Annual Review and Outlook - Logistics

Annual Review and Outlook - Logistics

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It took decades to break up shipping conferences’ control and fixing of shipping rates, but now freight forwarders face a new threat from the carrier-backed TradeLens, a group that has already taken control of much of the world's container cargo data.
The high-profile financial failings of so-called disruptors like Uber, Lyft, Grubhub, Blue Apron, and WeWork should serve as a warning to investors in the budding digital freight brokerage space.
Efforts to create end-to-end freight visibility advancing
With true end-to-end shipment visibility unlikely to come from a single provider, shippers and 3PLs are thinking about visibility as something that needs to be pulled together using data from multiple sources.
With the US-China trade war still unresolved and demand growth waning, developers in 2020 will be more cautious in bringing new logistics space online than they have been during the boom times of the past six years.
Virtually every notable new domestic freight broker in the US tied up at least one direct integration with a major transportation management system (TMS) provider in 2019, a trend that will likely continue in the coming years.
Shippers and non-vessel-operating carriers are now seeing electronic quotes on par with those offered through long-term contracts, a clear signal that certain container lines see instant quoting as a key part of their future strategies.
Third-party logistics providers increasingly view technology as a way to make their services "stickier" and more valuable to their customers, rather than as a competitive threat.

ARO Commentaries

The big story in 2020 is the continuing evolution of technology to eliminate waste and improve productivity in corporate supply chains. Shippers and carriers should continue to make significant investments in their technology infrastructure to address the way companies like Amazon and Uber are changing customer expectations.
The logistics industry must focus on the development of third-party, multi-participant, mobile-centric platforms that provide digital freight matching and real-time visibility for brokers and shippers, connecting them with the most fragmented resource in trucking: the small carriers and independent owner-operators that move 80 percent of truckload freight.
Supply chain leaders in all industries will increasingly engage with five major areas: trade agreements, the sustainability movement, the circular economy, the need for in-depth visibility, and fast-advancing technology for facility automation and for decision-making. will determine how their respective companies perform. The six major trends will place enormous pressure on all industries, regardless of the freight volumes. Much will require capital-intensive invest-ments, for global, regional, and local supply chains, which is always limited. Shippers will need strong talents to decide what to do; service providers will need strong talents to decide how to help their customers do it.
To combat the ever-increasing complexity of supply chain management, which leaves room for human error and interpretation that can result in severe financial consequences, companies will increasingly implement globe trade management (GTM) solutions to automate the compliance process, provide visibility, and create audit trails that document everything.
Logistics customers need new technology that is social, user-friendly, always on, and multifunctional — such as the ability to add cellphone videos in apps for product or container integrity — to face the headwinds of rising origin costs and greater consumer demands.
Application Program Interfaces (APIs) are the fundamental technology that will are soon arm freight brands with an arsenal of interoperable SaaS tools that will allow the instant transfer of data which will soon enable true end-to-end visibility, full transparency across entire supply chains, and so much more.
As macroeconomic trends, new tech, and consumer expectations continue to disrupt logistics, successful providers will assemble supply chain teams whose members are both strategic and tactical by nature and thus able to discern what matters most at any given time.
Implementing AI and machine learning in the supply chain, a prerequisite for achieving the many benefits offered by natural language processing (NLP), will require high-quality supply chain datasets, properly trained employees, and buy-in from all stakeholders.
The freight market offers a portfolio of options enabled by technology and incorporating a variety of modes that allows carriers to balance the best mix for each shipper.
Integration between supply chain and global trade management (GTM) platforms is vital in ensuring that shippers’ responses to supply chains shifts don't compromise compliance — and so that they become aware of additional opportunities above and beyond the immediate benefit to any changes.
2020 will see emerging technology and innovative solutions — such as SaaS and cloud storage, API services to connect different systems, and AI-based automated decision-making — that enable data flow across organizations to gain visibility and efficiency and illuminate black holes.
Coupled with machine learning, natural language processing, and other tech that frees up supply chain professionals for higher-order, value-creating activities, a complete redesign of the aging legacy logistics model, based on “straight-through processing,” is needed to produce fully digital data flows from end to end and predictable, lower-cost physical systems.
While yesterday was all about shipper-specific optimization and transportation management system (TMS) applications, today’s digital platforms enhance those applications by leveraging all shipper and carrier data for all network stakeholders.
Carriers that are reluctant to adopt new visibility technologies will find their hands forced by either competitive or regulatory pressures, such as the federal mandate of ELDs for trucking industry.
Service solutions offered by 3PLs must support both traditional warehouse and inventory management needs and rapid-response fulfillment, while offering complete visibility by connecting with multiple e-commerce platforms.
E-commerce’s demand for speedier shipping is driving logistics customers to infill real estate in the form of last-touch and city distribution facilities, but they are challenged by spiking construction costs and a lack of available land sites.
Standards-based solutions such as the DCAA’s industry blueprint processes, NYSHEX’s contract enforcement rules, and APIs allowing interoperation of different systems will help shippers adapt to the fundamental changes digitization brings to the logistics industry.
Supply chain operators are increasingly demanding cloud deployments for terminal operating systems (TOS) to reduce IT infrastructure costs, shorten TOS implementation timeframes, and increase interoperability with stakeholders.
Companies that take advantage of today’s technology to find efficiency and cost reductions in their supply chains have a huge opportunity to address latent inefficiencies by digitizing processes, improving workflows, and embracing new business models around data sharing.
As customers demand shorter delivery times and ships, terminals, trucks, and trains continue to move slowly and unreliably, supply chain managers will need to utilize enhanced visibility along the supply chain as a substitute for speed.