A Complicated Logistics Landscape for 2023

The planning process for 2023 has been perhaps the most challenging of the last few years. Economic slowdown, contraction in demand, rising prices and even energy shortages accompany the lesson that the pandemic left us: project around multiple scenarios, expect sudden changes, and be ready to respond flexibly. 

In logistics, the panorama is especially delicate as the distribution chain has been impacted by a domino effect that is disrupting operational capacity, supply, and costs indefinitely.

On the other hand, the growth of e-commerce and the influence of technology on consumer habits have accelerated the service offer to meet the current demands in digitalization, delivery times, traceability, specific demand models and reverse logistics, which have permeated all business models.

The pandemic made visible, as never before, the strategic role of logistics in the global economy but also led us to rethink the current model.

The globalization that we are so proud of showed its dark side when ports and air routes were shut down. The idea of a new configuration for the supply chain at a global level then emerged and the way was opened to the search for a closer and much less dependent interaction, especially with respect to essential inputs.

The phenomenon known as “deglobalization” poses a protectionist local culture that could clearly represent a significant risk to production chains.   Nearshoring, for its part, seeks to continue supplying the largest markets, such as the US, by relocating production companies. The issue requires collaboration between the private sector and governments to generate the conditions that allow taking advantage of opportunities.   

According to the Why Mexico report, carried out by the GBM Financial Group, Mexico could take advantage of its convenient geographical location to replace China and its main Asian competitors in exporting to the US in at least 10 relevant categories within the manufacturing industries in which the country specializes, such as automotive.

GBM also notes that the derivative investments could deliver growth of 4 percent of Gross Domestic Product, especially in the context of the Mexico-US plan to scale up semiconductor manufacturing and electric vehicle production.

Estimates by the Inter-American Development Bank (IDB) establish that the benefit of nearshoring for Mexico would be around US$35 billion.

The role of logistics will be relevant as a connector and facilitator. For this, it is essential to seriously assume the responsibility that the sector must maintain a competitive and high value offer that offers the best delivery conditions in relation to time and cost. 

It will also be very important to reinforce our commitment to the operation of a sustainable value chain.

Climate Change, the Other Factor

Sustainability management is increasingly valued. The urgency for results in mitigating the overall impact of human activity on the environment demands  the implementation of measures that contribute to meeting global goals. 

Unfortunately, another factor to consider in logistics planning are affectations like those reported by ING in its November 2022 article, Trade Outlook 2023, which mentions that, for the second time in just four years, low water levels in Germany's main rivers had seriously threatened economic activity. In the US, falling water levels in the Mississippi River were blocking more than 100 boats. In China, heat waves and poor rainfall caused droughts in the southwestern province of Sichuan, a hydropower producer. The article concludes that weather forecasts pose a disruptive threat that demands resilience in global supply chains.

In 2021, at Estafeta we began to align our sustainability actions with the environmental, social and governance (ESG) criteria that have become increasingly relevant for investors, consequently becoming a valuable indicator when  establishing business relationships. Our service offer considers of great importance the transmission of value that, as a logistics integrator, we add to the business of each of our clients through our sustainability efforts. 

Our  ESG criteria broadly cover each of the three aspects of ESG.  For our company, the path of continuous improvement in the management of our business consists of establishing KPIs and clear goals that allow us to visualize the progress and areas of opportunity, to place ourselves in a position to promote a sustainable and integral value chain: 

• We share our best practices and experiences with the sector and with our suppliers to pave the way.

• We train, develop, and promote our employees based on a policy of respect and promotion of growth.

• We propose to our customers new service and interaction options that allow us to reduce the environmental impact of the delivery of goods. 

• We open spaces of inclusion for people with disabilities and seek friendly and accessible work environments.

• We take care to maintain excellent compliance with changes in the legislation governing our business. 

Undoubtedly, 2023 will see greater challenges. It is time to take advantage of the full potential of our teams with a punctual follow-up accompanied by innovation that leads us to innovative solutions to overcome this situation that apparently has ceased to be a crisis to become a new global reality.

Sources:
Trade Outlook 2023: Slow steam in troubled waters | Article | ING Think
Nearshoring and Mexico's potential for 2023 - Newmark (nmrk.lat)