The logistics sector is bracing for new challenges in a changing world
Europe
How important a functioning supply chain in a globalized world is, was the theme of the Cluster for Logistics Conference “Logistics 2021 Reloaded”. Experts from Logistics and Industry related their experiences and challenges due to the pandemic, climate change concerns and global transformations at a physical conference held at the Chamber of Commerce on November 11th 2021.
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Carlo Thelen, Director of the Chambre de Commerce and President of C4L, welcomed the guests to the largest C4L event in nearly two years. The COVID-19 pandemic has changed everyday life but the logistics sector has proven its importance. “During 2020 and for the last six months, even the larger public has become aware how crucial well-organised logistics are.” Never before have supply chain disruptions been in the news so regularly until now, wondering jokingly, if Christmas will have to be postponed this year.
Mr Thelen singled out three main challenges for the logistics sector that were addressed in the conference, namely digital transformation, decarbonisation and finding the workforce with the skills to ‘make it happen’. Mr Thelen mentioned the new strategic roadmap of the Ministry of the Economy for a competitive and sustainable Luxembourg economy in 2025 called “Ons Wirtschaft vu muer” [1] which includes the development of resilient and sustainable strategic value chains.
In order to reach the ambitious goals of the EU’s “Fit-for-55 program” to cut greenhouses gases by at least 55%, the sector urgently needs digital transformation and data-centered project implementations to better serve Industry 4.0, said Mr Thelen. And “we also need to address the truck driver shortage in Luxembourg. Ninety percent of our truck drivers live abroad and companies inform us that it now takes nine months to register truck drivers in Luxembourg for their obligatory one-month training.” Reducing greenhouse gas emissions and enhancing energy efficiency has a long-term positive effect but cannot be done without support. C4L must call for support and public investments. The sector needs alternative refuelling infrastructures and technology, said Mr Thelen.
From mass data to smart data
Key note Speaker Franz Fayot, Minister of the Economy, lauded the crucial sector with a strong infrastructure in Luxembourg, mentioning as an example the new warehouse of Kuehne + Nagel that was inaugurated officially a week earlier in the presence of Hall of Fame Klaus-Michael Kühne himself. The logistics flows have become increasingly complex and connected across all continents with different stakeholders. Despite the numerous challenges during the pandemic, the logistics providers succeeded to keep freight moving across the globe.
However, the supply chains are increasingly data driven and the new economic strategy needs to be taking this into account. Logistics companies gather an endless amount of data, notes Minister Fayot, but this alone does not generate opportunities: “It needs to turn it into smarter data”. Big data coupled with Artificial Intelligence, IOT sensors and automation represents a huge potential for the sector, supported by the strategy “Ons Wirtschaft vu muer”, said minister Fayot. It should notably enhance process efficiency, demand forecasting, inventory management and procurement.
Academia and Research have their role to play and therefore a Digital procurement chair has been recently launched as well. The government also supports sustainable projects and until now 40,000 solar panels providing renewable energy for 4,000 households have been installed in logistics projects. New projects however need a collaborative approach between actors and the government is listening to the business community, promised the minister.
[1] https://meco.gouvernement.lu/en/publications/strategie/strategie-ons-wirtschaft.html
The conference took the opportunity to address the newest VAT changes that came in 2021. They are strongly impacting e-commerce and how to do business, noted Speaker Karine Bellony, Managing partner of VAT Solutions. The changes of Brexit have been addressed with new procedures in dealing with UK since January - with the exception of Northern Ireland which is deemed to remain in the VAT and Customs system. In the EU as well, new rules were introduced in July 2021 to enhance the dated rulings. In turn, operators saw their administrative costs increase as they had to invest to be ready for the new system.
Logistics actors need to adapt to pandemic and global shifts
Richard Forson, CEO of Cargolux, noted that the pandemic is changing the industry and gave an overview of the most pressing issues for the future. Inventory management will be notably different, with more security stock, while the logistics sector has trouble to find staff willing to work in logistics. Moreover, new entrants, attracted by the high yields, are entering to the market and some forwarders are concentrating and setting up their own transport fleet. As capacity and supply are not matching, Mr Forson wondered how long trade lanes will remain the same, considering the current asymmetrical flows between the continents. One major external issue will be the current evolution of inflation. It may just be temporary but if it is it going to continue, it will have a significant impact on transportation and consumption, warned the CEO of Cargolux.
A first-hand account of the everyday Brexit problems was given by Thierry Schoen, Sales director of Safety PTSG in UK and host of the LuxUnplugged podcast. As a Luxembourger in London he experiences the shortages in shops and petrol stations. The pictures of empty shelves were not just taken at the end of the day and it indeed took him a week and multiple attempts to get petrol for his car. COVID-19 and Brexit together created additional pressure on the logistics systems. Staff shortages and quarterly downturns are impacting industry as well.
The British government is trying to answer with innovative solutions, which actually generates quick employment in difficult times but puts more pressure on classic logistics providers, by supporting the creation of disruptors. The Gig economy in UK created more jobs than any other industry, noted Mr Schoen. In the logistics sector, Amazon created 50.000 positions with its Flex offer and Uber Freight are now flooding the market with cheap and flexible offers.
Luc Provost, CEO of B Medical Systems, gave an overview of the challenges regarding vaccine distribution and how the company is catering for the complex vaccine supply chains. Especially the varying temperature requirements (going from plus degrees to -80 C) for the various COVID-19 vaccines is a challenge. B Medical Systems had to optimise its production by extending the factory logistics at the site in Hosingen and review its processes. The company has 40 years of experience in creating cold chain refrigeration devices and is certainly a major actor in fighting the pandemic.
A very interactive roundtable moderated by POST Deputy managing director Hjoerdis Stahl addressed innovative solutions in Airfreight and Supply Chains. It regrouped experts Achim Taylor (POST), Jürgen Helten (CEO Luxport Group), Richard Forson and Christian Wilhelm (Shipsta). Alternative projects like the Ecoliner long trucks were proposed to obtain a level playing field with neighbour countries, as well as requests to re-invest Green Taxes into sustainability and innovation projects. At the end of the event, the manager of C4L Malik Zeniti briefly summarized the key events of 2021 including the award ceremony for best apprentices and Lean and Green award winners before encouraging the audience to enjoy their face-to-face networking opportunity.
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