By Adam Robinson, Director of Marketing & Digital Marketing Consultant at Cerasis
Understanding the state of overall supply chain management is a massive undertaking. It involves countless hours of research, continuous review of leading supply chain experts, consideration of technologies, capabilities from around the globe and much more. The internet is an invaluable resource for shippers and carriers, especially those of smaller size, looking to make a splash in the global supply chain. Unfortunately, the path to understanding this behemoth of information is riddled with rabbit holes, thorns, and even sharp objects. Instead of trying to make sense of the lot by yourself, we’ve taken the initiative to put together these freight and transportation trends to know and use in making supply chain management decisions throughout the coming year.
In this article, we’ll take a closer look at the end of 2018 and move forward into 2019 with general trends affecting the freight and transportation industry.
Peak Shipping Season: A Review of Trends from the 2018 Holiday Peak Season
Amazon’s Dominion grew through Whole Foods, brick-and-mortar space.
Amazon was a clear frontrunner in the 2018 peak shipping season, and a significant portion of their sales can be attributed to the rise of Amazon in the brick-and-mortar space. According to Steve Banker via Forbes, Amazon’s purchase of Whole Foods positioned the company to corner the omnichannel space, and Amazon went a step further. The eCommerce giant announced patents for robotic arms and ultrasonic sound pulses that would track employee movements. It might sound like something from a Hollywood film, but Amazon’s sales grew in response. According to the Business Insider, Amazon saw the biggest Black Friday and Cyber Monday ever with more than $7.8 billion in sales.
Spot Rates Rose
As explained by TalkBusiness.net, the American Trucking Associations’ Tonnage index declined in late-summer, but rates rose well before the peak shipping season. Spot rates rose nine percent, but some were as high as 12 percent. Isolated instances of higher rates existed, and in the weeks leading up to Christmas, rates soared. Meanwhile, inventory levels rose 3.6 percent, but it was still insufficient to meet demand with many consumers not receiving packages on-time.
Retailers Embraced Rapid Delivery
The rise of Amazon required a change in most retailers, shifting away from traditional, standard, and lengthy delivery to rapid deliveries. Walmart, Target, and Amazon all offered rapid delivery to meet the demand of peak shipping season, and smaller retailers followed as well.
Labor Costs Increased in Tandem With Economic Gains
The strong economy, before the Shutdown, hinted at increased labor costs for logistics. Labor costs rose at least five percent, but some areas saw gains exceeding 20 percent even before costs calculated for overtime. Actual costs could quickly rise above 33 percent.
Remodeling Drew in the Crowds for Peak Shipping Season
Remodeling of Targets drew in record crowds for the peak shopping season, and a heightened number of brick-and-mortar shoppers translated into higher eCommerce purchases, a result of more purchases completed online following an in-store promotion, but it proves the value of the brick-and-mortar location in pushing eCommerce sales higher. As a result, more retailers will look to remodeling to stay competitive with Amazon at the beginning of 2019.
Imported Goods Pushed Ports to Their Limits
The rate of imported goods increased in peak shipping season too. According to MoreThanShipping.com, foods represented a considerable change in shipping standards. Although this has always been a peak season for imported foods, more than 17,000 TEUs entered the Port of Oakland in the fall, which is a sum far more significant than data from 2017. Also, higher-than-expected imports were a result of both higher demand and preparation against future fears for new tariffs under the current administration.
Shippers Put the Box to Work
A final lesson from the 2018 holiday peak shipping season is about the box. The cardboard boxes packages arrive in serve as a valuable marketing tool. Walmart, Target and other major retailers took advantage of packaging space to promote buy-online pickup in store (BOPIS) delivery models and encourage consumers to look online for their products. In addition, they noted store policies on boxes in some stores. For instance, a Walmart in Texas had printed “Discounts may apply,” on boxes picked up in-store in Lubbock, Texas for online purchases. The exact rate of such advertising is not known, but at least one box caught the attention of a shopper in the South Plains.
The Top 2019 Logistics Trends Shippers Should Know
The state of the logistics is evolving, and 2019 is shaping up to be a year in which warehouses and distribution centers continue the development and implementation of technology-based processes. Technology allows shippers to work smarter, faster and with fewer human resources, and new technologies, such as drones and augmented reality, are continuing the process, reports Victoria Kickham of Logistics Brief. Unfortunately, companies that fail to stay in line with the top 2019 logistics trends could face uncertainty and lost competitive advantage, so let’s look at some of the top trends shippers should know to stay successful.
The Number of Direct-to-Consumer Shipments Will Increase
Another consideration in the supply chain trends for 2019 will go back to the use of drop shipping and shipments sent from warehouses directly to consumers. It is important to note that a difference exists between dropshipping and shipping direct-to-consumer. Dropshipping refers to manufacturers sending products directly, but products are purchased through a third-party. Shipments sent from a warehouse, which may be a major distribution center for Walmart, Target or another company, can be sent direct-to-consumer effectively lowering the cost of shipping. However, direct-to-consumer shipping is still more expensive than dropshipping. As dropshipping increases in use, more organizations will purchase software to manage and control warehouses.
LTL and Multimodal Shipping Will Grow in Popularity
As explained by Logistics Brief, the capacity crunch and extreme growth of eCommerce will contribute to unparalleled growth in the LTL sector. Fewer trucks are going to be available for full truckload, and excess freight will be consolidated into LTL loads and vice versa. Unfortunately, the continuing uncertainty regarding the economy will push most carriers to continue increasing freight rates, especially spot freight rates. As a result, shippers will need to rely on flexibility to ensure their freight will be picked up when necessary. Some loads will be rejected or placed on the waitlist, but shippers that take advantage of LTL and Multimodal shipping options, resulting in a continuous flow of goods through all modes, can navigate higher freight rates.
Digitalization Will Continue to Reshape Logistics
Digitalization, reports PwC, will become more critical to tracking changes in consumer behaviors, addressing the talent shortage, meeting compliance requirements for data protection and more. Sixty percent of transport and logistics CEOs expect technology to continue being disruptive to the business, and 65 percent are working to change distribution channels to reflect the digitalization of logistics.
Digitalization is not just an American concept, and it extends to shifts in international trade. Growth in Asia, Europe trade, free trade agreements, trade wars and barriers, new tariffs, the belt and route initiative, and lunch infrastructure development will continue to force more companies to embrace digitalization of logistics. Software-driven processes changes, such as artificial intelligence and big data analytics, will empower supply chain leaders and shippers to do more with less and reduce inefficiencies dramatically increasing effectiveness and speeding the order fulfillment process, which will, in turn, result in a faster logistics operation. Of course, any conversation on digitalization is incomplete without touching on the importance and role drones, and autonomous machines will have on the industry.
Drones and driverless trucks, also known as autonomous trucks, will empower shippers and carriers with new last-mile delivery options and reduce the cost associated with each order shipped. As these technologies mature, more regulations and developments are sure to change how shippers leverage such technology.
Supply Chain Will Grow More Circular
The concept of a circular supply chain is relatively new, and it is juxtaposed against the traditional “linear supply chain.” Instead of relying solely on mining for new raw materials and purchasing products from suppliers, the modern supply chain is turning to ways to reclaim existing, used raw materials which is essentially recycling. Recovering raw materials is a vital aspect of keeping prices low, staying competitive with Amazon, and offering a sustainable solution to millennials and Generation Zers. Meanwhile, shippers will look to new tactics to handle risk management and build resiliency within the supply chain. The result will resound throughout the supply chain and enable better, faster logistics.
Use of SaaS Within the Supply Chain Will Expand
According to A & A Customs Brokers, the use of software-as-a-service in logistics management is gaining traction, and this is due in part to the rise of cloud-computing software. SaaS offers the convenience of utilizing the latest services and technologies, without the upfront investment costs associated with an on-premise solution. In addition, the use of SaaS will expand as companies and software vendors offer new solutions and platforms to fulfill more needs. Ultimately, these providers are expanding beyond the limited capabilities, offering comprehensive eCommerce solutions, LTL management, transportation management, warehouse management, execution and control and much more.
Trucking & Freight Management Trends to Know in 2019
Freight management is crucial for companies around the globe. Effective freight management reduces delays for consumers, helps companies offer Amazonesque shipping benefits and much more. Shippers that wish to succeed in 2019 need to know the top trucking and freight management trends for 2019 and how they will affect shipping practices, global trade, last-mile, and even drivers.
Strategy Redevelopment to Meet Global Trade Challenges Will Be Among Top Supply Chain 2019 Trends
According to Talking Logistics with Adrian Gonzalez, companies are looking for ways to redefine strategies to address global trade challenges. For example, Brexit and uncertainty regarding tariffs will contribute to more negotiations and instability. Although domestic shippers have a safety net against Brexit, it could still lead to problems with obtaining products manufactured, including components, in Britain, and similar effects may occur due to new tariffs.
One of the biggest threats to shippers relating to strategy redevelopment will involve the effect on the U.S. agriculture industry. Farmers face problems with subsidies and inability to sell crops to China and other countries due to tariffs, and this will translate into trouble for the agricultural industry. Even though farmers grow produce and textiles, they play a vital role in encouraging economic growth. In other words, stagnant farming will reduce the amount of capital poured back into local economies, and given the state of the U.S. economy, small economies contribute to the successes and failures of the country’s economy.
Companies Will Opt for a “Single Window”
A significant freight management trend to expect in 2019 will focus on the use of a “single window” into logistics and operations. This concept has another name—the single pane of glass, and it is a common goal for many industries beyond logistics, such as facilities management, health care, and education. The principle behind the concept is to give managers and upper-level staff access to all information from a single platform. In other words, integrated platforms will reduce problems with visibility, and paired with the use of analytics, and shippers can leverage such platforms to derive new insights and improve operations.
Crowdsourcing of Last-Mile Is Among Top Freight Management Trends
The crowdsourcing of last-mile logistics is expected to continue as companies develop app-based trucking schedules and fleets. Also known as the Uberization of trucking, crowdsourced trucking will effectively give shippers access to private fleets and individual drivers, reducing strain caused by the capacity crunch and driver shortage. As noted by SelectHub, the truck driver shortage will continue to grow in severity, resulting in a deficit of approximately 75,000 drivers needed by the end of 2019, so shippers must start thinking about how to expand their networks now.
On-demand trucking will cushion the blow of increasing spot rates. As explained by Matt Snider via Breakthroughfuel.com, the use of on-demand trucking capabilities will help shippers navigate the high costs of spot rates. However, better analytics and forecasting will further reduce expenses as shippers learn more about what to expect, reducing the use of spot trucking in the first place.
Companies Will Begin to Implement the Power of Blockchain-Based Technology
Blockchain-based technology is one of the most exciting areas to watch out for in 2019. Companies are in the process of developing blockchain-based solutions for holistic supply chain management which will dramatically reduce compliance violations, enhance trust between companies, streamline payment processing, and reduce compatibility issues between systems. ShipChain is already well on track to developing a platform for use in logistics to manage supply chain processes, and the platform will enable faster integration with existing systems, helping companies take advantage of all new technologies.
Logistics Consolidation: Trends Arising From Consolidation of the Logistics Industry
Logistics consolidation will have a resounding effect on the industry in 2019. Logistics consolidation is a fancy way of describing the transition of shipping modes to accommodate available capacity. Unfortunately, the capacity crunch appears to be worsening and drivers are growing scarcer. As the industry attempts to compensate with better wages and if it’s for drivers and long-haul shipments, it will continue to suffer from stress. Unfortunately, the pressure in the industry translates into higher logistics cost, so logistics consolidation will become more commonplace throughout the year, resulting in these new trends.
Carriers Will Look for More Ways to Address the Talent Shortage Through Logistics Consolidation
Carriers are looking for more ways to address the talent shortage through logistics consolidation and the use of technology to ensure all consolidation is optimized. Improper consideration of backhauls, deadhead, dwell time and spot freight will result in excess freight and unused space. Unfortunately, most carriers still waste space in some form. To combat this problem, and carriers will look to deploy new types of technology to track volume use, shipment, frequency, potential consolidation and deconsolidation and more. Analytics will help carriers identify routes and pickups that may not be adhering to stringent consolidation protocols, such as poor palletizing of shipments.
More High-Priority Shipments Will Necessitate Greater Visibility With the Data and Blockchain
As explained by Sedat Saka via Forbes, the capacity within the supply chain opens the door to another problem; shippers are turning to white glove services and specialized, last-mile shipping options to move more product. Also, consumers are willing to pay a premium or their shipment, especially when two-day shipping is an option. Therefore, shippers will see more high-priority shipments, but the high-priority nature requires an increased level of visibility throughout the entire supply chain translating into more significant use of data, and blockchain will start to make an impact. Further, the logistics industry will see more high-priority shipments as consolidation continues. Tracking into LTL and FT is crucial avoid waste of space and ensure the proper handling of high-priority shipment.
Easier Payment Processing and Cross-Border Transactions Will Enhance the Global Supply Chain
Payment processing and cross-border transactions will be another area to undergo change throughout 2019. As a result of logistics consolidation. Fewer carriers amount to fewer payments, but consolidation can make tracking individual shipment payers and payees more difficult. Meanwhile, consolidation will streamline cross-border transactions, but again, the role of accuracy and thoroughness in shipment paperwork, including the bill of lading, is essential to preventing unnecessary delays and ensuring a optimize supply chain. Furthermore, more carriers will seek to invest in new technology, including outsourcing logistics management, to take advantage of consolidation options.
The Popularity of Discount Retailers Will Increase
According to Lauren Thomas of CNBC, an increased global economy effectively brings more product to the market, and since costs for raw materials and manufacturing very widely, depending on the location of the manufacturers, it is expected that the popularity of discount retailers will increase. The prevalence of discount retailers is also growing in tandem with consumers taking extra care. Before purchasing a product. Furthermore, the surge in eCommerce will naturally lead to an increase in brick-and-mortar business for companies offering buy online and pick up and toward delivery options. As a result, consumers needing to purchase necessities may be more likely to visit a discount retailer.
Major Retailers Will Look for Ways to Compete with Amazon
In a sense, the popularity of discount retailers will increase as companies look for ways to meet with Amazon. Amazon has already expanded into the brick-and-mortar space with its purchase of whole foods, and major companies, including Walmart and Target, are working to redevelop their existing eCommerce platforms to create an environment, and service more comparable to the eCommerce giant. At the same time, traditional stores, such as Walmart, have an advantage over Amazon for possessing an extensive brick-and-mortar network, so leveraging consumer-facing technology within the brick-and-mortar store can go a long way in improving competitive advantage. Consequently, the volume of shipment to the store will increase, resulting in more freight consolidation. Consolidation offers protection against rising truck rates.
Summary: The Right Logistics Service Provider Can Help You Navigate the 2019 Logistics Trends
The logistics industry is expanding and partnering with the right logistics service provider can mean the difference between securing lowering freight rates and unlocking more value in contracted services. As SaaS demand and the volume of shipments increase, shippers should consider outsourcing to a 3PL to stay competitive throughout the coming year.
Meanwhile, trucking will expand in 2019 as shippers look for new ways to meet the capacity crunch, but the continued growth of eCommerce will still lead to capacity problems. Effective freight management and working with carriers are the only ways to secure available capacity and meet consumers’ increasing expectations for no-cost delivery. Fortunately, many transportation management companies have the tools and resources to help shippers leverage the latest freight management trends in their operation. Working with a 3PL effectively reduces the risk of only shipping via one of the Big Three carriers. It opens the door a host of local, regional and even national carriers, which may Not have the marketing resources equivalent to DHL, UPS or FedEx. Shippers should take note and work to expand their logistics options today.
Bio: Adam Robinson oversees the overall marketing strategy for Cerasis including website development, social media and content marketing, trade show marketing, email campaigns, and webinar marketing. Mr. Robinson works with the business development department to create messaging that attracts the right decision makers, gaining inbound leads and increasing brand awareness - all while shortening sales cycles, the time it takes to gain sales appointments and set proper sales and execution expectations.