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The 5 Biggest Logistics Trends for 2018

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2017 has been a big year for logistics. From Amazon’s moves and successes to the continued growth of the internet of things (IoT), change has been the name of the game.

Layer new regulations and political shifts on top of industry-specific moves and you’ve got a pretty chaotic year.

Hopefully, 2018 will bring some certainty back into the mix. Now that we’ve laid a foundation of change, it’s time to build something meaningful on top of it. 2018 is the year for building.

Let’s take a look at the biggest trends to watch for in 2018, along with some advice about what your business can do to take advantage of those trends.

1. Government infrastructure investments on the rise

We all know the roads are bad. Potholes, unstable bridges, unsafe railways, and old highways have become a staple of the American system. It’s appalling and shockingly dangerous.

While this knowledge has been simmering for years, 2018 may be the year we see some investment in American infrastructure. In May 2017, the Trump Administration started talking about infrastructure, saying “If the United States continues to underinvest in infrastructure, we will continue to fall further and further behind our peers.”

A decaying bridge over a river via Wikimedia Commons

This bridge has some issues. [Source: Wikimedia Commons]

While the budget is still being hashed out, there is bipartisan agreement on the need to fix America’s roads to keep trucks and cars safe and travel efficient.

What it means for businesses

If you’re concerned about real change falling by the wayside, call your elected officials to let them know what infrastructure improvements mean to you, from both a safety and business perspective.

One of the major challenges for shipping will be controlling costs, as fuel prices are forecast to rise in 2018. Managing shipping costs requires the most efficient roads and rails possible.

If we’re going to see real change, be prepared for road work that causes delays and detours. I don’t expect any significant changes to take place until the second quarter at the earliest, but they’ll have an almost daily impact on your business whenever they arrive.

2. IoT and connected world growth

If you got tired of hearing about the internet of things this year, you might want to buy some noise-cancelling headphones. 2018 is set to be another nonstop year of IoT chatter, prediction, and implementation.

Offerings like the BlackBerry Radar are already making waves, and you should expect more sensor and tracking innovation in 2018. Tracking shipments with RFID, GPS, and other connected sensors is making shipping more efficient and automated.

By keeping an eye on shipments, logistics businesses all along the supply chain can make better decisions about routing, staffing, and warehousing. That leads to less downtime and fewer gut-based decisions about what to put where and who to staff when.

As we see increased growth in AI and machine learning, we’ll gain even more ways to manage and analyze IoT data. This will increase opportunities for better planning, ultimately reducing costs.

What it means for businesses

If you want to compete, you’re going to have to get on the IoT train.

Right now, you can implement a ton of small sensors, mobile apps, and other connected devices to make your operation more connected and easier to oversee. Once those are in place, turn to business intelligence software to start understanding the new data you’re generating.

If you don’t have smart devices or business intelligence in place right now or if your business lacks the capital to deploy anything, at least put a plan in place. IoT devices and insights can help you cut costs by finding inefficiencies in your work.

A handful of fleet management software options already offer devices to connect you to your drivers, giving you insight into how they’re driving and where they could save time or money.

3. Retailers solving last mile issues

Amazon has changed the way we buy things. If you’re buying online, you expect reviews, price matching, lots of shipping options, and fast returns. Almost all of these expectations have some impact on the supply chain, but none more than shipping options.

A decaying bridge over a river via Wikimedia Commons

USPS comes knocking for last mile success. [Source: Wikimedia Commons]

If retailers don’t offer two-day or overnight shipping, shoppers will often go elsewhere. Short shipping times put huge pressure on retailers to solve the last mile problem, as getting the actual item to a buyer’s doorstep is often the most challenging part of the whole process.

To address this problem, I expect to see more and more retailers embrace omnichannel shipping options such as ship to store and in-store pickup. These allow retailers to use their existing—and fast—shipping options while giving customers the free and fast delivery they demand.

What it means for businesses

This is a great deal for retail shippers. Omnichannel shipping means predictable demand from retailers without having to design last mile delivery options.

For last mile shippers, it’s less of a good thing. Even retailers who don’t adopt the ship to store model may move to an Amazon Locker-style system, which also cuts out the final, front door drop off.

If you’re in either camp, be sure to proactively work with the retailers in your portfolio to understand the needs of their customers. Increasingly, their operations are driven by customer demand rather than being self-guided.

If you can get ahead of that demand, you’ll be in a position to solve their shipping problems, whatever form they take.

4. Transparency will continue to be a talking point

Customers aren’t just looking for value. While brands are being led to make shipping changes by demanding customers, they’re also increasingly worried about the transparency of their supply chains.

The director of the Global Supply Chain Institute summed it up nicely, saying “A lack of ability to provide [supply chain] information in the face of safety or environmental violations can create a negative perception of the brand that may require immediate remediation and could take a brand years to recover from, if at all.”

The definition of transparency is expanding, and no longer just encompasses whether you shipped via a natural gas-powered train or by air. Consumers are increasingly aware of salary and worker rights issues, environmental factors, and even political affiliations.

While the majority of buyers are still passive processors of supply chain information—they care, but don’t go looking for the data themselves—people are ready to take action if something they don’t like comes to light.

What it means for businesses

Be proactive. Know what technology and customer service issues clients care about, and figure out if your operations align with their demands. Odds are you’ll have a few processes in place that your clients’ clients won’t love.

While you don’t need to bend to every whim of the masses, there are going to be larger social movements and demands you shouldn’t overlook. Fuel inefficiency isn’t great for your business or the environment, but it isn’t going to severely damage your brand.

On the other hand, if you’ve been subject to major workforce problems and controversy, you might want to straighten things up before you get caught in the spotlight.

5. Regulations and shifts in international trade

I led with infrastructure, because of its daily impact and likelihood to change. Almost all the political powers that be agree that something needs to be done, and whatever action they take is guaranteed to affect your business. If we look a level above infrastructure, we get into trends affected by regulation and trade.

NAFTA signing via Wikimedia Commons

The signing of NAFTA. [Source: Wikimedia Commons]

The Trump Administration has indicated that no trade agreement is safe. Everything from NAFTA to the U.S.-South Korea trade agreement is up for revision or deletion.

Even if all existing trade agreements are kept in place, there are plenty of new regulations under consideration that would change how American logistics businesses operate. The Trump Administration is pushing American Made, which may lead to increased tariffs and a drop in exports.

What it means for businesses

There are so many moving pieces that it’s almost impossible to suss out what things will look like five years from now, or even next year.

Your best bet is prioritizing your business’ reliance on regulations and trade to better understand where to put your time and money. The next few years will be busy for trade organizations, unions, and industry associations. By knowing which issues are most important to your business, you’ll know which regulations you should step up to defend or attack.

When we look at trends for 2019, perhaps we’ll be talking about the five agreements and regulations that have bubbled to the top. Right now, there’s too much noise to make a concrete prediction.

In the meantime, figure out what you can live with and what you can’t, then focus on supporting regulations that make your business better and fighting those that will damage your bottom line.

Other logistics trends for 2018

These are the five biggest trends I’m watching for in 2018, but I’m sure you’ve got other ideas.

What will you be keeping an eye on over the next year? Leave your own trends analysis in the comments below, and let everyone know how you’ll be making the logistics industry better in 2018.

Looking for Logistics software? Check out Capterra's list of the best Logistics software solutions.

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About the Author

Andrew Marder

Andrew Marder is analyst at CEB. His background is in retail management, banking, and financial writing. When he’s not working, Andrew enjoys spending time with his son and playing board games of all stripes.

Comments

Hi Andrew,

many thanks for the informative article! I think you mention points, which are quite important and crucial for the business world nowadays. However some companies are not paying enough attention to digitization (not only in the logistics sector but overall). Also the warehouse robotics-topic is quite exciting and would bring close attention in the year ahead. I have also seen recently some examples of companies, which are also providing cloud services (like here https://www.epg.com/gb/supply-chain-solutions/private-cloud-solutions/ ) and it would be definetely interesting, how those are going to develop in the next years, as the supply chain IT continues its transition to the cloud. Let’s see…exciting times ahead of us!

Looking forward to more blog posts from you.

Best regards,
Christian

Let’s hope that our failing infrastructure finally gets the attention it needs. We can’t wait for another bridge to collapse as our wake-up call. It’s crazy that obvious problems haven’t been fixed for this long.

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