State of Global Logistics & Trends to Watch
“Don’t overthink transportation and logistics. That’s our job”, cites Ryder’s third party transportation and logistics group.
Freight forwarding, air and sea freight expect high growth in these trade lanes. Meanwhile, motor carriers, express shippers, warehousing, environment and ethics all play a role in the state of Global Logistics.
Here are some trends to watch:
- Trucking sees its best carriers gear up for a hot freight market shaped by tight capacity for equipment and labor. We are short 50,000 truck drivers this year. More than ever, carriers have and are planning investments of a high magnitude and more strategic operations to best serve their shippers during the huge boom in business, driven by 3PLs, extraordinary growth and e-commerce on line sales growth.
- Parcel growth trends are causing logistic operations to re-adjust to ever-shifting changes like surcharges, based on established factor of dimensions and weight, and new entrants to the market, especially in last mile deliveries.
- Resources are tight and customer expectations are high, thereby making logistics more important than ever to an organization’s success, profitability and ability to serve customers. These events are creating a tight TL (truck load) Market with respect to capacity and rising rates.
- “Uber for freight”. “On-demand” trucking is caught up in stiff competition to develop mobile apps to match an available truck with a pending load, and the stakeholders are well funded.
- Tariffs … cross-border trade … political bluster aside, no matter who’s in the White House, logistics professionals on all sides of the border concur that careful planning, attention to detail and good partnerships are all key to efficient cross-border transit. Preparation and experience pay off.
Other fascinating points of interest include more automation which can increase storage density in a warehouse and reduce labor overheads thereby also reducing the need for more labor in already tight markets.
On-demand delivery | ride-hailing will cause its version of disruption in the trucking industry wherein companies buy and sell space on trucks pushing utilization up and costs down.
In the parcel delivery segment of the market, which is growing in leaps and bounds, there are crowd-sourced last-mile delivery services allowing commuters, taxi drivers and students to pick up parcels and drop them as part of their regular journey.
And lastly, voice recognition technology in the warehouse in concert with a company’s Warehouse Management System (WMS) helps to assess orders coming in, create optimal batches and pick paths with less walking, leading to more picking. For example, Talbots, one of the largest women’s fashion retailers in the U.S., had experienced 150 mispicks a day in one of their Distribution Centers. They added Voice Recognition which resulted in decreasing the number of mispicks to single digits. This case study improved Talbots productivity and accuracy while reducing warehouse employee training time. “We have sustained 12% growth in our Direct-to-Consumer Business”, according to their General Manager.
Understanding these trends can help you differentiate yourself as a Logistics and Transportation Real Estate Broker/Advisor. How rent figures into the calculation, given the high rates projected, is yet to be fully understood; but, likely not detrimental to making deals since freight costs have always been about 55% of the clients’ total occupancy costs and real estate only 5% – 10%.