The transportation and logistics industry has been known for continual innovation and use of new technology. Over the past 24 months, supply chains have been pressed by the growth of e-commerce and customer demands for speedy and reliable deliveries. And, there has been more emphasis and awareness on supply chains and logistics on a macro level, a micro level and an ultra-micro level.
To meet relentless customer expectations, companies must reimagine their approach to everything from recruiting drivers to data to making your supply chain more transparent. Here are four key transportation and logistics trends to watch in the year ahead and beyond.
1. Promoting Work-Life Balance for Drivers
The United States has faced a chronic shortage of truck drivers for years. However, since 2020 the shortage had turned into a crisis, as there was a surge in both shipped goods and early retirements. The shortage has also been exacerbated by a lot of the typical long-haul drivers moving into the gig economy.
Dealing with these shortages, and capacity volatility, is causing companies to outsource more of their logistics operations. As a result, interest is growing in dedicated transportation services, where a third-party logistics firm (3PL) manages a private fleet for a company and handles such issues.
2. ‘Faster Please’ Is the New Normal
Companies are implementing a variety of strategies to meet customer demands for quicker and more accurate deliveries.
Real estate is at a premium with companies wanting to be closer to customer for both e-commerce, traditional retail, and last mile needs—everything from conveyable to big and bulky items.
Getting the facilities closer to the endconsumer is only one method for speeding deliveries. Companies are also exploring forward deployment of goods—the emerging trend of sending goods to an area in anticipation of orders. This puts a premium on analytics and data that can predict customers’ future needs.
Companies have to be very diligent in their inventory carrying cost, so they have to make sure they’re putting products in the right ZIP codes based on their information and expectations of customers’ ordering. The first wave of companies that are using forward deployment are doing even better than expected.
3. The Nuances of Supplier Diversity and Nearshoring
Just-in-time (JIT) delivery models are a great approach to managing inventory level—if everything goes well. As supply-chain disruption becomes a growing risk, companies are considering not just the cost of delivery, but also the cost of running out of products.
Supplier diversity and nearshoring are gaining more attention, as companies look to reduce risk and boost supply-chain reliability. Companies have to work through delicate issues, like labor shortages and environmental regulations that prevent manufacturing facilities from being built in certain areas.
The U.S. capabilities in manufacturing aren’t what they were in the middle of last century, and compared to other countries, we lack workers with specific skills, like high-end machining. Experts suggest companies start nearshoring by moving more of the final assembly to the U.S., which doesn’t require the same skill set as some other manufacturing roles.
4. Supply Chain Transparency Provides New Paybacks
The need for greater supply chain visibility was made apparent in the early days of the pandemic. When people came into a store looking for cleaning supplies and toilet paper, the mark of great customer service was whether the manager could go online, see that the shipment would arrive at 3 p.m. and then actually have the shipment arrive at 3 p.m.
Operations teams, and even end-customers, can use the innovative technology tools to track and trace products in real time. Companies want to be able to see a developing problem well in advance and then divert products as needed throughout the supply chain. Companies are also using heightened transparency to increase flexibility.
These four trends, taken together, represent how transportation and logistics maintains a steady focus on innovation in service of the customer experience. The changing tastes and demands of consumers, along with the surge in e-commerce, are creating new complexities in supply chains. As the transportation and logistics industry evolves, 3PLs must also continually advance their capabilities to give companies the flexible, agile, and transparent supply chains they need.