The global transportation and logistics industry is taking a positive approach and looking to capitalize on the opportunities that change can bring by focusing on expansion and investment and looking to develop solutions to big challenges such as climate change.
That’s according to the latest Global Transportation and Logistics Risk Report, by Willis.
A majority (57%) of those surveyed ranked infrastructure investments among the sector’s biggest business opportunities for the next two years. As well as general investment in improving rail, ports and airports, this may reflect a drive to build out the facilities and technologies needed for the transition to clean energy.
Yet, new regulations, particularly in environmental and cyber security areas, are adding complexity and costs to operations, emerging as the top risk (53%).
Other key opportunities
- Global Trade Expansion: 50% of respondents ranked global trade expansion as a key opportunity over the next two years. The growth of international trade presents new markets and opportunities for logistics companies to expand their reach and services.
- Customer Experience: 44% ranked customer experience as a leading opportunity across the next two years. Enhancing the customer experience through advanced technologies and personalized services is a critical focus for many firms.
- New Markets: 44% of respondents plan to expand into new markets. This should lift performance, particularly for logistics and supply-chain businesses whose fortunes are closely linked to expanding international trade metrics.
Other top challenges
- Business Interruption: 47% ranked business interruption as a top risk, as heightened global instability and conflict, as well as disruptions caused by natural disasters and operational failures pose risks, which can lead to significant delays and loss of customer trust.
- Supply Chain Disruption: 37% of executives ranked supply chain disruption as a top risk. Growing supply chain interdependencies will amplify the potential disruption caused by tariff wars and trade tensions, weather events and supplier delays, across multiple geographies and industries, which can cause delays and increase costs.
- Cyber Security: Cyber security was ranked by 34% as a top risk. Because delays are costly for transport and logistics companies and their customers, criminals may think they are more likely to pay to end a ransomware attack, making the industry a more attractive target.
Technology is proving to be critical to managing risks and improving service efficiency, as more than half of executives (55%) look to invest in technology as a strategy. Real-time end-to-end tracking of assets and cargoes can enhance transparency and response times, while advanced technologies can improve weather forecasting, reduce errors, and strengthen cybersecurity controls.
“It will be paramount for companies to keep on top of fast-changing cyber threats, as well as being able to demonstrate that they are on a path to climate resilience and sustainability. These are no longer ‘nice to have’, but business necessities., said Garret Gaughan, global head of direct & facultative at Willis, in a statement.
Additionally, sustainability is a major focus for the industry, with 61% of respondents citing it as their biggest environmental risk. The transportation sector, which accounts for approximately a quarter of global greenhouse gas emissions, is under pressure to reduce its carbon footprint. This is likely to continue globally despite a rollback of climate targets in some countries.
