Collaboration, Leaner Supply Chains, Data Visibility Among Logistics Trends

WASHINGTON — Leaner supply chains, more data visibility and collaborations between direct competitors are among the trends taking hold in the transportation industry, logistics executives and researchers said.

Companies have turned their focus toward identifying and eliminating waste, Carl Fowler, senior director of business development at Menlo Worldwide Logistics, said on Jan. 24 at the Transportation Research Board’s annual meeting.

Over the past 20 years, freight movers have been able to leverage changes in the industry and “move up the supply chain evolutionary scale” by working with external parties, he said.

Now, though, in the absence of “game-changing” advances in technology or infrastructure, companies have begun to look internally for ways to drive down supply chain costs, he said.

Menlo Worldwide Logistics, based in San Mateo, Calif., ranks No. 19 on the Transport Topics Top 50 list of the largest logistics companies in the United States and Canada. The third-party logistics provider is a unit of Con-way Inc.

Mike Erlandson, vice president of government affairs at grocery retailer and wholesaler Supervalu Inc., said grocery stores aren’t stockpiling as much as they have in the past.

“The backrooms of grocery stores are very much gone today,” he said.

Supervalu, Eden Prairie, Minn., ranks No. 18 on the Transport Topics Top 100 list of the largest private carriers in the United States and Canada.

Companies also want to gain better visibility of their inventories and turn it into “actionable intelligence,” Fowler said.

Third-party logistics providers control large swaths of companies’ data, “but that data is silent” unless they study the information to drive supply chain improvements, he said.

Collaboration is another trend, not just with third-party logistics firms or between different units of a company, but also among direct competitors, Fowler said.

Rival companies in Germany, for example, are now shipping their products together, said Stefan Wolpert, a researcher with the Fraunhofer Center for Applied Research on Supply Chain Services in Nuremberg, Germany.

Confectioners Mars Inc. and Ferrero ship their competing products together in Germany to improve city logistics, Wolpert said.

Beverage suppliers also have consolidated their distribution efforts in urban areas, he said.

Fowler said he’s seeing more organizations break down their supply chains with “velocity centers” while moving away from “mega” distribution facilities.

He also noted the emergence of fourth-party logistics providers, or 4PLs, which act as a “supply chain orchestrators.”

He compared the role of the 4PL to the conductor of an orchestra, who “finds talent to conduct the symphony.”

More organizations also are looking to implement green strategies, in part to control costs, Fowler added.

Meanwhile, the country’s changing demographics promise to influence the domestic movement of goods in the coming years, a U.S. Census official said.

Scott Boggess, a demographer with the U.S. Census Bureau, said the United States is becoming increasingly diverse, and its population is shifting geographically.

“Who we are is changing, and that’s going to change demand for goods and services,” he said.

The foreign-born population grew to 12.5% in 2009, Boggess said. The consumption patterns of foreign-born residents will be a mix between U.S. patterns and those of their native countries, he said.

At the same time, the percentage of people ages 65 and older is also increasing.

The aging population will have implications for the labor force, which will become younger as baby boomers retire, Boggess said.

Americans are also becoming more geographically concentrated in metropolitan areas, and many are moving from the Midwest and Northeast to coastal areas in the South and the West.