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Logistics industry was unprepared for economic disruptions

Most businesses – intending to keep sourcing expenses to a minimum – failed to diversify their sourcing and kept them anchored across factories in China.
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The logistics and supply chain sector was unprepared for the disruptions caused by both the trade dispute with China instigated by President Donald Trump in 2019 and the subsequent Covid-19 pandemic a year later, according to analysis of a survey.

Research undertaken by supply-chain automation platform Centersource and logistics media consultancy Charlie Pesti, entitled The State of Freight 2021, surveyed over 300 supply chain specialists which revealed a “scramble for inventory and visibility,” said the companies.

The report breaks down its analysis into three parts – sourcing, visibility, vertical and horizontal collaboration – the report highlights the lack of preparedness by the industry using “conventional sourcing practices” that failed to deliver.

On sourcing, the report states, “The impact was oversized as most businesses – intending to keep sourcing expenses to a minimum – failed to diversify their sourcing and kept them anchored across factories in China. Sourcing diversification has remained a frequent topic of debate since, with logistics stakeholders shifting a part of their sourcing outside China and renewed interest in nearshoring.”

The research also found, “For example, that 88.2% of shippers either had or were planning to diversify suppliers, the report helps industry watchers understand how that process is playing out on the ground, including what technology and business practices are leading the way.”

A further 89.9% of those surveyed said they were like to or had already made moves to increase their co-operation with other stakeholders in the supply chain.

Another 42% said they had little or no visibility into their primary customer or vendor’s operations, with 20% pointing to a lack of visibility of their shipments encouraging them to seek technological solutions.

“The State of The Freight 2021 is the first such report to categorise and detail the seismic shifts that are taking place in response to global volatility,” said Amir Rashad, CEO & Founder of Centersource.

Source: Container News

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