Logistics crisis: who is to blame and what to do

- What are the reasons for today's difficulties related to transportation? Can we now talk about a crisis in the logistics industry?

The crisis in today's logistics is obvious. It is expressed in the increase in cargo traffic through ports and border crossings. The current capacities are not enough to cope with the traffic. This, in turn, leads to higher rates and longer delivery times. Cargoes arrive unevenly and accumulate in warehouses. And as a consequence, they either do not have time to be realized or are no longer needed. One of the reasons for this is a decrease in consumer power in society, which causes sales to fall. Prices are rising, and the ability to pay is decreasing. Also now there is a change of nomenclature and diversification of cargoes. The goods arriving today have certain specifics. This is due to the fact that due to the pandemic people are sitting at home more, and due to the change in lifestyle their needs for consumer goods have changed. Demand gives birth to supply and production capacity is also regulated by the consumer. Logistics is no exception. There is an economic crisis in the world. Consumption capacity will continue to decrease, and we will have a surplus of goods. At best, transportation will not “fall into a deep hole”, but it will definitely decrease. We have been observing a growth trend in the logistics industry for a long time. But the growing indicators that we see today are inertia, the remnants of previous contracts. I believe that lower consumption will soon lead to lower transportation. No system can grow indefinitely, bypassing growth crises. We can look at the situation from the other side. If something happens, it means that it benefits someone. I think that the story of transportation collapse at the borders is artificially created. Here we should ask: who benefits from the increase in transportation rates? Of course, the owners of ships, containers and infrastructure. I would add to this that ships and terminals now actually play the role of warehouses (not free of charge, of course), which means additional profit for their owners.

- What do you see as solutions to today's problems? How about building up logistics capacity?

I think that the introduction of new facilities for handling containerized cargo will not affect delivery times. The fact is that ports do not have time to process cargo, their throughput capacity is limited. And the construction of ports, terminals, purchase of containers, launch of new vessels requires time, which in this case is not available. Optimization of port operations in all directions, interaction with railroads, acceleration of cargo handling dynamics, including by digital means, can help in the current situation. A good example of such a prompt response is the decision of Russian Railways to use gondola cars for container shipments (previously it was prohibited to use this type of cars for containerized cargo). Gondola cars loaded with coal come to Vladivostok, then the coal is shipped to China. The empty gondola cars are loaded with containers, which go, for example, to Moscow. Here, the containers are unloaded, and the gondola cars go back to the places where the coal is loaded. This partially solves the problem of a shortage of empty platforms in the Far East.

- They are now writing about the flow of investment in container terminals and other logistics facilities in Russia. What do you think about this?

I believe that this is a very big risk in today's uncertain economic situation. Besides, the logistics industry is now at its peak, and in such conditions it is better to sell than to buy.

- How should logisticians work today to stay on track?

Logisticians in the current situation need to monitor the market. This work should be a daily routine. The more alternative routes, carriers and freight forwarders there are, the more flexible you will be able to react to changing conditions and the more opportunities you will have to organize delivery in a reasonable time and without overpayments. You can optimize the delivery by dividing it into parts: customs clearance, loading at the port, selection of partners and others. Even if it is possible to reduce costs in one area, it will be a small victory! However, this is for those who are not looking for easy ways. It is difficult to work this way, but it is the only way to improve the quality of work and not lose customers, to build up a reputation and act in the interests of the company. There are companies that now limit the acceptance of cargoes to their actual capabilities: they do not take more orders than they can fulfill and specify real delivery terms. I think this is the right decision, but not all companies can realize how much the delivery time has grown. And it is impossible to influence this even by increasing the cost. It is also very important to keep your finger on the pulse and look around carefully, to feel the market. Perhaps you should start working on diversifying your business, team up with partners, offer new and/or additional services to customers, respond quickly to requests and anticipate customer needs. And of course, improve existing customer service.