By Wasana Nadeeshani Sellahewa
(Commonwealth) _ Prices are declining, there are more trucks and vessels available, ports are improving significantly over the world, and there are more businesses wanting for goods to convey.
Unfortunately, many businesses didn’t comprehend what they were getting into, despite the fact that revenues are flowing and expectations are high. All facets of the supply chain are being adversely affected by the sudden decline in demand brought on by the global economic recession, with growth projected to fall from 6% in 2020 to 2.7% in 2023. Along with this downturn in demand, all of the developed economies are experiencing worldwide inflation. As of October, the rates of inflation were 2.8% in China (up from 2.1%), 7.5% in India, 8.2% in the United States, and 10.1% in the United Kingdom.
Demand grew significantly during the Covid epidemic. Every step of the supply chain, from shipping to warehousing, became backed up as trade traffic increased. This increase was caused by issues that emerged in addition to increased demand. Transporting goods from point A to point B has grown to be a true maze, occasionally lacking obvious answers. Schedule accuracy dropped to 30%, truckers were harder to find in most industrialized nations, and terminal to warehouse labor shortages slowed the flow. In the whole industry, the effort for each transaction has recently increased in difficulty, complexity, and length.
When the economy was booming and many businesses were turning in record profits, the majority of them did not put any effort or money into boosting efficiency and developing fresh synergies. Instead, they started hiring like crazy. This rule applies to everyone, from white-collar office workers to blue-collar warehouse workers.
Keep in mind that CH Robinson, the biggest freight broker in the US, just lay off 650 employees. In the same WSJ piece, it is said that “Warehousing and storage industries, which gained more than 400,000 jobs over the course of two years to the end of 2021, lost 20,000 positions from September to October.” In addition to CH Robinson, the sector has been rattled by Fedex’s decision to impose furloughs and Amazon’s recent layoffs.
It became exceedingly challenging to locate competent individuals for positions due to an increase in hiring and Covid measures. The price of recruiting increased as a result of the dearth of eligible individuals. Because they were unable to locate suitable candidates, businesses began to accept productivity levels of 70% to 80%.
The desire of venture investors has been waning as the world economy has slowed. Even though the market had high pricing levels and several smaller logistic-tech enterprises realized this, they started to lay off their workers as early as in June.
Due to the enormous profits that were made at the same period, the larger businesses were still supported. However, when huge international logistic-tech businesses prepare to secure fresh rounds of funding, I think there will be a significant vulnerability due to the rise in interest rates throughout the world. Cost-cutting is necessary in order to raise money, as we can see in many publicly traded corporations.
To sum up, our industry, which was almost completely employed until three to four months ago, is now experiencing the beginnings of layoffs. Businesses that are well-managed, who anticipated that this spike would only last a short while, and who adjusted to the climate with the appropriate projection will maintain a happy staff and a successful business.
Companies that didn’t prioritize productivity, who anticipated that this madness would last for years to come, and who cared more about short-term gains than viewing this time as merely a stepping stone in a longer race, will have to make difficult decisions that will affect both their teams and their businesses. I genuinely hope that the harm will be minimal and that there will be possibilities for
