Logistics
Five challenges, the transport and logistics industry are facing during Christmas time
Christmas time is logistics time. While the pre-Christmas festivities are generally a time for reflection, they are the busiest weeks of the year for transport and logistics companies.
Here’s a list of five challenges that the transport and logistics industry must deal with during Christmas season:
Christmas time is logistics time. While the pre-Christmas festivities are generally a time for reflection, they are the busiest weeks of the year for transport and logistics companies.
Here’s a list of five challenges that the transport and logistics industry must deal with during Christmas season:
Coping with increased demand and delivery pressure
In Germany, the demand for goods increases significantly during Christmas time, since the Christmas business in November and December is the busiest period of the year for many retail companies. The German Retail Association (HDE) forecasts that sales in the German retail sector will reach 120.8 billion Euros during the time around Christmas this year. The German Parcel and Express Logistics Association (BIEK) even expects around 715 million shipments to be transported in November and December 2023, 400 million of them will be sent to private households. During the Christmas period, around 14.5 million parcels are transported on an average delivery day and, at peak times, up to 20 million parcels are transported in the parcel service providers' networks in a single day, including around eight million parcels to private households every day. This puts pressure on logistics companies to handle deliveries quickly and punctually, which requires intensive planning and resource calculation.
Combating staff shortages
Recruitment, especially in times of skilled worker shortage, remains one of the most important challenges in the transport and logistics industry. There are currently around 565,000 employed truck drivers in Germany, but according to the Federal Association of Freight Transport, Logistics and Disposal, there will be a shortage of almost 100,000 more drivers across Germany in 2023. This becomes a problem during the Christmas holidays in particular, as the increased volume of goods also increases the demand for workers in the transport and logistics industry. Logistics companies in Germany therefore often hire thousands of seasonal workers to cope with the increased workload. According to a study conducted by the Institute of Economic and Social Sciences (WSI) in 2022, around 45% and 33% of employees in the retail and transport sectors work during the Christmas holidays and around the turn of the year. Almost one in five truck drivers on Christmas Day is not at home, but on the road. This year, the German Parcel and Express Logistics Association (BIEK) expects CEP companies (courier, express and parcel service providers) to plan for up to 15,000 additional workers and up to 10,000 additional vehicles to ensure that parcels arrive safely and on time.
Combating staff shortages
Recruitment, especially in times of skilled worker shortage, remains one of the most important challenges in the transport and logistics industry. There are currently around 565,000 employed truck drivers in Germany, but according to the Federal Association of Freight Transport, Logistics and Disposal, there will be a shortage of almost 100,000 more drivers across Germany in 2023. This becomes a problem during the Christmas holidays in particular, as the increased volume of goods also increases the demand for workers in the transport and logistics industry. Logistics companies in Germany therefore often hire thousands of seasonal workers to cope with the increased workload. According to a study conducted by the Institute of Economic and Social Sciences (WSI) in 2022, around 45% and 33% of employees in the retail and transport sectors work during the Christmas holidays and around the turn of the year. Almost one in five truck drivers on Christmas Day is not at home, but on the road. This year, the German Parcel and Express Logistics Association (BIEK) expects CEP companies (courier, express and parcel service providers) to plan for up to 15,000 additional workers and up to 10,000 additional vehicles to ensure that parcels arrive safely and on time.
Preparing for extreme weather events
However, ensuring that parcels arrive in good shape and on time requires not only sufficient manpower and vehicles, but also appropriate preparation. Particularly in winter, extreme weather events such as rain, wet conditions or snow can disrupt traffic and damage railroad tracks, roads, ports, piers, bridges and other transport infrastructure, which in turn disrupts supply chains. Logistics and transportation companies therefore rely on advanced weather forecasting models to anticipate potential disruptions. Technologies such as GPS tracking and automated route planning systems also help to respond to unexpected weather events. To withstand adverse weather conditions, meticulous vehicle maintenance is also essential for many companies during the winter months.
Meeting delivery deadlines
However, it is not just the weather that is making work more difficult for transport and logistics companies, but also the increased traffic. This is particularly difficult for last mile delivery. In consequence, there are delays, meeting delivery deadlines and higher operating costs for logistics companies, particularly in terms of fuel consumption and working hours. Logistics companies are therefore relying on flexible and dynamic route planning to avoid traffic obstructions. Modern GPS and traffic monitoring systems also contribute to monitoring traffic flows in real time and adapting routes accordingly. The use of alternative delivery methods, such as cargo bikes or foot couriers in urban areas, can also help to avoid traffic problems.
Meeting delivery deadlines
However, it is not just the weather that is making work more difficult for transport and logistics companies, but also the increased traffic. This is particularly difficult for last mile delivery. In consequence, there are delays, meeting delivery deadlines and higher operating costs for logistics companies, particularly in terms of fuel consumption and working hours. Logistics companies are therefore relying on flexible and dynamic route planning to avoid traffic obstructions. Modern GPS and traffic monitoring systems also contribute to monitoring traffic flows in real time and adapting routes accordingly. The use of alternative delivery methods, such as cargo bikes or foot couriers in urban areas, can also help to avoid traffic problems.
Optimize warehousing
With the significant increase in demand for goods, storage capacities are also heavily utilized during the Christmas period. Seasonal fluctuations make it difficult to predict exact demand and lead to irregular flows of goods. The need to have sufficient goods in stock without creating excess inventory therefore requires precise forecasting and efficient inventory management. Limited storage capacity can lead to bottlenecks during the peak season, especially when demand exceeds expectations. Companies must then set up temporary storage solutions or expand existing storage capacities to meet the increased demand. Companies are turning to automated processes and improved warehouse management systems. Just-in-time delivery, i.e. the method of only delivering goods when they are needed, is also becoming increasingly important: This involves using advanced data analysis tools and forecasting models to better predict fluctuations in demand and adjust warehousing accordingly. Automated warehousing systems also help to increase efficiency. In addition, long-term agreements with suppliers can help to avoid capacity bottlenecks and ensure a continuous supply.