The transportation and logistics industry is currently going through some major transformations. These changes are creating opportunities and challenges. Successful shippers are looking for ways to adjust to the challenges and take advantage of the opportunities. Here are 3 key areas they are focusing on.
Economic Outlook
Online retail spending is estimated to increase up to 20-30% over the next 3-4 years. This impacts future freight distributions and patterns by creating additional density for retailer’s networks. Capacity is already expected to tighten by the end of the year. In addition, the economy still shows signs of growth, meaning manufacturing will continue to need and produce more freight.
Amazon has announced its plan to enter and dominate the grocery business by combining its technological know-how with brick and mortar stores. Walmart has countered with its own plans and vows to go head to head with the e-commerce giant. It’s a clash of the Titans and the transportation industry stands to gain.
Need for Labor
There is an industry wide problem finding skilled labor, with some local markets having more difficulty than others. There are many reasons why it is a problem, but 2 stand out. First, trucking often pays less than other business’s competing for the same potential employee. Second, many unfilled positions require being away from home.
As freight volume continues to grow labor will become an even bigger issue. To attract more recruits, some experts have proposed establishing 2 industry standards – a higher base pay and a flex time policy. But, neither idea has gone anywhere. The current “solution” of poaching each other’s employees is not a good long term answer for anyone. So, what are successful owners doing to find good people?
Most owners have a gap between their hiring requirements and their knowledge about how to effectively find people. They think they have “tried everything,” but have only tried a few, old methods. There is too much competition to leave hiring to chance, or a half-hearted try. Successful owners are getting outside help to learn new ways to attract, train and retain good employees.
Technology and Data
It is well known that many transportation and logistics companies are late adapters to technology. Some are starting to be shut out of contracts if they cannot provide the data and technology required by customers, especially cyber security. Larger customers are adding minimum levels of cyber security to their contracts; this requirement will eventually become SOP.
Many trucking businesses are even more behind in using analytics to make smart operational decisions. They do not understand the competitive edge analytics can give them (i.e. which trucks, routes, drivers, customers, and loads are the most profitable). Every year companies go out of business because the owner has no way of knowing if he is making a profit or not.
(Sidebar – Over the next couple of years pay attention to and learn about “blockchain technology”. It will transform the way the logistics and transportation industry operates.)
Successful shippers are thriving by looking for ways to benefit from opportunities and limit risk to their supply chain. They do it by keeping up on, learning about and applying new strategies. We are in the middle of a shift in the way transportation and logistics is done, do not be left behind.
At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:
