This week, the Council of Supply Chain Management Professionals (CSCMP) published their 29th annual State of Logistics Report, which identified the trends that will impact the industry for the remainder of the year and well into the future.
The 2018 State of Logistics Report—presented by Penske Logistics—focuses on “an industry rapidly changing to meet growing demand and costs,” and is entitled “Steep Grade Ahead,” reflecting the year of fluctuation that the CSCMP anticipates. While “Steep Grade Ahead” centers around 2018, CSCMP offers a look into the future—to 2020 and beyond.
According to the introduction of the report, the 29th edition aims to “provide a narrative on macroeconomic factors affecting logistics, insights from industry leaders, discussion of important trends, detailed analysis of each major logistics sector, and a strategic assessment of the industry.”
The 2018 State of Logistics Report also maps the technological trends that CSCMP expects to “impact the overall transportation industry over the next 10 years” by providing an innovation grid spanning from 2018 to 2028. From freight uberization to on-demand 3D printing to blockchain, logistics is said to be “in the early stages of an evolutionary leap driven by technological change."
The report identifies autonomous mobile robots, artificial intelligence, uberization for freight, and blockchain as the “four key disruptive technologies.” These, along with “strong demand and capacity constraints” are expected to “shape short-term conditions in logistics.”
A look back into data from 2017 confirms that “United States Business Logistics Costs (USBLC) rose 6.2 percent last year, following a rare decline in 2016.” The 2018 State of Logistics Report notes that “key indicators suggest the economic momentum that lifted GDP 2.9 percent last year will continue: retail and wholesale inventories are swelling, household spending is strengthening, and economists are predicting tax reform will add 70 basis points to GDP over the next decade.”
Overall, “A closer look at 2017 numbers shows rising costs across all USBLC components: transportation, inventory carrying costs and other expenses...Transportation led the way with a 7 percent overall increase, with costs running well above inflation for every shipping mode except waterborne freight. Private or dedicated fleet and rail saw the biggest hikes as shippers scrambled to lock up capacity—a trend also reflected in A.T. Kearney surveys.”
According to the report, “five trends lead to one scenario” in 2018, expecting the following to “shape the future of logistics”:
Robust macroeconomic growth rooted in a strong labor market and recent tax cuts will boost demands for logistics.
Rising interest rates, a tighter labor market, and higher fuel prices will raise logistical costs.
Robust demand patterns and new competitors will challenge old business models
A fully digital, connected, and flexible supply chain optimized for e-commerce and last mile, same-day delivery will become essential.
The next-generation supply chain will improve fulfillment and drive efficiency through technologies such as big data and predictive analytics, artificial intelligence, robotics, crowdsourcing, and electric and autonomous vehicles.
CSCMP believes that “capacity is likely to stay tight” in 2018, enabling “providers to push through more rate hikes.” Meanwhile, companies will turn to revolutionary technologies to “find capacity and boost efficiency.” Supply chain efficiency will continue to improve so as to “secure carrier capacity at the lowest possible price. CSCMP concludes by suggesting that “carriers should maximize capacity utilization by cultivating a strong customer base that will improve network density.”
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