Opinion: Trends Affecting Logistics in 2018

The logistics industry is evolving, bringing both risk and opportunity to corporate supply chains.

Farrell

Last year, natural disasters, government regulations and a healthy Gross Domestic Product created challenging capacity and rate conditions. This year (and beyond), the booming e-commerce space and demand for operational efficiency will amplify the need for more automation and technology within the supply chain.

Companies are putting additional emphasis on logistics due to the impact their supply chains have on earnings and customer loyalty. Going forward, consider these macro trends that will likely impact your logistics and supply chain operations:

1. Managing Freight Demands and Market Shifts

We’re coming out of a turbulent year. An unprecedented number of storms sharply impacted trucking capacity. Hurricanes in Texas and Florida took anywhere from 5% to 10% of capacity away from the market. This, in turn, drove up rates.

A significant industry challenge also is underway, as trucking companies navigate the ELD mandate, which took effect in December. Many experts predict we will see a productivity drop of 4% to 6% following this rollout, 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.

At the same time, the nature of freight is changing.

As business-to-business buyers’ purchasing behaviors and delivery expectations align more closely with consumer habits, more businesses want their inventory closer to customers. The result is more frequent shipments that are lighter in weight. To contend with these changes, carriers are adjusting their rates to focus more on how much trailer space a shipment occupies (density pricing) and less on weight and tonnage.

2. Using Technology to Improve Logistics

For many companies, the supply chain is no longer a simple cost of doing business; it is a way to generate competitive advantages. And technology has become the perfect enabler for advances in the supply chain.

Artificial intelligence, for example, 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 algorithms that analyze trends and predict scenarios, is providing shippers with the real-time knowledge to make faster and better decisions.

In addition, the Internet of Things will come into play when companies begin deploying control towers that will help increase supply chain visibility. More visibility into your lanes improves strategic capacity. Once logistics companies understand shippers’ movements and the nature of their freight, they are able to build specific carrier relationships that give us access to capacity on a consistent basis throughout the year.

And everyone is talking about blockchain, including the logistics industry. Blockchain technology is an open, distributed 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 among shippers, carriers, brokers and others. Today, however, this technology is in its infancy.

3. Satisfying Buyers’ Delivery Expectations

Consumers’ and business buyers’ delivery expectations are rising. 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.

To manage these demands, logistics service companies 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 multivendor are a few of the services that companies are relying on to meet their customers’ delivery needs.

As you can see, times are changing. But you can make the most of the evolving logistics space. Here’s how:

Use a Variety of Logistics Services

Utilizing multimodal shipping services and logistics solutions, such as combining intermodal with truckload and final-mile, helps mitigate capacity challenges and meet customer delivery expectations. Working with a full-service third-party logistics provider offers access to many carriers and services that can be combined into custom solutions. Because of the complexity of today’s supply chains, one could argue that there has never been a time of greater opportunity for third-party logistics providers than now.

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.

Adopt Technology That Drives Efficiency, Savings

Adopt technology that can automate tasks, provide actionable insights to help you make smarter business decisions and scale as your business evolves. A Transportation Management System that integrates with your Enterprise Resource Planning and business systems to analyze trends, optimize routes, match your shipments with optimal capacity and increase your freight-management efficiency and cost savings.

GlobalTranz is a third-party logistics provider specializing in LTL, full truckload, expedited shipping services and managed transportation solutions. Through technology-driven logistics and carrier relationships, GlobalTranz provides services that enable shippers to respond to customer demands.