2016 has proved to be a transformative year for the supply chain management industry. From the Hanjin collapse to Otto’s delivery of 50,000 Budweiser cans through the world’s first autonomous truck delivery, the industry has made headlines frequently.
This 2017, the industry is expected to reach as many milestones, or even more. The growth of the trucking industry has reached $800 billion and even new players look like they’re about to add to that. Amazon is currently rumored to be building an “Uber for Trucking” application — and with that, all eyes are looking at the possible advancements of the logistics and supply chain industry.
How will Uber and Amazon’s entry to the logistics industry impact the 3PL and brokerage market?
The 3PL and brokerage market would have to boost their efficiency via technology investments in order to compete with big players like Amazon and Uber. These giant tech companies have a greater vision and are willing to lose money in the short-term in order to pursue long-term goals.
Regardless of size, companies would have to work more efficiently this year in order to remain competitive. We will be seeing normal gross margins become significantly lower over the next few years, and the only means to offset lowering margins is by working on internal efficiency.
We will also be seeing automation dominate over traditional brokerage models and old processes. Pricing, booking, and tracking will be requiring less human involvement in the years to come. By the year 2020, the old brokerage model will only have remnants of legacy processes used today.
What can be expected from investments in supply chain and logistics start-ups?
Dynamic start-up funding isn’t bound to slow down anytime soon. The previous year saw a projected $5 billion in investments across 315 deals for start-ups disrupting the industry.
Start-ups whose goal is to overhaul e-commerce logistics have received remarkable attention as numbers of e-commerce sales continue to rise along with the potential for growth in the sector. Other start-up categories that receive notable investments are: freight and supply chain visibility, sensors/asset tagging, last-mile delivery, enterprise resource management (ERP), inventory management, trucking, and warehousing.
How will TMS vendors adjust as multimodal transportation becomes the new norm?
Multimodal will become a top priority for key industry players looking for ways to solve today’s most difficult supply chain problems. Transportation management system (TMS) suppliers will start to offer more seamless multimodal services. The efficient combination of transportation modes decreases inventory costs, contains freight costs, and optimizes lead times.
As shippers and their logistics providers look for systems that support multileg, multimode shipments, mode-agnostic technologies are expected to have higher demands. This year, TMS providers will invest in expansions of their TMS suites to allow for global and multimodal optimization within a single platform.
These are just some of the many predictions on how the industry is bound to transform this year. These predictions are likely to have the greatest impact in the short-term, but it would be interesting to see what other factors will change in the next five to ten years.