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E-commerce Logistics Market Grew by 19.9% in 2021, Says Ti’s Latest Report

There are expectations that the Asia Pacific’s market growth will be affected by both the Chinese and the South Korean market’s 2021-26 CAGR

E-commerce Logistics Market Grew by 19.9% in 2021, Says Ti’s Latest Report

Transport Intelligence’s (Ti) latest report, Global e-commerce logistics 2022, shows that rapid growth in the market continues with growth of 19.9% in 2021, though growth has slowed from 2020’s Covid-19 induced peak.

  • The global e-commerce logistics market grew by 19.9% in to reach a value €441.47bn in 2021.
  • Global e-commerce logistics market to grow at a CAGR of 11.8% from 2021-2026
  • Cross-border e-commerce market forecasted to grow at a CAGR of 10.65% to 2026
  • Global e-fulfilment market made up 46.8% of the total for e-commerce logistics, with last mile making up the remaining 53.2% in 2021
  • E-fulfilment service providers have broadened their service offerings to capture more of the e-commerce value chain

Ti’s latest data shows that, regionally, in 2021 Asia Pacific is still the biggest e-commerce logistics market, followed by North America and Europe. However, in 2026, Ti forecasts that North America will be the biggest e-commerce logistics market, with the US, Canada and Mexico all experiencing nominal 2021-26 CAGR above the global average.

There are expectations that the Asia Pacific’s market growth will be affected by both the Chinese and the South Korean market’s 2021-26 CAGR slowing down below not only the global average but the regional average of 7.1% too. Their percentage of online retail sales as a percentage of total sales, at 28.0% and 24.5% respectively, are testimony of mature markets. In addition, the parcel pricing war we’ve seen in China has hampered overall growth. However, the two countries will remain amongst the biggest e-commerce logistics markets globally on the back of a high number of e-shoppers.

A similar situation is likely to happen with the UK’s e-commerce market, with online sales as a percentage of total retail sales standing at 26.6% as of December 2021 as reported by the UK Office of National Statistics. The UK’s e-commerce logistics market is also expected to be affected by Brexit too over the next five years, but it will maintain its place as the third e-commerce logistics market globally after the United States and China.

Ti’s new research also shows for the first time the growth of the developing cross-border e-commerce logistics market, which is forecast to grow at a CAGR of 10.65% from 2021-2026. This growth is expected to continue as consumers seek luxury goods that may not be available within their own countries. However headwinds remain, particularly in terms of compliance with tax and customs regimes surrounding cross-border movements.

The new report also highlights how the e-commerce logistics market is broken down between e-fulfilment and last mile delivery services. In 2021 the global e-fulfilment market was valued at €235.42bn and represented a total of 46.8% of the market. Whereas the larger last mile market had a total value of €253.10bn and constituted the other 53.2% of the market.

Ti’s latest report also drills down further in to the e-fulfilment market, highlighting the structural changes which have taken hold since the beginning of the pandemic. Showing how fulfilment service providers from LSPs to software providers have broadened their service offering to capture more of the e-commerce value chain.

Ti’s Head of Commercial Development, Michael Clover, said: “In 2021 e-commerce has been one of the key growth sectors for logistics and we’ve seen some spectacular revenue growth from individual service providers. Overall growth has slowed since 2020, with growth levelling off as the extraordinary conditions for e-commerce growth brought about by the pandemic unwind, but growth is still above pre-pandemic levels. The forecast out to 2026 portrays a maturing market where online retail penetration levels are sustained in the most mature markets between 25-30% and other markets move up to this level.”

tive insights Turkey is a growth market and key cargo hub for the UK, particularly for textiles and fashion, automotive cargo and Fast-Moving Consumer Goods

Kerry Logistics Network Reacts To Growing Demand with New 1S2 Service Between UK and Turkey

Kerry Logistics Network Limited (‘KLN’; Stock Code 0636.HK) has launched a new One Stop Solution (1S2) for imports and exports between the UK and Turkey across all modes in response to strong demand.

“Turkey is a growth market and key cargo hub for the UK, particularly for textiles and fashion, automotive cargo and Fast-Moving Consumer Goods (FMCG) which have seen a strong surge in demand as companies search for alternative sourcing locations outside of Asia,” said Emma Rowlands, Strategic Sales Director, Kerry Logistics UK.

“We have locations throughout the UK and expert trade teams located in Istanbul, Ankara, Izmir, and Bursa. We have been operating in Turkey for 30 years, which makes us perfectly suited for the growth we are experiencing,” Rowlands added.

“Customers are increasingly looking for diversity, flexibility, and multimodal solutions that can be consistently maintained into and out of Turkey, which is why we have created the 1S2 to meet these needs.”

Already ranked IATA’s primary Agent in Turkey, KLN’s 1S2 has been developed to cater to growing multimodal demands and offers: Full Container Load (FCL) and Less than Container Load (LCL) fast transit services to all UK ports; daily Full Truck Load and Less than Truck Load across the European Union (EU); bonded and non-bonded, consolidation, value-added and Quality Control (QC) warehousing solutions; as well as in-house Customs clearance.

In combination with the 1S2, KLN offers a clearance service both on commercial and low value channels which is applicable for e-commerce.

Additionally, trade compliance, customs advisory and other consulting services are available for businesses looking to enter the Turkish market.

About Kerry logistics

Kerry Logistics Network Limited is a listed company engaged in third party logistics, freight services, warehouse operations, and supply chain solutions. It was listed on 19 December 2013, raising over US$280 million, as a spin-off of Kerry Properties Limited. Kerry Logistics is headquartered in Kwai Chung, Hong Kong.

The growth of the nation’s main port has now moved Colombo to the 22nd largest port in the world, according to the Sri Lanka Ports Authority

Colombo Port Continues Growth in 2021 TEU Levels

Colombo Port in Sri Lanka has processed 7.25 million TEU in 2021, a near 6 per cent growth on 2020 levels.

The growth of the nation’s main port has now moved Colombo to the 22nd largest port in the world, according to the Sri Lanka Ports Authority (SLPA).

SLPA chief Prasantha Jayamanna told the local Daily FT that the improvement was welcome, adding that President Gotabaya Rajapaksa has requested elevating the port’s position to within top 15 by 2025.

The Colombo Port saw volume increases of 5.8 per cent from the previous year, with transshipment volumes growing by 4.2 per cent to 5.85 million TEU.

SLPA terminals specifically saw a 5 per cent growth to 2.2 million TEU for the calendar year.

There are currently three container terminals at the Colombo Port — the Jaya container terminal (JCT) operated by the SLPA, the South Asian gateway terminal (SAGT), and Colombo international container terminal (CICT), which is operated and managed by China Merchants Port.

Earlier this year Colombo Port began phase two of its Eastern Terminal extension which will allow it to handle the largest container vessels.

Construction began on 12 January 2022 under the patronage of President H.E. Gotabaya Rajapaksa and Prime Minister Hon. Mahinda Rajapaksa. This extension will see the length of the terminal increase to 1,320 metres.

The project is scheduled to be completed on 4 July 2022. Once completed, the facility will consist of 12 giant cranes and 40 normal cranes, to be supplied by China’s Shanghai Zhenhua Heavy Industries Company (ZPMC).

Ports Minister Hon. Rohitha Abeygunawardena has said the development will cost around $1 billion, set to be financed by local funds.

“An extent of 420m of the Eastern Terminal has already been completed so far. Once completed, the terminal, which will be 1,320m in length, contributes the SLPA to handle 14 million BTU annually. At present the SLPA handles 7 million BTU annually,” said the Minister.

The construction contract of this project was awarded to the Sri Lankan-based Access Engineering and the China Harbour Engineering Company (CHEC).

third-party logistics

A Comprehensive Guide to Picking a Third-Party Logistics (3PL) Partner for Your Business

The right third-party logistics partner can help your organization improve customer service, control costs, and increase efficiency. It’s important to properly vet possible logistics partners to ensure your brand and services are well represented and the partner can deliver according to your needs.

Establish Communication

Logistics have gotten more sophisticated in recent years, and logistics partners need to maintain high levels of communication and data sharing between the provider and the company. It’s important to find a third-party logistics provider that you can trust and one that shares your brand’s culture and values.

Do Your Due Diligence

Not all logistics providers are created equal. If you’re selecting a new provider or changing to a different provider, it’s important to look for logistics partners with the resources and capabilities you need to reach your business goals. Providers should also be able to integrate with your existing systems, or be willing to work with you to find an agreeable solution.

Ideally, look for outstanding service across financial history, brand stability, experience working in your industry, experience in specific geographic regions, owned vs. rented assets, and compliance with regulations.

Along with talking to the providers themselves, do outside research and read reviews from other companies that worked with them. If possible, ask the provider to connect you with satisfied customers. If they stand behind their service, they will be happy to showcase happy customers.

Look for Diverse Offerings

Logistics providers typically specialize in a few domains, including commodity services, industry services, and logistics services. Their offerings can range from sourcing, shipping, transporting, and customs management to multi-function supply chain management and oversight for specific industries or specialization in particular sections of the supply chain.

Service add-ons are valuable to both parties. A single provider can supply several services to make your supply chain scalable and seamless. You can look for value-added amenities like IT asset management, quality control, and high-tech logistics solutions. Some common service add-ons may include rush order or emergency order handling, product kitting, reverse logistics programs, and returned material authorization agreements.

Choose Partners with Advanced Technology

A third-party logistics provider’s IT infrastructure is vital to your needs and their own. Your possible provider should own and operate the contemporary technology needed for their side of the partnership, including warehouse management systems, fleet tracking systems, and inventory analytics and controls. You could also look for order fulfillment systems, freight theft or damage management, and wares tracking using RFID or EDI.

The logistics industry is undergoing rapid change. It’s important to find providers with advanced technology solutions to address your needs as the business evolves.

Look for Customization

Depending on your industry, you may need additional customization options for your business. An experienced third-party logistics provider can help you optimize inventory and deliver excellent service for your customers. Building to order, rather than relying on stock, allows you to reduce inventory and production costs.

Opt for Omnichannel Expertise

Omnichannel is essential in the modern business world and necessary for enhanced customer experience. Your third-party logistics provider should understand the ins and outs of omnichannel commerce and how to provide that exceptional experience for customers.

Look for partners with repeatable business models, proven performance with previous customers, and experience with your business type, industry, or customer base. Depending on your needs, you may want to opt for a dedicated provider that focuses on one part of the supply chain or specific product types.

Work with a Network of Locations

Effective logistics partners have strategic network configuration with optimized distribution centers. It’s vital to understand the third-party logistics provider’s warehousing asset ecosystem, such as rented or proprietary storage facilities. If your products will need multiple storage stops on domestic or international routes, you will need a provider that owns and manages these warehouses for quality control and security.

You should also investigate more details about the warehousing assets, including the facility sizes and capacities, scalability, and future expansion plans. Are the warehouses close to ports, airports, highways, and railways? How many trailers and containers do they typically handle in a day? Is there anything you need to be aware of regarding service during the busy seasons or in the event of high shipping demands?

Prioritize Excellence in Service

An experienced logistics partner is dedicated to service excellence and quality management. Your third-party logistics partner will have a significant impact on how your own business and customer service functions, so you want to be sure you’re choosing a provider that’s committed to delivering for you and improving their own product.

A provider with a dedication to service excellence will continue to optimize their own processes and will look for opportunities to implement better solutions whenever possible. They should be invested in their service and its success, like you are to your own company and product, and always looking to excel.

Find Brand Alignment

Your logistics partner reflects on your brand and impacts your business. To ensure your brand and your vision are represented, you need to look for a provider with a long history of success, adherence to compliance and regulations, financial stability, and a continued interest in investing in the company, facilities, equipment, systems, and resources for optimal logistics.

With the right partner on your site, you can grow into a solid relationship with a third-party logistics provider that can grow and evolve with your business. While switching to different providers occurs as business needs change, it’s much simpler to find the right provider at the start and work on developing a long-term partnership.

Key Takeaways

The supply-chain management industry has undergone radical changes in the last decade. Many third-party logistics providers emerged on the market in response to this boom and the increasing opportunities with a global marketplace. Not every provider has the tools, resources, and expertise to deliver for you, however, so do your due diligence and find a provider with a positive reputation, proven processes, and a willingness to adapt and grow. 

__________________________________________________________________

David is CEO of DB Schenker USA, a 150-year-old leading global freight forwarder and 3PL provider. David Buss is responsible for all P&L aspects in the United States, which is made up of over 7,000 employees located throughout 39 forwarding locations and 55 logistics centers.

Logistics

SIX THINGS TO CONSIDER IN PICKING THE BEST THIRD PARTY LOGISTICS OUTFIT

Logistics is the lifeblood of commerce and e-commerce. For companies that have built their foundations and business models in the process of producing, selling, shipping and delivering goods, it is arguably the most vital cog in the entire machine.

Get logistics right, and a business can thrive. Get it wrong, however, and the effects on any company’s brand reputation and bottom line can be catastrophic.

The challenge for many firms looking to deliver goods to customers is the simple fact that they will lack the resources or know-how and are unable to effectively handle large-scale logistics in-house. To maximize commercial opportunities, products must be deliverable across large geographies, yet this is almost impossible to achieve singlehandedly.

As a result, many will turn to third-party logistics (3PL) providers–supportive organizations specializing in the provision of cost-effective fulfillment and distribution services.

Indeed, logistics is big business. According to estimates, roughly 10% of the United States’ $21 trillion annual GDP can be attributed to the industry.

Given the size of the opportunity, the market continues to become increasingly competitive, resulting in rampant logistics-centric innovation among 3PL providers who today provide a range of highly effective, bespoke services.

For those seeking the help of a 3PL, this innovation is hugely beneficial. Yet not all 3PLs are created equal. Within such a crowded environment, the challenge for many companies is finding the right provider that is capable of unlocking as many otherwise unattainable benefits as possible.

Here are six things to consider when choosing a third-party logistics provider.

Track record

While many services a company utilizes can be somewhat transactional, a 3PL-client relationship must be built on trust. Such providers will become a vitally important part of your business’s success, so it is important that you know they have a proven ability to support your specific needs. 

There are a variety of ways in which you can determine this track record:

-Are they an established player in the market?

-Do they hold accreditations from recognized industry bodies?

-Do they have case studies with example success stories working with companies similar to your own, in your regions of interest?

-What sort of results are they delivering for those clients, and how do these compare with your expectations?

-Take the time to understand a potential providers’ areas of strengths and weaknesses to ensure they are able to deliver upon their promises. 

Expertise

Despite broadly catering to the same demands, the individual offerings of 3PLs will often vary. While one provider might offer a limited number of services but specialize in your specific industry and/or geographies of interest, another might offer an expansive range of services that could help to make your supply chain more scalable, yet only do so on a generalized basis without the ability to meet a stringent set of bespoke needs. Rarely will one company’s model mirror that of another. 

Consider your specific business needs and goals, understand how logistics will best support these, and then you can work to understand what kind of 3PL provider and services you will need. In following these steps, you are more likely to benefit from 3PL services that are relevant to your organization.

Location

The footprint of a 3PL is just as important, if not more so than its services. The best providers will have a well-established network that is able to uphold a seamless logistics operation across multiple locations, either regionally or perhaps globally. 

Indeed, this is a further question: Are you looking to sell your goods locally, regionally, nationally or internationally? One 3PL may have an unrivaled footprint in one state, but not be able to compete with others who specialize in country-wide services. 

Again, consider your own needs and find a 3PL that can meet those requirements.

Compatibility

While cost will often be the primary factor worth considering for any company, it should not be the be-all and end-all. Cheaper doesn’t always mean better value. With 3PLs, it is equally worth considering the company’s cultures and values to understand how they work with your business and cater to your customers. 

-Are they willing to communicate with your company on a regular basis?

-Are they a good cultural fit?

-Do they demonstrate a willing commitment to data sharing that can demonstrate your ROI?

-Do they have a track record of going the extra mile for their customers?

It is worth remembering that your 3PL provider will be an extension of your business, and the quality of their offering will reflect on your own brand. Ensuring you create a truly embedded partnership with a close working relationship is, therefore, vital.

Scalability

With the support of a good 3PL, it is likely that your business will be able to grow more quickly. But does that same 3PL have the flexible and agile characteristics necessary to support that growth?

Scalability is a fourth important element to consider when selecting such a provider. If the answer to the above question is no, then you may find that you will be forced to change 3PL provider in the near future, causing unnecessary administration, stress, costs and disruptions.

Equally, it is not just about whether a 3PL can scale with your business, but what impact this might have.

-What would this mean for your costs?

-Will the services and value for money improve, reduce or stay the same? 

Place your roadmap front and center and ask yourself whether a 3PL would be able to support this. 

Innovation

As has already been mentioned, competition in the logistics space continues to spur an ever-increasing amount of innovation among 3PL providers who are deploying state-of-the-art technologies and cutting-edge services to both cut above the noise and benefit their customers on a daily basis. Some 3PLs will be more committed to innovation and technologies than others, however. 

To identify those that will value innovation and bring plethora of benefits to your business not only now but in the future, consider their current offering.

-Will their software and systems integrate with your own?

-How do they track metrics, data and deliver analytics? Can they provide this information to you easily?

-How usable and up to date are their website, dashboards and alike?

Those that can deliver positive answers to these questions will likely be companies that are committed to continually enhancing the service they bring to their customers and will likely maximize industry innovation to the benefit of your business.

Ultimately, it is important to do your research. Don’t just settle on the cheapest provider. For something as important and integrated as a 3PL, which will become an extension and representation of your own brand and business, it is important to focus on quality in all aspects. 

By considering these six simple factors, you will be well placed to find a more suitable, more relevant 3PL capable of meeting your organization’s needs. 

chain

Top 5 Ways to Crisis-Proof Your Supply Chain in 2021

Here’s how manufacturers, distributors, and retailers can shore up their supply chains with an eye on making them more resilient and crisis-proof in 2021 (and beyond). 

If there’s one thing the world’s manufacturers, distributors, and retailers learned in 2020, it’s that there’s no such thing as being too prepared to tackle a supply chain crisis. With companies across many sectors still grappling with COVID-related material shortages and the world’s transportation networks struggling to keep up with the demand, there’s no time like the present to make your own supply chain more resilient, agile, and crisis-proof.

“The COVID pandemic caused significant disruption to 80% of supply chains around the world, with the result that nearly half (47%) of supply chain operations will be overhauled,” Kearney reports. “But as dramatic as these figures are, they still understate the size and scope of supply chain challenges.”

Offsetting Severe Disruptions

It didn’t take long for the global pandemic to throw companies around the world into crisis mode. In March of 2020, more than 80% of companies already believed that their organizations would experience some impact due to COVID-19 disruptions; by late-March, that number had grown to 95%, according to Institute for Supply Management (ISM).

“Severe supply chain disruptions were experienced in multiple regions to varying degrees,” ISM reported a few months later, noting that in early-March, 6% of firms reported “severe disruptions” across their supply chains. By the end of March, severe disruptions were being reported in North America (9% for U.S. supply chains, 6% for supply chains elsewhere in North America), Japan and Korea (by 17% of respondents for each), Europe (by 24% of respondents), and particularly China (by 38% of respondents).

5 Steps to Take now

By June 2020, Accenture was reporting that 94% of Fortune 1000 companies were experiencing supply chain disruptions due to the pandemic. “Disruptions to supply chain caused by COVID-19 were unpredictable and devastating, drawing attention to how critical supply chains are to sustaining business success and daily operations,” Supply & Demand Chain Executive (SDC) reports. “Unfortunately, the pandemic has also underscored how vulnerable supply chains are to sudden adversity.”

To help your supply chain better withstand the shocks of a future crisis, consider implementing some or all of these strategies for bolstering resilience:

1. Fully leverage connectivity and digitization. “Advancing connectivity with supply chain partners and digitizing information to generate a single version of the truth guarantees that enterprises can inform and cooperate with their entire supply chains to respond in unison,” SDC explains. “Organizations that connect their supply chain partners into a multi-enterprise business network can have access to real-time information, rapid access to capital, and enhanced shipment visibility.”

2. Strive for end-to-end visibility. The goal should be to gain insights into every aspect impacting inventory in the supply chain. This includes enterprise-level demand forecasts and purchase orders, cooperation with suppliers to ensure that availability and capacity needs are met and connected or “single-instance” applications of enterprise resource planning systems (ERPs), SDC advises. “This visibility also covers warehouse management across your distribution network, transportation tracking and visibility, in-house and outsourced production and final delivery and settlement.”

3. Improve partner collaboration. The lack of communication between trading partners led to a lot of late orders, missed shipments, and understock situations in 2020. It also forced more companies to examine the role that basic exercises like data sharing across supply chain networks can play in the overall health of those networks. “Effective collaboration with partners is critical to supply chain resiliency,” SDC says, noting that early sharing of forecasts and orders is a best practice, whether volatility exists or not.

4. Diversify your supply sources. Don’t let your single-source approach become a point of failure in a crisis. Instead, consider alternate supply sources and begin weaving them into your overall procurement plan before disaster strikes. One way to do this is by near-shoring the manufacture of certain components, or you might want to adopt a China plus one policy, whereby most of your production takes place in China while some of it happens in another country. These and other diversification strategies help lessen risk and ensure that you don’t have all of your “eggs in one basket” when the next disruption emerges.

5. Build more trust into supply chain processes. There was a time when keeping things “close to the vest” and blocking organizations from obtaining internal data, forecasts, and other information was just a part of doing business. Fast-forward to 2021 and the business landscape basically demands higher levels of trust and transparency across trading partners. This, in turn, helps those partners shield their respective supply chains—and, the ecosystem as a whole—from shocks and disruptions. “Supply chain transparency is one way to enable communication among suppliers,” Symbia Logistics points out. “With open discussions, all parties can tackle issues that impact pricing, quality, and competitiveness. If a supplier is unwilling to share data, a company has to wonder why. What is the supplier trying to hide?”

By implementing some or all of the above points, companies can shore up their domestic and global supply chains and prepare them for the impacts of the next disruption—no matter how big or small that event may be. After all, it doesn’t take a global pandemic to bring a supply chain to its knees and the next interruption could be waiting right around the next corner.

Generix Group North America provides a series of solutions within our Supply Chain Hub product suite to create efficiencies across an entire supply chain. Our solutions are in use around the world and our experience is second-to-none. We invite you to contact us to learn more.

This post originally appeared here. Republished with permission.

shortage

Here’s How to Turn the Trials of Commodity Shortages into Positives for your 3PL

As I’m sure you’re aware, there’s a global shortage of a small, yet vital component in so many of the goods we use and buy today — so-called semiconductor chips. These tiny processors are used by manufacturers to produce everything from cars and Class 8 trucks to TVs, laptops, smartphones, medical devices, and even appliances like refrigerators and toasters.

These types of commodity shortages have become a defining factor of the post-COVID economic recovery and the 2021 economy as a whole.

Remember the gasoline shortage after the recent Colonial Pipeline shutdown? How about the lingering chicken wing shortage, as bars and restaurants re-open and try to stock up? Builders have been reporting lumber shortages for months, and prices on 2×4 studs and sheets of plywood have hit all-time highs. The list goes on: diapers, chlorine, furniture, toilet paper (in the early days of the pandemic). And, obviously, a “shortage” of hirees, which our industry is all too familiar with, in its persistent shortage of available truck drivers.


 

While most of our relationships with shippers remained hearty over the past year, our Michigan-based operation relied heavily on the automakers, both inbound loads of parts for new vehicles and, of course, trailers loaded with finished cars outbound for dealers.

But amidst the microprocessor shortage, new car production, at times, came to a complete standstill as the need for semiconductor chips blocked American automakers like GM, Dodge, and Ford from building new vehicles. With those production stops, our Michigan operation, likewise, came to a standstill; leaving our trucks parked and our staff searching for answers.

Unfortunately, the outlook for that business returning is cloudy, at best. One analyst might say chip capacity will return to normal by the end of the year. Others say this drags on until 2024.

Trying to plan around this uncertainty has been a challenge. But there are a couple key lessons that can be taken from all of this:

First, logistics providers need to diversify. If you rely on one steady stream of business either at large or for one branch of your operation, you’re a sitting duck. A shortage that popped up seemingly overnight derailed that segment of our business and left us suddenly searching for answers. We had been so busy managing our automotive business here in Michigan, we didn’t take the time and effort to find new customers and forge new relationships. In the end, that lapse caught up with us.

Secondly, remember to treat negative events as opportunities to learn and grow, and possibly emerge from them better and stronger than you were before.

When it became clear the auto production setbacks would be long-term, I encouraged our team not to simply sit around and wait for things to change. Instead, we gathered team members and taught them new skills — ones they could use in their own careers and ones that could benefit the company, too.

For example, we looped in members of our team who weren’t hired to do sales, such as those in dispatch and other back-office functions, and we taught them the basics of making sales calls and reaching out to potential new customers. They were all on board to do it.

We flipped around roles and tried to think outside the box. We had dispatchers finding industries and businesses that wouldn’t be impacted by the semiconductor shortage and then making cold calls to try to drum up new lines of business.

If it worked, fantastic — we made something out of nothing. If not, at least we tried, and our employees had opportunities to continue working and to learn new skills.

Ultimately, that could be the biggest takeaway: When things are turned upside down and the world suddenly changes, go back to the basics. Start at the beginning again and figure out how to find business.

These are lessons that can apply broadly across the third-party logistics landscape and ones I would encourage shippers, brokers, and carriers to make sure they heed, too. Do what you can to diversify your lines of business, because you never know when they might suddenly be toppled. And never underestimate your team’s ability to pivot and learn new skills, as that could be the key to pushing through when you find yourself in a rut.

What are the lessons you’ve learned over the past 15 months in your logistics operation? I’d love to hear about them, to learn from your experience, and to share your insights with our team, too: rkramar@circledelivers.com

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Ryan Kramar is a Vice President of Operations at Circle LogisticsFounded in Fort Wayne in 2011, Circle is one of the fastest-growing transportation companies in the nation, servicing over $250 million in freight spend. Circle combines the dedication of a privately owned asset-based 3PL with the coverage of a public large-scale provider to create a superior modern freight experience. Circle is committed to delivering on three core promises to our customers: No Fail Service, Personalized Communication, and Innovative Solutions, and provides coverage across all modes of transportation in the continental United States and Mexico, including Dry Van, Flatbed, Reefer, LTL, Expedite, Oversize and Air.

For more information, please visit www.circledelivers.com

inventory

OUT WITH THE OLD: ‘JUST-IN-TIME’ IS A THING OF THE PAST IN TODAY’S INVENTORY MANAGEMENT

The supply chain has been given a new blend of market disruptions in the past year. Beyond the obvious pandemic, digital commerce surges and new expectations for next-day delivery have some inventory managers scrambling to keep up with demand while meeting expectations in performance and operations.

Inevitably, cost management goes hand in hand with achieving competitive consumer satisfaction results, so this adds another layer of stress for the team to maintain. Of course, none of this matters if the product is unavailable, and if the status of goods is unknown for extended periods of time, the lack of visibility alone can quickly diminish any chance of maintaining a competitive edge. 

So, what does it take, then? Tom Martucci, chief technology officer at Consolidated Chassis Management, shares that previously held ideals toward inventory management have shifted.

“Inventory management, which was primarily driven by just-in-time philosophies before COVID, has evolved,” Martucci said. “The realization of disruption and the need for ‘buffer stock’ is no longer seen as a luxury but a necessity, particularly in asset management. The operational degradation, lost sales and recovery costs have proven far more impacting than any savings from keeping stocks ‘tight.’ Most companies will now reconsider these old philosophies, with more consideration given to service continuity.”

So, what can be done to better understand what is needed for that competitive advantage everyone in the industry is aiming to achieve? It starts with appropriate asset management. Martucci shares that assets–primarily their utilization and costs–need to be approached with a different philosophy in mind.

“The lessons over the past year have shown us that we must consider a portion of our assets as ‘buffer stock’,” Martucci explains. “The costs of these assets need to be included with the overall pricing philosophies, where I believe these small increases, clearly explained to the stakeholders, are much more easily accepted than massive disruptions and recovery costs. As always, there needs to be dialogue between seller and buyer to assure there are clear expectations and deliverables.”

Technology fulfills a critical role in supporting proactive inventory management initiatives, especially for those warehouse managers struggling to keep up with unpredictable demand trends. The important thing to remember here is the level of visibility provided by the technology implemented. By successfully gathering critical information and data, managers are not left with risky assumptions and guesses. 

“Technology drives visibility, and visibility is a necessity for efficient inventory management,” Martucci says. “In the same way that you can’t manage what you can’t measure, I believe you can’t manage what you can’t ‘see’ in terms of asset visibility via solid technology. On the cutting edge of this evolution is the adaptation of GPS tracking and telematics of the asset itself. No longer will companies need to rely on and ‘hard reader’ verification of the asset’s location. On-board technology will not only be able to tell us where the equipment is, but also the physical condition of the asset. This will promote more efficient use and a higher degree of safety.”

Consolidated Chassis Management takes asset management and amplifies it. The key part of what makes the company’s solutions competitive is not only the amount of data provided, but also the right kind of data it gathers and manages. What makes CCM a highly competitive chassis pool manager is found at the core of CCM’s mission that embraces an inclusive and extended stakeholder reach while maximizing principles of quality, availability, flexibility, efficiency, sustainability and neutral management.

“Our technology division created our CIT platform with asset management as its core mission,” Martucci says. “The technology was developed to manage the assets within the CCM chassis pools, and we recently introduced it as a fleet management solution for other companies needing an equipment management solution. The underlying design of our technology includes logging and tracking the number of different metrics throughout the various supply chain processes. We consider our systems very data-rich, which provides us the visibility needed to effectively manage the assets.”

Additionally, CCM takes into consideration how the market is evolving and proactively prepares to adapt solutions for optimal customer support and add a level of flexibility for the customer. Adding to their focus on quality, Martucci explains that changes are in the works for advancing data integration capabilities in the near future.

“Although we are currently reliant on EDI and APIs for data sharing, we are preparing our APIs for the emerging evolution of GPS-Telematics which positions us to seamlessly integrate the new data into our applications and data warehouse,” he says. “These tools are highly flexible resources our management teams use in assuring the assets are where they are supposed to be and are maintained at the highest level.”

From traditional asset management philosophies to advanced technology integrations, Martucci makes it clear that going back to the basics of asset management is at the core of any inventory management approach. Without these key functions of a business within the supply chain, there is simply too much room for error if the goal is to remain competitive. 

“This starts with having a clear visibility as to where the assets are and what their condition is,” Martucci says. “Accepting that consistency is the forerunner of efficiency, establishing clear asset management processes and procedures is a key foundational element. Maintaining a clear set of business metrics that drive and support these business processes is a must; as we’ve said, ‘You can’t manage what you can’t measure–or see in this case.” 

If your company made it through the past 12 months, consider what brought it to the other side of the pandemic and this new era of digital commerce. If there are still holes in your organization’s management approach, the time to rebuild the groundwork of your strategy is now. An important takeaway is that traditional philosophies – not antiquated methods, can be what sets your company apart from competitors. 

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Tom Martucci is vice president and chief technology officer at Consolidated Chassis Management, where he is responsible for the identification of CCM’s computing needs as well as designing and enhancing CCM’s software suite to meet today’s market needs. He has more than 30 years of experience in the transportation industry, with responsibilities ranging from technical development of applications to developing IT strategies for several large corporations. Prior to joining CCM, he was the chief information officer with Interpool Inc., where he managed separate IT departments for servicing the leasing business and the design and development of Trac’s Poolstat system. Tom attended Iona College, where he received a bachelor’s degree in Business Administration, majoring in Management and minoring in Computer Science. He recently attained a certificate in Executive Training for High Performance at the University of Virginia’s Darden School of Business. 

logistics

3 Reasons Why it’s Going to Take Longer to Unravel the Current Global Logistics Mess

If you’re involved in global shipping or even a consumer who recently purchased furniture or other bulky items, you’re well aware of the sorry state of global logistics. The pandemic and its knock-on effects have created global shipping chaos and driven astronomical shipping costs. While we are all enduring the consequences, the big question now is when will global logistics return to normal? Will it happen after peak season this year? I am less optimistic about a quick turnaround. Here are three data points that highlight why I believe the current situation will drag on longer than anticipated.

Inventories are way down and retailers want to hold more of it in the future.

The pandemic created a unique situation. Manufacturing and distribution capacity declined, but consumer demand didn’t. Retailers have seen their inventories cut as consumers continue buying, but they cannot replenish their stocks. According to the US Census Bureau, the inventory to sales ratio is down more than 25% since the beginning of the pandemic (see Figure 1).

The chart also shows a general decline over 2 decades in the inventory to sales ratio, which is a testament to retailers and their logistics partner continually improving their supply chain performance. That trend is about to change as many retailers are deciding to hold more inventory as a hedge against greater supply chain uncertainty. So, what does that mean? Retailers will be buying more than what they need in the short-term to build their stocks to larger acceptable levels. This will continue to put more pressure on supply chains and logistics operations—not reduce it—even after the peak season ends this year.

Figure 1: Retail Inventory to Sales Ratio

Inflation is up, but still viewed as manageable and history says it can go higher before stunting demand.

The Federal Open Market Committee (the Fed) just released its revised forecast for inflation. The forecast did rise by 1% to 3.4% for the year; however, that is more than manageable and unlikely to suppress consumer demand as longer-term inflation is being forecasted at 2%. In addition, if inflation were to go higher, that wouldn’t necessarily mean that US import volumes would decline and take pressure off the current situation. The last time inflation breached 5%, as it did in May, was in August 2008 when it reached 5.8%. As you can see from the US maritime import chart (see Figure 2), import volumes continued to increase.

Figure 2: US Maritime Import Volume

Source: Descartes Datamyne

The economy continues to reopen and the Fed expects robust job creation through the fall. This is a good news/bad news story. As states continue to relax or eliminate COVID-19 related restrictions, parts of the economy such as restaurants, tourism and other service industries will return to more normal capacity, increasing demand for goods many of them import. The Fed is also predicting robust job growth into the fall. The continued opening up of business will drive job growth and consumer spending as those hit hardest by the pandemic have more cash to spend. Again, more pressure on global supply chains.

The protracted situation means that short-term plans that increase costs but get goods to market may make more sense than waiting for the global shipping situation to get better on its own. However, retailers and other importers should evaluate their supply chains now for the alternate sources and paths their goods take to get to market. This evaluation should take into account the impact that highly concentrated and congested trade lanes have on the risk to fulfilling customer demand. For example, the concentration of manufacturing in countries such as China and the use of ports like LA/Long Beach. We can see today the delays that are happening and it won’t take much to see additional delays at some level with disruptions in the future. Now is the time for importers to engineer the risk out of the supply chain.

warehousing

All you Need to Know about eCommerce Warehousing in 2021

In the last year, we have seen many large and small businesses shift their focus towards the online marketplace. While many are quick to point the finger towards the coronavirus pandemic, in truth, it only accelerated the digitization process. Online sales have been growing for years, and that inventory needs to be stored before it gets sold and shipped. In this article, we will look at the recent trends and cover all you need to know about eCommerce warehousing in 2021.

What is eCommerce warehousing?

Just so we’re on the same page, let’s get a few basics out of the way first. eCommerce warehousing refers to the storage of physical inventory before the stored goods are sold online. Of course, you can find other definitions floating around. What’s important is that it can stand for small, one-person garage businesses as well as large companies. The goods need to be stored safely and securely; that is a given. However, goods also need to be correctly cataloged with accurate arrival dates, quantities, and exact locations within the warehouse. As you can see, regardless of the scale of your business, keeping track of inventory is vital.

Outgrowing your living room

You shouldn’t be ashamed of starting small. Great things often have humble beginnings. Many large online businesses started small and slowly grew into what they are today. After all, eCommerce giant Amazon started from Jeff Bezos’s garage. The online marketplace is constantly growing, and demand shows no signs of slowing down, even after the pandemic is over. Pretty much anyone can open an online store, and micro-fulfillment has become the new industry buzzword.

Starting your new online business from your own home is an excellent way to keep costs down. That’s probably the most common reason people choose to use their garages or living rooms as improvised storage spaces. Sure, it might work for a while, but what happens when you get tired of living in a warehouse? You should have a business plan for when you eventually outgrow the confines of your garage. If things go well, your storage needs will increase beyond what your home can offer. Modern startups are becoming increasingly creative, so there is no shortage of solutions available for you to consider.

Going for an actual warehouse

We’ve already mentioned an increased demand, but demand hasn’t grown just for the number of goods delivered. Customers have expectations that are set by your competition, and it’s up to you to keep up. You will need to ship at record speeds and make sure the goods are delivered undamaged. Changing from storing your inventory in your home’s garage to a dedicated warehouse comes with many benefits. Of course, any small business will still need to keep warehousing costs low. But with all the digital tools available, you shouldn’t have a hard time organizing your inventory. This will allow you to ship faster, saving time, money, and your nerves in the process.

Learn to streamline and outsource

Outsourcing to a third party is often referred to as third-party logistics (3PL). It is a common way to streamline and automate the eCommerce warehousing portion of your business. The good news is that outsourcing can unburden you of more than just warehousing. 3PL can handle inventory management and help with order fulfillment. You can even go as far as to automate inventory restocks and get estimates on future orders by tracking demand.

Tracking and transparent shipping are readily available to customers due to the internet being omnipresent. On the other hand, you can have access to real-time inventory status with just a few clicks. Digitalizing will allow you to sync orders from multiple platforms while avoiding mix-ups. It’s up to you to make the most of these tools and integrate them into your business.

Managing your eCommerce warehousing

Regardless of whether you are a one-person business operated from your home or have multiple employees and partner with a 3PL company, you will need to get involved with managing your eCommerce warehousing. You can start by training the staff that does the warehousing, but also getting acquainted with the digital tools yourself. Manage your sales funnel in a way that helps you forecast demand and plan your warehousing and shipping accordingly.

Always have a plan on how your business will scale and how you will need to adapt. Ensure that the 3PL you have chosen can scale with you and handle an increased volume of operations. Another important issue you mustn’t neglect is handling customer satisfaction and possible complaints. Proper warehouse management should include measures to process returns quickly.

Sometimes it feels like the world is changing faster than we can keep track of it. We’ve given you a rundown of all you need to know about eCommerce warehousing in 2021. Digital tools have allowed us to connect worldwide marketplaces in ways that seemed absurd 20 years ago. You can fulfill orders and ship from the comfort of your home to someone who is on a different continent. And both of you can have real-time information on the transaction and status of the shipment. Small businesses have given large companies a run for their money, and it’s now the giants to have to keep up.

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George Brownlee is a freelance writer who mostly covers topics related to how storage and shipping affect both individuals and businesses alike. George comes from a background of working as a manager who specialized in logistics and supply chains. He likes connecting people, places and things and has been collaborating with simplifystorage.com for the last two years.