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Spring 2019 Truck and Track 23
BUSINESS NEWS
2018 can certainly be summarised
as a turbulent year in logistics and
transportation management. On the one
hand, ecommerce continued to grow at
record levels without the slowdown that
many were predicting, leading many
organisations to recognise the importance
ofreachingbeyondtraditionalstrategiesto
enhance their logistics and transportation
capabilities. Yet, on the other, there was
considerable global trade instability
and the focus of many companies was to
determine what strategies they needed
to put in place to mitigate the brewing trade wars and Brexit
uncertainty. Market hype was also at an all-time high, making
it harder to identify the best opportunities for technology
investments. As the start of the year sees these trends continue
to dominate the sector. Chris Jones, EVP at Descartes Systems
Group, says that the question for logistics and transportation
professionals globally is what will drive 2019 strategies and
investments to meet the market challenges and provide the
greatest returns.
Here are his thoughts on five key trends for 2019
Collaborative Transportation Management. The concept has
been discussed, but never realised on a large scale. With the
capacity shortage continuing for the perceived future, shippers
and LSPs are looking for ways to expand their network. Real-time
visibility solutions can identify the capacity that is trapped in
a given network. New solutions have been developed to allow
companies to share capacity and cover a greater percentage of the
loads. Work in 2018 has shown that, as the number of participants
expand, the ability to dramatically increase available capacity rises.
Collaborative transportation management will be the fastest way
in 2019 for shippers and LSPs tomeet their transportation capacity
challenges.
The Global Trade Scramble. For many shippers and LSPs, there
is no choice but to spend a lot of time and effort on strategies
and tactics to mitigate the impacts of Brexit, the current US
administration and the affected countries. The uncertainty that
exists in the market is what is most disconcerting and driving
this high level of focus. In North America, changing duties and
quotas are driving companies to develop new sourcing strategies,
evaluate the impact of new duties on the bottom line and vet new
suppliers. Brexit is even more problematic for Europe as companies
try to understand the effects on their supply chains and logistics
services if the seamless flow of goods stops between the UK and
the rest of Europe. In 2019, companies will focus on global trade
and customs solutions that can help them navigate the potential
changes, glean clearer insight into alternative trade opportunities
that exist and ensure compliance with much higher customs
clearance requirements. 2018 was also a very active year in the
area of sanctioned parties list expansions, stepped up enforcement
actions especially on challenging rules like the OFAC 50%, and it is
very likely the pace of sanctions and enforcement actions will ramp
up in 2019.
Home Delivery Hangover. Again, another “no choice” for retailers
as consumer expectations for home delivery continue to rise with,
again, record online sales during the 2018 holidays. Retailers
will be focused on getting costs in line and better understanding
what customers want and are willing to accept for home delivery
services. In 2018, companies started to get a better perspective
on the different kinds of expectations customers had for delivery
services, and that “as fast as possible” and “free” were more market
hype than reality. In addition, leading retailers started to focus on
understanding the balance between delivery service and the fees
charged and – most importantly – understanding that allowing
consumers to self-select their delivery options based upon speed
and price could lower or recover delivery costs. In 2019, retailers
will increasingly look for home delivery solutions that allow them
to provide consumers with delivery choice, and even steer them to
options that help the bottom line.
Parcel Power. As ecommerce grows, so does parcel shipping. In
2018, the rapid expansion of domestic and international parcel
shipping continued. Carriers established more aggressive pricing
and delivery strategies to keep pace with the increasing demand
and improve profitability. Governments adopted more stringent
tariff policies to make sure they were not missing an increasingly
large revenue stream from ecommerce direct from Asia. As the cost
and complexity of parcel shipping increases in 2019, companies
will deploy solutions that can minimise their parcel shipping costs
throughmore intelligent carrier andmode selection, and effectively
address international requirements such as landed costs, restricted
party checking and customs filings.
Technology – Some Hot & Some Not. There was not a day in
2018 when some organisation or technology company was not
announcing their AI, Machine Learning, Big Data or Blockchain
solution or initiative. Even the business and trade press pointed to
these technologies as ushering in a new era in logistics technology.
As 2018 unfolded, however, there was a divergence in the value
of some versus others that will carry into 2019. In 2019, there
will be greater investment in – and results from – AI, Machine
Learning and Big Data because of the ability of these technologies
to significantly augment existing solutions and deliver business
value in the near term. Unfortunately for Blockchain, it heads to
the “trough of disillusionment” for the next year as pilots end and
questions remain about the change and costs required to deploy
it, its technological limitations and, most significantly, the lack
of standards. For anyone who has been in the tech industry for
20 years, Blockchain should be a reminder of the hype that XML
received in the late 90s. The question for the value of Blockchain
isn’t if, just when.
The macro trends of ecommerce, global trade destabilisation and
the over-the-road transportation capacity shortage will continue
to shape 2019 just as they have in 2018. Shippers and LSPs are
realising that they must act differently to survive or thrive and
will more aggressively adopt new logistics and transportation
technology solutions.
Chris Jones, EVP at
Descartes Systems
Group
5 Key Logistics Trends and Technology
Implications for 2019