Impact of inflation on logistics industry

The US consumer price index (CPI) in April increased by 8.5%, marking the largest percentage increase since 1981. Before that, from mid-2021, the newspaper Logistics Management analyzed the impact of inflation on supply chains and logistics operations. Accordingly, inflation has hindered this sector in issues: port congestion and backlog of imported containers, excess labor, fuel prices…

A reader survey of Logistics Management about 100 stakeholders involved in freight, supply chain and logistics affirms that inflation continues to affect every step, from an operational and business standpoint. Specifically, 92% of survey respondents are affected by the current inflation situation.

While the US Federal Reserve is setting interest rate hikes to quell or slow the rise in inflation, it remains to be seen whether this measure is enough. Dave Ross, Executive Vice President of Roadrunner Freight, a logistics provider, is finding what people are buying is more expensive than it was a year ago, typically with sharp increases in warehouse rents and gas prices.

“The same goes for the cost of goods, partly because the high cost of shipping over the past 1.5 years has left retailers with no choice but to raise the price of their products,” said Dave. Ross said. The expert also added, that means people no longer spend heavily and buy as many goods as before. A lot of new logistics companies are established but almost no one realizes it because of the increased demand and the supply chain is too congested. Fuel prices are soaring, which will obviously slow down the economy.

Network Collaboration expert Glenn Koepke found that an important way for businesses to deal with inflation is to revert to a few months of planning to minimize risk in last-minute shipping, regardless of sea. by air or by road. Recently, fuel costs have increased by as much as 30%, the same level as when the Russian-Ukrainian conflict began.

“One of the keys to the logistics industry is that consistency makes it so much easier for us to plan. If we know there are five shipments a week from the Port of Los Angeles to the Chicagoland area, the service provider says transportation will be easy in the planning process for each trip,” said Mr. Ross.

Predictability is one of the fundamental factors that businesses and professionals are trying to achieve. However, a lot of companies are unable to predict or change consumer and supplier habits…

Inflation is likely to persist in the coming months and clearly affect supply chains on various fronts, as the survey data shows. Logistics Management and comments from Mr. Ross, Mr. Koepke also emphasized. The most important thing for businesses right now is to stay calm and have a calculated approach to each situation, and at the same time, they should make adjustments if needed.

Thanh Thu (according to Logistics Management)