Industry experts agree that costs across all sectors worldwide will continue to rise in 2018, and the most successful shippers will be those that are able to mitigate their impact on profitability. And, the right technology will play an increasingly vital role in driving efficiencies across the global logistics network.<\/strong><\/span><\/p>\n By\u00a0Patrick Burnson,\u00a0<\/strong>Executive Editor for\u00a0Logistics Management<\/i>\u00a0magazine<\/p>\n A<\/strong><\/span> recent series of surveys conducted by a prominent industry think tank indicates that the current state of global logistics is characterized by extreme urgency and the pressure to deliver above and beyond\u2014regardless of mode.<\/p>\n Transport Intelligence (Ti)\u00a0<\/a>a consultancy based in Bath, England, recently produced a collection of primary research reflecting the latest thinking in the market along with the views of senior shipper executives within its \u201cLogistics Briefing\u201d network concentrated in the EU.<\/p>\n According to the Ti collection titled \u201cLogistics Surveys 2017<\/a>,\u201d completed last December, there\u2019s scant doubt that the global express industry has already undergone significant transformation, not least due to the seismic shifts brought about by e-retail. The collection provides analysis of the key trends affecting the overall industry and is split into five surveys investigating the freight forwarding, motor carrier, express and warehousing sectors as well as the increasingly important topic of \u201cenvironment and ethics\u201d in global logistics.<\/p>\n While the individual surveys identify a different set of challenges for each of the logistics markets, disruption was one of the most important trends, which was identified across all the segments. In each case, innovation and disruption was regarded as a \u201cdouble-edged\u201d sword.<\/p>\n For example, a large proportion of respondents in the forwarding sector believed that traditional freight intermediaries would lose out to new entrants, but at the same time saw certain technological innovations as a way of mitigating the impact of increasing costs. The freight forwarding survey also found that logistics professionals identified air and sea freight as the trade lanes that offer the best prospects for volume growth over the coming years.<\/p>\n In Ti\u2019s European \u201cRoad Freight Survey,\u201d responding shippers also reveal which technologies have the greatest potential to transform their business. It may come as a surprise to some that autonomous vehicles were not the runaway winner\u2014they ranked third\u2014perhaps because many respondents took the \u201cbelieve it when they see it\u201d view, assessing fully driverless trucks as something of a pipe dream.<\/p>\n The motor carrier survey also suggests that this market will witness significant fluctuations in trucking freight rates in the EU in the coming year with changes in the truckload and LTL sectors. Overall, the survey identifies where growth opportunities might lie in the European motor carrier sector, thereby providing input into transforming trucking strategies to align these with the upcoming trends and demand fluctuations.<\/p>\n Despite many years of on-line shopping, shippers told Ti researchers that they continue to believe that this offers their businesses the best opportunities for growth. Furthermore, they want their carriers to stay focused on meeting evolving consumer needs.<\/p>\n Given the strains that e-commerce can put on the operations of express carriers, logistics managers are searching for solutions to best deal with this change in volume mix, say Ti analysts.<\/p>\n John Manners-Bell<\/a>, Ti\u2019s chief executive officer, notes that e-commerce is having an equally important impact on warehousing property in the EU. Not only has this trend led to vast investment in new facilities but, according to the survey, smaller locations aimed at distributing e-retail shipments to local consumers are also growing in importance in the Americas and Asia-Pacific.<\/p>\n \u201cGiven the amount of publicity that many online booking and quotation platforms have received in the international freight forwarding sector, I was surprised at the amount of respondents who were disappointed in their performance,\u201d says Manners-Bell, who adds that 61% of logistics executives who had used these platforms said that performance had been \u201cmixed,\u201d while only 14% said that it had performed well in all areas of functionality.<\/p>\n \u201cThis finding suggests to me that the sector still has a long way to go before this technology disrupts more traditional freight forwarding processes, even though the survey also suggests that significant progress towards digitization is inevitable in the next five years,\u201d says Manners-Bell.<\/p>\n According to Ti, next year\u2019s survey will track the development of these platforms around the globe, not only to find out how widespread adoption has become but also to discover if they\u2019re living up to expectations of advances in instant pricing.<\/p>\n \u201cCosts across all freight transportation sectors around the world will continue to rise in 2018, and the most successful companies will be those who are able to mitigate their impact on their profitability,\u201d adds Manners-Bell. \u201cAnd there\u2019s little doubt that technology will play an important role in this by driving efficiencies.\u201d<\/p>\n In wrapping up the findings, Ti analysts report that shippers also expect more mergers and acquisitions activity in the parcel and 3PL sectors, as the major players seek to consolidate their position in the market and push into specialized\u2014and more lucrative\u2014niches such as global perishables and pharmaceuticals.<\/p>\n Analysts for the global management consultancy\u00a0McKinsey & Company<\/a>\u00a0have also weighed in on what they believe is the current state of global logistics. Their body of research comes to many of the same observations: Certain logistics-related technologies don\u2019t always live up to their promise either here in the United States or around the world.<\/p>\n Indeed, Ali Sankur, an expert based in the company\u2019s Chicago office, maintains that logistics technology has \u201ca checkered\u201d history. \u201cSince the development of the first mainframe computers, companies have pursued technological solutions for their logistical challenges,\u201d he says. \u201cTheir search has led them up plenty of costly dead ends.\u201d<\/p>\n Furthermore, Sankur believes that some technologies have created as many problems as they solved. \u201cManufacturing-resource-planning (MRP) systems, for example, promised a fully automated solution to difficult production-scheduling activities,\u201d he says. \u201cIn practice, their mechanistic, inflexible approach often struggled to cope with the uncertainties and volatilities of the real world, in which machines break down, suppliers fail to deliver, and customers change their minds.\u201d<\/p>\n Sankur also notes that other \u201csolutions\u201d turned out to be clever in search of a real problem.\u00a0Radio-frequency identification (RFID)\u00a0<\/a>tags, for example, were intended to provide a real-time view of the progress of every item from production line to customer, revolutionizing logistics and supply chain management anywhere in the world in the process. In practice, however, high cost and difficulties in implementation have limited the use of the technology to a few niche areas.<\/p>\n \u201cOver time, companies learned that out of every hundred radical new technologies that promised to transform logistics and supply chain operations, only a handful actually fulfilled their potential,\u201d Sankur concludes.<\/p>\n And while Sankur sends out that subtle word of warning, other McKinsey analysts maintain that three broad areas of logistical innovation deserve particular attention today at home and across the globe: Automation and robotics; open IT platforms; and on-demand transportation.<\/p>\n These areas stand out thanks to high levels of activity by the biggest global services providers as well as the positive benefits already achieved by early adopters. Equally as important, however, is that these technologies all share one critical characteristic: accessibility.<\/p>\n \u201cWhile adopting a new supply chain technology might once have been a multi-year, multimillion dollar effort requiring significant changes across the global business, these three technologies allow companies to smart small, addressing specific problems and achieving rapid impact,\u201d says\u00a0Luis Benavides<\/a>, a McKinsey partner in the Miami office.<\/p>\n Benavides argues that starting on small, targeted new technology projects minimizes risk, making it easier to make the decision to go with an innovative approach, and provides shippers with valuable intelligence that they can apply to other technologies or different areas of their supply chain one step at a time.<\/p>\n If, on the other hand, an idea doesn\u2019t work, it simply reinforces the new cultural imperative: Fail fast and move on.<\/p>\n \u201cIn the warehouse sector, falling system prices, combined with lower set-up costs, mean robots can reach payback even if they are applied only in specific roles for short periods,\u201d notes Benavides.<\/p>\n Indeed, the potential impact of warehouse automation goes beyond productivity improvements. \u201cTechnology can help warehouses handle fast-changing, multi-channel and omni-channel requirements, and increase service levels to support same-day and next-day delivery,\u201d says Benavides. \u201cAs significant, automation can increase storage density and reduce labor overheads, giving companies more strategic freedom in their network footprint decisions.\u201d<\/p>\n Uber launched a trucking-industry version of its service in early 2017. As well as matching loads with available capacity, the system also aims to simplify rate negotiations and speed up payments, a critical element for small truckers and owner-operators.<\/p>\n Other organizations around the world are offering crowd-sourced last-mile delivery services, allowing commuters, taxi drivers or students to pick up parcels and drop them as part of their regular journeys. Systems such as these are changing how companies think about last-mile deliveries as customers everywhere have come to expect same-day service as a matter of course.<\/p>\n Retailers worldwide are already developing advanced omni-channel fulfillment offerings that allow a customer to pick a product online\u2014often using a mobile device\u2014and then select from a range of different collection or delivery options.<\/p>\n
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<\/h2>\nTechnology key to logistics evolution<\/h3>\n
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<\/p>\nBeware of technological promises<\/h3>\n
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<\/p>\nThree trends to watch<\/h3>\n
On-demand delivery<\/h3>\n
Ride-hailing services have disrupted transportation industries in many cities around the world. The same concept\u2014using smart software to match supply and demand in real time\u2014is now being applied in logistics. Companies can use online auction systems to buy and sell space on trucks, pushing utilization up and costs down.<\/p>\n
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Patrick Burnson, Executive EditorPatrick Burnson is executive editor for\u00a0Logistics Management<\/i>\u00a0and\u00a0Supply Chain Management Review<\/i>\u00a0magazines and websites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at\u00a0pburnson@peerlessmedia.com.<\/p>\n<\/div>\n![\"\"](\"http:\/\/moovafrica.com\/news\/wp-content\/uploads\/2018\/01\/Sameday-Cargo-Delivery-1.jpg\")
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