Mario Alberto Aguilar
Mexico's Association of Logistics Operators
Expert Contributor

Embracing Disruption Key to Logistics Operator's Future

By Mario Alberto Aguilar | Tue, 10/13/2020 - 09:00

Throughout its history, AOLM has worked on strategic issues that fall under the jurisdiction of 3PLs and has supported various initiatives through its working groups and committees. There has been no exception with the health crisis that the world is experiencing.

The active participation of its members in a cooperative and cordial environment is one of the characteristics that distinguishes AOLM the most. Faced with this pandemic, we have shared good practices to benefit our logistics operations and also the environment with our customers and suppliers.

The suspension of temporary activities and the confinement of employees caused a shortage of goods and raw materials in most sectors, as well as serious customs problems around the world, because strict sanitary measures had to be put in place to prevent COVID-19 from spreading.

Due to the lack of personnel, the logistics companies were forced to increase transit times, causing the collapse of containers routes. Air transport restrictions also adversely affected import / export capacity. Together, this led to an increase in container prices and limited capacity for incoming and outgoing goods on the few available cargo flights, which has become one of the main obstacles to restoring the normal functioning of supply chains.

However, in the face of product and service shortages, we can also observe growth trends, as not all economic sectors have been affected, particularly those related to food and medicine. Due to an uncontrolled increase in demand, most supermarket chains have had to demonstrate the adaptability and flexibility of their logistics operations by changing their daily delivery frequency at their points of sale.

Likewise, there is also a significant increase in activity for logistics operators whose main activity is based on providing services to essential industries. Interestingly, the increase in sales in sports, gardening and pharmacy or food has compensated for a drop in categories such as fashion and footwear or pets. In that sense, the challenge facing logistics operators is enormous, as the operation must be guaranteed without affecting the small budget that still protects the companies facing this health crisis, as well as strengthening customer communication and identifying their needs to continue producing or placing their products and adapting logistics to meet the expectations of having the product as soon as possible, complying with safety and hygiene measures for the logistics operators and the impact on the supply chain.

The coronavirus crisis is going to pass but it will undoubtedly cause the traditional supply chains to change. In many instances, due to the lack of contingency plans, the major impacts of this crisis have shown a supply chain that is not very resistant to disruption. Thinking about the next 100 years, all companies, not only those in logistics, should integrate prevention plans for future crises, as well as improve communication channels with our suppliers and adopt new technologies to monitor the performance of the entire supply chain. 

There is a great need, while maintaining economies of scale, for a more distributed, coordinated and traceable supply of components across multiple geographies and suppliers. This would require the creation of global platforms that use sophisticated technologies such as 5G, robotics, IoT and blockchain to help reliably link multiple buyers through a "mesh" of supply chains with multiple suppliers.

In our new normality, change is definitely one of the constants we have to consider in our planning. The decisions that were taken without solid grounding as was done before will be remembered without a doubt as a great success or a great learning experience, depending on the result that we obtained before a changing world and being little prepared for an accelerated evolution.

The B2B platform's usual suspects, such as Amazon and Alibaba, are likely to move forward and compete for ownership of this more advanced supply chain ecosystem, while logistics operators will continue to be key players in globalization's future.

In this and other matters, AOLM will continue to work with other associations, organizations and chambers, both private and public, to benefit members and to allow a change in the development of logistics throughout Mexico. the Mexican republic. Similarly, work will continue on strategic issues that will keep it a pioneer in the logistics sector at the national level.

Photo by:   Mario Alberto Aguilar