Market Insights

"Continuing on the present road is no longer an option"

Column by Paul van de Vorle

The logistics sector is under huge pressure. Demand is increasing, costs are rising, and the driver shortage is worsening. The question that concerns us all is: How can we guarantee supply chain reliability?

Whereas the global economy almost came to a standstill at the beginning of 2020 due to the Covid pandemic, in 2021 it rebounded – with unprecedented force. The general demand for goods is increasing rapidly, creating major challenges. Not only manufacturers, but logistics service providers too are finding it difficult to keep up. The increasing shortage of drivers is creating even bigger challenges.

Call for greener logistics

In addition to cost and reliability, the rise of intermodal transport is fuelled by a third important aspect: sustainability. '30 by 2030' is a frequently heard watchword. It refers to Europe's goal of converting 30% of long-distance traffic to a more sustainable alternative by 2030. The call for greening within the industry is also growing. Whereas in the past the cost was sometimes a restraining factor, now we see that this gap is closing and that a modal shift offers many advantages, such as saving on fuel and labour, reducing empty kilometres and increasing the payload.

Growing demand, serious shortages

The impact on the supply chain is considerable. Due to the growing demand for goods and the shortage of drivers and load units, delivery reliability is compromised. Moreover, global inflation – in particular the higher price of fuel and labour – has resulted in price increases over the past year. Logistics service providers and shippers are experiencing the consequences of this on a daily basis. And the tide will not be turning any time soon. Will we still have enough drivers available in Europe? And how will we keep costs under control?

The rise of intermodal

The solution lies in intermodal transport. Although the modal shift in product flows was initially only interesting for longer distances, the rising costs of labour and fuel are calling for a re-evaluation. At the same time, demand is increasing. Because of the unreliability of intercontinental supply chains, the industry is looking for alternatives. Companies are more often choosing to produce in Europe again, thus increasing the demand for transport. This requires continuous investment in the intermodal network, especially in rail and shortsea connections. Equipment innovation is also playing an important role, with a view to making the best possible use of the equipment within the framework of the maximum permitted weight, as well as realising the biggest possible container volume.

Taking responsibility

Now is the time to act and take responsibility and to go to work on the modal shift. We already see government and industry working together to facilitate the expansion of the intermodal network. Logistics service providers, in turn, are investing in capacity, not only physically, but also digitally. For example through forwarding platforms to make optimal use of capacity in the network and to eliminate empty kilometres. But if we want to realise real change, the mindset must also change. The traditional transport model of cost and capacity is no longer the only deciding factor. In 2021, it's all about cost per ton, sustainability, capacity, reliability and cooperation.

New perspective

It’s time for a new perspective. We need to re-examine the supply chain, and it involves everyone: carrier, shipper and recipient, seeking new opportunities. Enter into the conversation together and involve the organisation: from purchasing to supply chain management and commerce. If we want to meet the challenges of our time, it is important to work together in the chain, with an open mind and a common goal because continuing on the present road is literally no longer an option.