As we start 2018, I have been reflecting on the state of the logistics industry and I wanted to share trends that will likely affect our shipper customers in the upcoming year.
The logistics industry is evolving, bringing both risk and opportunity to corporate supply chains. In 2017, natural disasters, government regulations, and a healthy GDP created challenging capacity and rate conditions. The booming e-commerce space and demand for operational efficiency continues to amplify the need for increased automation and technology. Companies are putting more emphasis on logistics due to the impact it has on earnings and customer loyalty. Supply chain and logistics management are strategic imperatives.
As you plan for 2018, consider these macro trends that will likely impact your logistics and supply chain operations.
- Managing freight demands and market shifts
- Leveraging technology to optimize logistics
- Satisfying buyers’ increasing delivery expectations
- Managing Freight Demands and Market Shifts
We’re coming out of a turbulent year where an unprecedented number of storms have sharply impacted trucking capacity. Hurricanes in Texas and Florida took anywhere from 5-10 percent of capacity away from the market, which in turn drove up rates.
There is also a significant challenge in the industry as trucking companies navigate the ELD mandate, which went into effect on December 18. Many experts predict we will see a productivity drop of 4-6 percent following the rollout, thus exerting more pressure on capacity.
These capacity pressures are occurring amid a thriving economy with an overall strong GDP, which is increasing demand for trucks. While at the same time, the nature of freight is changing. As B2B buyers mirror consumer purchasing behaviors and delivery expectations, more businesses want their inventory (SKUs) closer to customers. The result is more frequent shipments that are lighter in weight. To contend with these changes in buyer preferences, carriers are adjusting their rates to focus more on how much trailer space the shipment occupies (density pricing) and less on weight and tonnage.
- Leveraging Technology to Optimize Logistics
For many companies, the supply chain is no longer a simple cost of doing business, but a way to generate competitive and operational advantages. Technology has become the perfect enabler for most advances in the supply chain. Tools like artificial intelligence (AI) and machine learning can instantly identify opportunities for efficiency, cost improvement, and risk management.
The growing access to thousands of data points, computing power, and cloud capabilities, combined with AI and machine learning algorithms that analyze trends and predict scenarios, is providing shippers with the real-time knowledge to make faster and better business decisions. GlobalTranz is creating ways for people to turn massive amounts of data into actionable insights that increase logistics efficiency and drive overall cost savings.
Additionally, the Internet of Things (IoT) will come into play when companies begin deploying control towers that will help increase supply chain visibility. More visibility into your lanes improves what we call strategic capacity. Once we understand our shippers’ movements and the nature of their freight, we’re able to build specific carrier relationships that give us access to capacity on a consistent basis throughout the year.
Everyone is talking about blockchain, including the logistics industry. Blockchain technology is an open, distributed ledger or database, that digitally records the transaction history between parties involved. In transportation, blockchain can create a more connected and efficient supply chain by enabling real-time, secure, and inalterable information sharing between shippers, carriers, brokers, and more. Eventually, blockchain technology will impact logistics, but today we’re in the infancy stages. In 2017, GlobalTranz became one of the first 3PLs to join BiTA (Blockchain in Trucking Alliance), to develop industry-specific standards and help grow and educate the logistics industry about this promising technology.
- Satisfying the Increasing Delivery Expectations from Buyers
Consumers and business buyers’ delivery expectations are rapidly increasing. Next day delivery and unique service expectations are now the status-quo for e-commerce, and a growing number of retailers and businesses are enforcing must-arrive-by delivery requirements. According to The Wall Street Journal, “Wal-Mart Stores Inc. is charging suppliers monthly fines of 3 percent for deliveries that don’t arrive exactly on time.”
To manage these delivery demands, logistics service companies like GlobalTranz are tapping their networks and resources to provide just-in-time logistics solutions designed to meet expanded consumer and business buyers’ expectations. Automated warehouses, final-mile, multimodal, and multi-vendor are just a few of the services companies are relying on to meet their customers’ unique delivery needs.
How to Thrive in Disruptive Times
The times are indeed changing, but you can make the most of the evolving logistics space considering these suggestions in 2018.
- Use a Full-Suite of Logistics Solutions
Utilizing multimodal shipping services and logistics solutions, like combining intermodal with truckload and final-mile, helps mitigate capacity challenges and meet customer delivery expectations. Working with a full-service 3PL provides access to a broad range of carriers and services that can be combined into custom solutions for your business.
- Build a Large Carrier Network
Build a large, diverse network of qualified carriers that have the equipment to move your commodities to the locations you currently ship and can accommodate your future expansion plans. GlobalTranz has a network of 34,000+ carriers capable of moving anything from a pallet of bottled beverages to an 800,000-pound transformer anywhere in the world.
- Adopt Technology that Drives Efficiency and Savings
Adopt technology that can automate tasks, provide actionable insights to help you make smarter business decisions, and scale as your business evolves. A TMS, like the GTZ technology platform, integrates with your ERP and business systems to analyze trends, optimize routes, match your shipments with optimal capacity, and increase your freight management efficiency and cost savings.
- Partner with a Logistics and Supply Chain Expert
Because of the rising complexity of today’s supply chains, you could argue that there has never been a time where the 3PL has been more critical, or strategic as it is now. Because of advances in e-commerce, multimodal, and the emergence of final mile, white glove, and technology-driven supply chains, about 90 percent of domestic Fortune 500 companies partner with third-party logistics providers for outsourced logistics and supply chain services.
Looking for a 3PL that will help you navigate the challenges in 2018?
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