Posts

What’s Next for Supply Chain Tech?

From floods to hurricanes to historically high ocean rates, 2018 has dealt one challenge after another to supply chain professionals. In our recent infographic, we broke down the stories making headlines and causing turmoil for shippers this year, including:

  • April 1’s ELD mandate, which led to a reported drop in productivity for 83 percent of trucking companies
  • The $250 billion in Chinese tariffs President Trump has imposed this year, with more looming on the horizon
  • The shocking 50 percent year-over-year increase in ocean rates, as freight carriers tried to wrestle back control of pricing and improve profitability

As for 2019? More uncertainty and complexity are sure to follow. Measures like the bunker adjustment factor, which many ocean carriers are enacting to offset rising fuel costs, will have an impact on organizations’ bottom lines. Meanwhile, two in three businesses say they lack visibility into logistics processes, and 70 percent of businesses experience supply chain disruptions. These current and impending challenges underscore the importance of an agile, technology-driven supply chain.

Tech Investments Are on the Rise

By preparing with the right mix of tools, people and processes, businesses can equip themselves to handle whatever 2019 brings. Technology is the backbone of that strategy: A centralized platform is key for improving visibility, optimizing operations, gaining insight and delivering value across the supply chain.

Recognizing these opportunities, a new wave of digital logistics startups aims to help businesses enhance nearly every area of supply chain activity. Venture capital continues to pour into the sector, and shippers are increasing their tech investments to gain a competitive edge in the market.

In a report set for release November 13, AGL will reveal:

  • How much businesses are spending on supply chain technology today, and how much that number will rise by 2022
  • The growing role that disruptive technologies play in overall spending
  • The top five areas for technology innovation

Visit our website to download a free copy and get an inside look at the technologies that could transform your operations in the years to come.

Want more competitive insights? Download our infographic for a look back at supply chain in 2018 and strategies to prepare for the year ahead.

What to Look for in Your Supply Chain Partnerships

2018 has been packed with one shakeup after another, leading to one of the most uncertain environments in recent memory for shippers. The biggest headline-grabbers include:

  • Trump’s tariffs. Arguably the biggest supply chain story of the year, the U.S. and China have kept importers on their toes with a barrage of duties. With roughly $250 billion in Chinese goods now subject to tariffs, businesses have been importing record-breaking volumes as they rush to get items in hand before duties take effect. The trade war is poised to escalate further, as Trump threatens to enact tariffs on an additional $267 billion in goods.
  • The ELD mandate. The long-awaited mandate, which required truck drivers to install electronic logging devices (ELDs) that track and cap their total hours in service, has had a ripple effect across modes. The mandate reduced productivity for 83 percent of trucking companies, creating a capacity crunch and rising rates for shippers. Meanwhile, many ocean carriers have been forced to sit at port for trucks, prompting some to impose emergency intermodal fees and restrict door deliveries.
  • Ocean turmoil. The industry’s move to cancel sailings in an effort to improve profitability shocked many shippers this year, and continues to wreak havoc with capacity and rates. Total capacity has shrunk by 7 percent, leading to a 50 percent year-over-year spike in Trans-Pacific ocean rates and a scramble to secure space during peak season – even for shippers under contract. Those hefty prices are slated to continue into 2019, thanks to newly announced bunker adjustment factor surcharges.
  • Disruption from disasters. When Hurricane Florence tore up the East Coast in September, businesses across the country felt its effects. Delivery disruptions rose by 49 percent that week nationwide, despite only a 2 percent drop in shipments. With more than a month to go before hurricane season ends, more disruptions could be looming for shippers.

Dealing with supply chain disruptions

For shippers large and small, the move toward technology-enabled supply chains is helping to improve visibility, control and responsiveness when things go awry. But while a centralized platform is the cornerstone of a high-functioning supply chain, hands-on support is the key to keeping it running day after day.

That’s why more businesses are turning to external providers to help them navigate this disruption-prone environment. Freight forwarders now account for nearly 45 percent of U.S. containerized imports from Asia, a 2 percent year-over-year increase. The right partner can help businesses access scarce capacity, tackle challenges head-on and offer best practices for improving operations. Here are a few areas to consider when choosing yours.

  • Dedicated support. By assigning a single point of contact to your business, your partner can get to know your business goals, rules and requirements better, so they can make more effective recommendations.
  • A deep logistics network. The ongoing struggle to source ocean capacity underscores the importance of a well-connected partner. Look for a partner with a strong network to help find available space at the best possible rates.
  • Customs expertise. As the scope of U.S. tariffs extends to new areas like electronics, food and housewares, more businesses are bracing for the impact to their organizations. A partner with customs brokerage expertise can minimize the pain by ensuring harmonized tariff classifications are correct, helping to apply for exemptions and taking other steps to ensure customs compliance.

For supply chain professionals, dealing with disruptions is a growing part of the job. Finding the right partner can help equip these businesses to face today’s biggest challenges – and whatever comes next.

It’s TMS Time

As high trucking demand and short supply roil supply chains, businesses large and small are turning to technology to access capacity, improve efficiencies and hold the line on rates. Several factors are driving interest in TMS, including:

  • Tight trucking capacity. With the number of available drivers already on the decline, the April 1 ELD deadline is making space even harder to come by. In one survey, trucking companies said ELD has reduced their productivity by 83 percent by limiting the hours each vehicle can be in service. As carriers try to do more with less, the survey found, rates are up by 71 percent.
  • Changing shipper needs. Continued e-commerce growth means more fulfillment points and complexities for brands. An ARC Advisory Group study found that shipment size has decreased but shipment frequency is increasing, putting pressure on already tight capacity. Truck shipments grew 5.9 percent from January to February, an 11 percent jump from the same month last year, as 2018 promises to be a historic year for freight volume.
  • 3PLs go digital. The highly competitive trucking environment presents a huge opportunity for third-party logistics providers. With shippers flocking to well-connected providers to source capacity at reasonable rates, many 3PLs are offering new technologies to capture additional market share, driving TMS adoption among more customers. In a 2017 survey, 58 percent of respondents said digitization of 3PL services will be the most common 3PL enhancement over the next five years.
  • Lower barriers to entry. TMS used to be a non-starter for small and mid-size businesses because of implementation costs and hassles. Now, many vendors offer streamlined, cloud-based solutions, putting a TMS within reach for more businesses. As a result, TMS usage is skyrocketing among SMBs.

Driving Value with a TMS

Once a tool for route planning and rate management, today’s more robust TMS solutions cover everything shippers need to automate and optimize ground transportation. Common features include route planning and optimization, freight auditing and payment, order visibility, and carrier management. Since many platforms have moved to the cloud, they can also offer real-time collaboration between shippers, carriers, trading partners and customers to improve visibility and efficiency further.

When done right, migrating to a TMS can yield great improvements on cost, productivity and customer service. Companies typically slash their freight spending by 8 percent with an effective TMS, thanks to load consolidation, lower-cost mode selections and multi-stop route optimization. On the other side of the coin, businesses like Home Depot are using transportation management to boost sales revenue through measurable customer service improvements.

For businesses mulling a TMS purchase, key considerations include the ability to work across modes, customization capabilities, and integration with existing systems to power automation. A supply chain partner who offers a deep carrier network as well as a TMS can help your business build a more efficient ground transport program, despite trucking industry turmoil that shows no signs of letting up.