Digitization is an ongoing process that’s proving consequential in nearly every industry. This is certainly true of freight shipping, where digitization, along with online shopping, global marketplaces and new productivity technologies, have had a lasting impact.
Logistics, cargo handling, last-mile fulfillment, customs and compliance and many other aspects of this business are responding to these and other influences. Here’s how.
1. Ecommerce yields a massive rise in freight volume
According to Statista, the global retail ecommerce market – the B2C market – could be worth more than $6.5 billion by 2023. Additional findings say the B2B market is six times this size. The sheer volume of products is a major change and challenge for the freight shipping industry.
It’s fair to state that ecommerce has had a direct impact on the amount of freight being transported. According to freight industry research:
- Intra-regional truck trips for last-mile delivery are on the rise, even as the average length of those trips is falling.
- Moreover, as retailers have built out their omnichannel sales strategies in order to reach more people from more places, the freight industry has responded by building new distribution hubs to shorten the value chain even further.
- Some 13% to 30% of purchases made online are returned – a major increase compared to brick-and-mortar purchases, which have an 8% return rate. Online retail increases reverse logistics demands as well.
It’s not news that the ability to buy and sell things online creates online shoppers. What’s more interesting is how the ubiquity of ecommerce has fed into the other technologies and trends on this list, including the call for better trust mechanisms, global demand, eco-friendliness and the construction of an Industrial Internet of Things for freight carriers.
Ecommerce doesn’t just compound the problem of volume. It also raises the bar for turnaround times and lowers the bar for price expectations. The freight industry must answer in kind.
2. The industry pursues blockchain standards
The Blockchain in Transport Alliance (BiTA) represents more than 300 members of the global transportation business community that see blockchain as the foundation to a new kind of freight industry. As a BiTA spokesperson explained, “Over the next five years, we envision the massive adoption of several digital technologies, including blockchain, that will provide for the nearly seamless transportation of goods from origin to destination.”
TradeLens is one blockchain initiative that already has impressive cargo and freight industry buy-in. Five of the biggest cargo lines, representing 60% of global maritime cargo capacity, have signed on already. This type of trading system will lower costs and offer a much shorter value chain thanks to blockchain’s common distributed ledger technology.
The issue isn’t that blockchain will disrupt freight carriers, forwarders and third-party logistics companies – it already is disrupting them. Smaller companies need to know what’s on the horizon and which technologies stand the greatest chance of disrupting their business models and workflows.
3. A global ecommerce marketplace delivers environmental pressures
One of the biggest freight carriers, Maersk, has signaled that it intends to go carbon-neutral by the year 2050 – a pledge made with the knowledge that oceangoing freight represents 90% of global trading, and so has an outsized environmental and climate change impact.
Transparency is one of the major pressures of a global, commerce-focused marketplace. When customers have a choice, they increasingly choose products or services from the greener of two companies if both offer similar products and services. That goes for choosing freight services as much as it does any other product. Freight carriers and other companies play an enormous role in the overall sustainability of a supply chain, and a global marketplace means they can’t hide outdated practices anymore.
As the U.S. Environmental Protection Agency (EPA) notes, companies should use the technologies at their disposal, like sensors and enterprise analytics platforms, to engage in “measuring, benchmarking and assessing freight transportation activities and strategically making better choices that reduce emission[s].”
One place to begin is the EPA’s greenhouse gas emissions calculator, which helps companies quantify the kind of environmental impact they have. From there, making a difference means knowing which technologies may provide a credible solution, including the Internet of Things.
4. The Internet of Things makes freight more accountable
As Deloitte notes, companies that deal with cargo and freight transported by rail, ground, sea or air have a unique opportunity to take advantage of “widely distributed networks” to gather information rapidly about freight processes and react to emerging conditions. The IoT provides data mobility down to individual assets and items in the freight carrier supply chain.
For instance, consider the problem of keeping foods, beverages and medications at fixed temperatures. Shippers and freight forwarders that use sensors in climate-controlled vehicles or facilities can tell in an instant if a product is no longer in compliance. Smart refrigeration systems can even adjust the temperature automatically.
Sensors improve the detail in paper trails and chain of custody documents in other ways too. Fragile products, including delicate parts and carefully calibrated equipment, often require especially close inspections on arrival. Shippers have to make the right packaging decisions to begin with, but having sensor data available from the journey helps manage risk and makes any questions about fault easier to answer should the need arise.
Trucks and other vehicles are extensions of the industrial IoT in freight too. Electronic data loggers for trucks help eliminate unnecessary idling, identify more expedient routes and deliver data in close to real-time about vehicle and operator performance. Route optimization software may even incorporate weather and traffic data to provide new suggestions in real-time.
5. Automation saves resources and streamlines operations
Automation is one of the most important digital breakthroughs in the cargo and freight handling industry. Here are just three reasons why:
- Distribution and sorting centers can make use of connected material handling equipment that monitors its own condition and proactively flags maintenance issues, helping to eliminate failure patterns, optimize parts life cycles and keep talent focused on other priorities.
- Smart inventory and warehouse management systems give carriers tools to automatically identify available storage space in their own warehouses and find partners with less-than-truckload cargo ready for consolidation, while automated systems store or retrieve merchandise without allocating pickers or stowers.
- The task of inspecting freight on arrival or before departure benefits from modern advancements in machine vision. Robotic inspection stations can help reallocate talent to more demanding work and bring down defect rates at the same time.
The shift to just-in-time business processes, not to mention pipe dreams of “anticipatory shipping,” means the freight industry is under constant pressure to modernize and streamline all that it does.
The ecommerce explosion is both an opportunity and a major headache for companies in this space – and exciting new technologies are helping them weather the changes.