Logistics Consolidation: Trends Arising From Consolidation of the Logistics Industry

Share on facebook
Share on twitter
Share on linkedin
Share on pinterest
Share on reddit
Share on email
Share on print

Logistics consolidation will have a resounding effect on the industry in 2019. Logistics consolidation is a fancy way of describing the transition of shipping modes to accommodate available capacity. Unfortunately, the capacity crunch appears to be worsening, and drivers are growing scarcer. As the industry attempts to compensate with better wages and benefits for drivers and long-haul shipments, the industry has not quite fully solved the driver shortage and this leads to a continuation of stress in the industry. Unfortunately, stress in the industry translates into higher logistics cost, so logistics consolidation will become more commonplace throughout the year, resulting in these additional trends.

Carriers Will Look for More Ways to Address the Talent Shortage Through Logistics Consolidation

Carriers are looking for more ways to address the talent shortage through logistics consolidation and the use of technology to ensure all consolidation is optimized. Improper consideration of backhauls, deadhead, dwell time and spot freight will result in excess freight and unused space. Unfortunately, most carriers still waste space in some form to combat this problem, and carriers will look to deploy new types of technology to track volume use, shipment, frequency, potential consolidation and deconsolidation and more. Analytics will help carriers identify routes and pickups that may not be adhering to stringent consolidation protocols, such as poor palletizing of shipments.

The Move to LTL Digital Shipping

How New LTL Technologies & Processes are Changing the Shipping Game

More High-Priority Shipments Will Necessitate Greater Visibility With the Data and Blockchain

As explained by Sedat Saka via Forbes, the capacity within the supply chain opens the door to another problem; shippers are turning to white glove services and specialized, last-mile shipping options to move more product. In addition, consumers are willing to pay a premium or their shipment, especially when two-day shipping is an option. Therefore, shippers will see more high-priority shipments, but the high-priority nature over requires an increased level of visibility throughout the entire supply chain. This translates into more significant use of data, and blockchain will start to make an impact. Also, the logistics industry will see more high-priority shipments as consolidation continues. Tracking into LTL and FT is crucial to avoid waste of space and ensure the proper handling of high-priority shipment.

Easier Payment Processing and Cross-Border Transactions Will Enhance the Global Supply Chain

Payment processing and cross-border transactions will be another area to undergo change throughout 2019. As a result of logistics consolidation. Fewer carriers amount to fewer payments, but consolidation can make tracking individual shipment payers and payees more difficult. Meanwhile, consolidation will streamline cross-border transactions, but again, the role of accuracy and thoroughness in shipment paperwork, including the bill of lading, is eventual to preventing unnecessary delays and ensuring a optimize supply chain. Furthermore, more carriers will seek to invest in new technology, including outsourcing logistics management, to take advantage of consolidation options.

The Popularity of Discount Retailers Will Increase

According to Lauren Thomas of CNBC, and increased global economy effectively brings more product to the market, and since costs for raw materials and manufacturing vary widely, depending on the location of the manufacturers, it is expected that the popularity of discount retailers will increase. The prevalence of discount retailers is also growing in tandem with consumers taking extra care before purchasing a product. Furthermore, the surge in e-commerce will naturally lead to an increase in brick-and-mortar business for companies offering buy online and pick up and toward delivery options. As a result, consumers needing to purchase necessities may be more likely to visit a discount retailer.

Major Retailers Will Look for Ways to Compete with Amazon

In a sense, the popularity of discount retailers will increase as companies look for ways to meet with Amazon. Amazon has already expanded into the brick-and-mortar space with its purchase of whole foods, and major companies, including Walmart and target, are working to redevelop their existing e-commerce platforms to create an environment, and service more comparable to the e-commerce giant. At the same time, traditional stores, such as Walmart, have an advantage over Amazon for possessing an extensive brick-and-mortar network, so leveraging consumer-facing technology within the brick-and-mortar store can go a long way in improving competitive advantage. Consequently, the volume of shipment to the store will increase, resulting in more freight consolidation. Further, consolidation offers protection against rising truck rates.

What Does It All Mean?

Freight consolidation will continue throughout 2019, and the number of carriers will shrink as mergers and acquisitions reduce the available pool. Unfortunately, this could create problems for shippers with a limited carrier network. Therefore, more shippers will look to third-party logistics providers (3PLs) to enhance carrier networks and even keep costs in check. Working with a 3PL effectively reduces the risk of only shipping via one of the Big Three carriers. It opens the door a host of local, regional and even national carriers, which may Not have the marketing resources equivalent to DHL, UPS or FedEx. Shippers should take note and work to expand their logistics options today.

Join 30,000 Plus Subscribers!

To subscribe to our blog, enter your email address below and stay on top of things. We'll email you with a confirmation of your subscription.


Subscribe!

Send this to friend