3PL Perspectives
Bob Farrell | GlobalTranz
The logistics industry is evolving, bringing both risk and opportunity to corporate supply chains. Last year, natural disasters, government regulations and a healthy GDP created challenging capacity and rate conditions. The booming e-commerce space and demand for operational efficiency continues to amplify the need for increased automation and technology. Companies are putting more emphasis on logistics due to the impact it has on earnings and customer loyalty.
Consider how these current macro trends will likely impact your logistics and supply chain operations:
Managing Freight Demands and Market Shifts
2017 was a turbulent year. An unprecedented number of storms sharply impacted trucking capacity. Hurricanes in Texas and Florida took anywhere from 5 to 10 percent of capacity away from the market, which in turn drove up rates.
There is also a significant challenge in the industry as trucking companies continue to navigate the ELD mandate that went into effect in December 2017. Many experts predict productivity will be impacted, 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 B2B buyers mirror consumer purchasing behaviors and delivery expectations, more businesses want their inventory (SKUs) closer to customers. The result is more frequent shipments that are lighter in weight. To contend with these changes in buyer preferences, carriers are adjusting their rates to focus more on how much trailer space the shipment occupies (density pricing) and less on weight and tonnage.
Leveraging Technology to Optimize Logistics
For many companies, the supply chain is no longer a simple cost of doing business, but a way to generate competitive and operational advantages. Technology has become the perfect enabler for most advances in the supply chain. Tools like artificial intelligence (AI) 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 business decisions. Like many other organizations, my company is creating ways for people to turn massive amounts of data into actionable insights that increase logistics efficiency and drive overall cost savings.
Additionally, the Internet of Things (IoT) 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 we understand our shippers’ movements and the nature of their freight, we’re able to build specific carrier relationships that give us access to capacity on a consistent basis throughout the year.
Everyone is talking about blockchain, including the logistics industry. Blockchain technology is an open, distributed ledger or database that digitally records the transaction history between involved parties. In transportation, blockchain can create a more connected and efficient supply chain by enabling real-time, secure and inalterable information sharing between shippers, carriers, brokers and more. Eventually, blockchain technology will impact logistics, but we’re still in its infancy.
Satisfying Increasing Delivery Expectations
Consumers’ and business buyers’ delivery expectations are rapidly increasing. 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. According to The Wall Street Journal, “Wal-Mart Stores Inc. is charging suppliers monthly fines of three percent for deliveries that don’t arrive exactly on time.”
To manage these delivery 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 multi-vendor are just a few of the services companies are relying on to meet their customers’ unique delivery needs.
How to Thrive in Disruptive Times
Times are indeed changing, but you can make the most of the evolving logistics space using the following techniques:
Use a Full Suite of Logistics Solutions
Utilizing multimodal shipping services and logistics solutions, like combining intermodal with truckload and final-mile, helps mitigate capacity challenges and meet customer delivery expectations. Working with a full-service 3PL provides access to a broad range of carriers and services that can be combined into custom solutions.
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 and Savings
Adopt technology that can automate tasks, provide actionable insights to help you make smarter business decisions and scale as your business evolves. A TMS 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.
Partner with a Logistics and Supply Chain Expert
Because of the rising complexity of today’s supply chains, you could argue that there has never been a time where the 3PL has been more critical, or strategic, as it is now. Because of advances in e-commerce, multimodal and the emergence of final mile, white glove and technology-driven supply chains, about 90 percent of domestic Fortune 500 companies partner with third-party logistics providers for outsourced logistics and supply chain services.
Bob Farrell is Chairman and CEO of GlobalTranz, located in Scottsdale, Arizona. He may be reached at [email protected]
