Distribution in 2022 | News

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By James Dawson and Charles Reid

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As we move through 2022, there is a feeling that the markets will begin to level off after a period of uncertainty caused by the pandemic and war in Ukraine

The displacement of containers from Covid-hit ports, followed by the Suez Canal crisis, exacerbated an already stretched logistics industry as the world went online due to the pandemic. The industry Charles and I have been involved in for over two decades was stretched to the limit. It became a race against time to build infrastructure to cope with the increase in demand. As expected, there have been winners and losers in the race – those that have chosen to invest have seen their service levels maintained, whereas those who have seen service levels dip to levels not experienced for over a decade.

The change in consumer behaviour through the pandemic has seen the market evolve its service offering. Undoubtedly, contactless delivery has made doorstep deliveries more efficient. However, the surge in volume has placed a strain on capacity, causing market-leading firms to impose caps on volume at peak times. The supply pressure on companies has caused a shift in marketing messaging. Black Friday is no more, for example. Instead, in an effort to flatten peak demand, it has become more like Black November.

There is no way of predicting the future. The past has taught us that. But one thing is for sure: Amazon will gain market share at phenomenal rates year-on-year. Before the pandemic, they had a limited network and would use a host of distribution firms. They still use those firms but now have huge distribution centres (DCs) strategically positioned around the UK (and the world) with a liveried fleet, offering their Prime customers guaranteed next-day delivery of almost any product you can imagine. The next stage in their offering is widely anticipated to be same-day delivery. It has the market looking nervously looking over its shoulder; the tune Amazon is playing inevitably means the market will have to follow.

Sustainability in distribution is now, more than ever, part of corporate responsibility. There are huge strides being taken with targets for electric vehicles, including aircraft. The mandate has changed from days of huge fuel consumption to achieving carbon-negative ambitions. The industry is changing rapidly. Let’s hope it stays on course to achieve its target.

Finally, adding unnecessarily to the world’s uncertainty about its future is the war in Ukraine. Presently, the war seems to be grinding to a stalemate, with Russia focusing its forces’ collective attention on the Donbas region in the south-east of Ukraine. What the conflict means is uncertain. However, distribution companies have already seen their fuel costs rise dramatically. As a result, many are putting priorities such as sustainability on the back burner to focus on reducing costs.

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