5 Common Logistical Issues and How To Deal With Them

Running an e-commerce business means keeping track of many different elements — from managing your inventory and warehouse to ensuring that nothing gets damaged during transit and that the order fulfillment process runs as smoothly as possible. With so many moving parts, it can be hard to keep up. No e-commerce business — not even enterprise-level retailers — is immune to logistical issues. Sometimes, these challenges are out of your company’s control, such as rising fuel costs and various economic factors. Other times, the cause may be human error. Either way, knowing how to deal with logistical challenges is crucial for ensuring cost efficiency and delivering a best-in-class customer experience.

This article will walk you through the most common logistical issues and how to work through them.

What are logistical issues?

Logistics is the process of planning, executing, and overseeing the flow of goods across the supply chain efficiently and cost-effectively. It involves managing supply, warehouse infrastructure, transportation of goods, inventory control, meeting delivery deadlines, and satisfying consumer demands — all under the umbrella of logistics management.

The Chartered Institute of Logistics and Transport defines the seven Rs of logistics as:

• ​Getting the Right product
• ​In the Right quantity
• ​In the Right condition
• ​At the Right place
• ​At the Right time
• ​To the Right customer
• ​At the Right price

Logistics is the backbone of the supply chain. Many aspects must be carefully managed and synchronized to keep goods flowing, leaving room for issues to arise at various stages. Poor logistics management can be costly, affecting productivity, the company’s bottom line, brand reputation, and future growth. Missed deliveries and damaged goods can negatively impact customer satisfaction and loyalty.

One example is Toys R Us, which faced significant logistics issues during the 1999 holiday season. The retailer was unprepared for the influx of online orders, leading to delivery delays not caused by low inventory, but by the logistics of preparing and shipping orders fast enough.

1. Rising fuel and fleet maintenance costs

The surge in fuel and fleet maintenance costs is a major challenge in e-commerce logistics. These recurring expenses can significantly impact supply chain dynamics. A higher fuel energy index translates to elevated transportation costs, affecting operational expenses, inventory management, transport costs, and warehousing expenses.

From 2016 to April 2023, the global fuel energy price index nearly doubled, with a six-fold increase between 2020 and 2022 due to factors like energy supply shortages and geopolitical tensions. Rising vehicle maintenance costs and surging container shipping expenses further complicate matters. For example, shipping container costs for a 40-foot container rose from $1,300 pre-pandemic to over $11,000.

To mitigate these challenges, companies must balance pricing strategies, optimize delivery paths, and invest in fuel-efficient technologies.

2. Lack of skilled labor

A significant challenge in logistics is the shortage of skilled labor. Every link in the supply chain relies on trained personnel for smooth operations, timely deliveries, and efficient coordination. Without an experienced workforce, the logistics process risks derailment, delays, and dissatisfied clients.

Despite many job openings, there are not enough workers to fill them. In 2021, the American Trucking Associations estimated a shortage of over 80,000 truck drivers, with projections reaching 160,000 by 2030 if trends continue. This shortage extends beyond individual businesses to the entire logistics ecosystem.

Proactive measures are essential for cultivating a skilled and proficient labor force to ensure the stability and efficacy of the logistics industry.

3. Challenges of managing complex systems

The logistics sector is highly fragmented and requires managing complex systems, posing significant challenges. Multiple steps and teams are involved in completing each order, making it difficult to keep track and ensure smooth operations.

According to a 2023 S&P Global Market Intelligence survey, 67% of organizations in shipping and logistics have a digital transformation strategy, and nearly 31% are considering one. Digital transformation is a priority, with 82% of supply chain CEOs planning to invest in digital capabilities.

Digital transformation in supply chain management helps mitigate risks, cut transportation costs, and increase efficiency and productivity, ultimately improving customer satisfaction. However, the complexity of processes and lack of standardization, integration, and data management are obstacles to streamlining operations and integrating new technologies.

Third-party logistics providers can help unify these components into a seamless, omnichannel experience.

4. In-transit damage and failed deliveries

In-transit damage and failed deliveries are pivotal concerns in logistics. The last-mile delivery segment is the final and often delicate stage of getting products to consumers. Late or incorrect deliveries and potential damage during transit directly impact customer satisfaction and operational efficiency.

Businesses have seen a surge in online sales, with 69% reporting higher average order values due to the pandemic and 54% seeing more international orders. However, 55% of e-commerce customers expect delivery delays for international orders. Additionally, 71% of businesses cite inaccurate delivery details as a primary reason for delivery failures, often due to incorrect address entries.

Address verification is crucial to prevent failed deliveries, which can cost an average of $17.20 per failed order. Providing seamless, timely, and reliable deliveries cultivates customer trust and loyalty and optimizes last-mile operations.

5. Managing customer expectations

With the rise of online shopping and same-day delivery, customers expect instant gratification, putting logistics companies under pressure to meet increasing demand. In the US, retail e-commerce revenue reached $1 trillion in 2022, reflecting the shift to online shopping.

Customers are often unaware of the complexities behind logistics systems. They expect fast delivery — two-day delivery is the norm, and 41% of global shoppers now expect packages within 24 hours, with 24% preferring delivery within two hours.

Meeting these tight deadlines is challenging, but customer service levels are a key competitive differentiator. A 2021 survey found that 44.5% of executives consider customer experience a primary differentiator for their company. Logistics companies must adopt strategies to speed up delivery, adapt to changing consumer trends, and deliver a satisfactory experience.

Conclusion

The order fulfillment process is complex, with multiple components to manage at each stage. Disruptions can significantly impact the overall process. Rising fuel and maintenance costs, lack of skilled labor, challenges of managing complex systems, in-transit damage, failed deliveries, and the pressure of managing customer expectations are all issues that can hinder transport.

While logistical issues cannot be avoided altogether, being proactive and embracing digital transformation can reduce risks and help overcome problems as they arise.