food industry and may lead to the spoilage of large batches of goods. Further, low inventory turnover, that is, the number of times the inventory was sold during the given period, extends the expiry date, thus increasing the costs of inventory storage (Karim et al., 2018). Hence, these challenges lead to rising costs of logistics activities and negatively influence the company’s performance.

Security Challenges

The extant literature also reveals that the transportation and logistics sector encounters security challenges. Mangla et al. (2019) mention the issue of a lack of safety because organizations fail to ensure the safe arrival of goods without any thefts and do not have adequate information about their employees. Goodrich and Edwards (2020) delved into the question of transportation security and found out several issues endangering the safety of transporting goods. First, some problems are inherent in transportation vehicles, for example, the loss of control over the speed or the direction of the vehicle due to sabotage, mechanical failure, or the intent of the operator. Rail transportation is subject to signal errors, radio frequency jamming, and poor track conditions (Goodrich & Edwards, 2020). The second security challenge is inadequate infrastructure and its maintenance, which provides opportunities for sabotage (Goodrich & Edwards, 2020). Another safety issue is human factors; according to Goodrich and Edwards (2020), it refers to people’s attempts to commit terrorist attacks using the transportation system. Thus, ensuring security is a significant challenge encountered by the transportation and logistics sector.

Financial Challenges

Transportation and logistics management is faced with several challenges related to finances. First, the transportation sector is directly influenced by increasing prices of crude oil, which affects the costs of transportation (Mangla et al., 2019). Second, a lack of funds leads to poor road infrastructure and maintenance, which has a negative impact on transportation and logistics productivity (Mangla et al., 2019). Currency fluctuations are also a challenge for transportation and logistics management (Mangla et al., 2019). They influence the trade, which, in turn, increases the costs of transportation.

References

Azmat, M., & Kummer, S. (2020). Potential applications of unmanned ground and aerial vehicles to mitigate challenges of transport and logistics-related critical success factors in the humanitarian supply chain. Asian Journal of Sustainability and Social Responsibility, 5(1), 1-22.

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Goodrich, D., & Edwards, F. (2020). Transportation, terrorism and crime: Deterrence, disruption and resilience. Mineta Transportation Institute Publications.

Herold, D. M., & Lee, K.-H. (2017). Carbon management in the logistics and transportation sector: an overview and new research directions. Carbon Management, 8(1), 79–97. Web.

Karim, N. H., Rahman, N. S. F. A., & Shah, S. F. S. S. J. (2018). Empirical evidence on failure factors of warehouse productivity in Malaysian logistic service sector. The Asian Journal of Shipping and Logistics, 34(2), 151-160.

Mangla, S. K., Sharma, Y. K., Patil, P. P., Yadav, G., & Xu, J. (2019). Logistics and distribution challenges to managing operations for corporate sustainability: Study on leading Indian diary organizations. Journal of Cleaner Production, 238, 117620. Web.

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