CONGESTION IN LOGISTICS

In an era where groceries are delivered within 10 minutes, no one would like to spend weeks waiting for those deliveries. But assume that your goods are delivered in a few weeks, or maybe months; yes, you can face these kinds of situations due to the congestion caused in the logistics industry. To understand this problem in detail, we first need to understand what exactly congestion in logistics sectors is, what the basic forms of congestion are, and how it can affect you.

Understanding Congestion in logistics

Congestion in logistics is a scenario that occurs when the cargo is unable to reach the desired location at the right time, either due to traffic on the trade route or due to insufficient infrastructure at the ports.

After understanding the basic meaning of this terminology, let's now understand the basic forms of congestion that the logistics industry generally faces.

• Port congestion: Port congestion occurs when ports experience a sudden influx of cargo, which overburdens the ports, making it insufficient to process and load cargo due to insufficient staff availability, inadequate infrastructure, or vessel bunching.
• Highway congestion: Highway congestion can be caused by poor road infrastructure, accidents, and a high surge in the transportation of goods, causing a delay in the transportation of cargo and charging a high economic cost to the stakeholder.
• Warehouse congestion: Warehouse congestion happens when there is a mismatch between incoming and outgoing goods. After understanding the basic forms of congestion in the logistics industry, let's now understand the factors that cause this congestion.

Causes of congestion in the logistics industry

• Increased trade volumes: There are times when the trade volume increases and the ports or warehouses don't have the necessary infrastructure to store the cargo or lack the vessels required for the loading of cargo.
• Seasonal fluctuations: Seasonal fluctuations occur when there is high demand for certain products in a particular season, like in the winter when there is a high number of imports or exports of dry fruits or woolen clothes, which causes congestion.
• Inadequate infrastructure: Few ports or warehouses lack the required infrastructure for storing or loading cargo.

By now, you must have understood what congestion is and how it is usually caused. Now let's explore the consequences or aftermath of this congestion.

Consequences of this congestion

• Supply chain disruptions: The congestion on the trade route causes a disturbance in the whole supply chain as the cargo is not delivered at the right time to the desired destinations.
• Economic impact: The congestion causes a major economic loss to the stakeholders as they must pay an extra demurrage penalty to the ports or warehouses, and it also causes a negative impact on the GDP of the involved countries.
• Environmental impacts: Heavy congestion also has an adverse effect on the environment because of the increased energy consumption and increased emission of harmful gases by the vessels that are waiting in the queue for loading or by vehicles that are stuck in road traffic.

We have understood the consequences of congestion now let's understand how this congestion created a disruption in the logistics industry through recent examples.

Examples of congestion in the logistics industry

1. One of the major incidents that disrupted the whole supply chain was the Suez Canal obstruction, where the Ever-Given container vessel was stuck in the canal banks and blocked all the traffic, making it difficult for other vessels to move across that trade route.
2. At the time of the pandemic, when COVID-19 occurred, there was huge congestion in the logistics sector because of the high import and export of pharmaceuticals.
3. The West Coast Port Congestion of 2014-2015, where the labor dispute between the Pacific Maritime Association and the International Longshore and Warehouse Union led to significant congestion at major West Coast ports, disrupting supply chains and causing economic losses.

Congestion in the logistics sector is a formidable challenge that can disrupt the entire supply chain, affecting industries, economies, and consumers. So, we must understand the cause of this congestion and act accordingly. The industry players should invest in the infrastructure and the optimization of operations so that congestion can be eradicated from the industry.