2016 was a transformative year for the supply chain. From the Hanjin collapse to Otto’s delivery of 50,000 Budweiser cans via the world’s first autonomous truck delivery, there was no shortage of industry headlines.
2017 is poised to experience as many milestones, if not more. With the growth of the $800 billion trucking industry and new players in the market, like Amazon, who is “rumored” to be building their own “Uber for Trucking” application – all eyes are on the logistics and supply chain industry.
How will Uber and Amazon’s push into the logistics sector impact the 3PL and brokerage market?
To oppose shrinking margins and growing competition from big players like Amazon and Uber, the 3PL and brokerage market will need to boost efficiencies via technology investments. The giant tech companies have a greater vision that offers them the luxury to lose money in the short-term for the pursuit of long-term goals.
Regardless of size, companies will need to work more efficiently in 2017 to remain competitive. We’ll see normal gross margins become significantly lower over the next several years. The only means to offset lowering margins is by gaining internal efficiencies.
We’ll see automation take over traditional brokerage models and antiquated processes. The acts of pricing, booking and tracking will require far less human involvement in the years to come. By the year 2020, the age-old brokerage model will only have remnants of legacy processes currently used today.
What can we expect from investments in supply chain and logistics start-ups?
Funding for dynamic start-ups is not going to slow down any time soon. 2016 saw a projected $5 billion in investments across 315 deals for start-ups disrupting the industry.
Start-ups aiming to overhaul e-commerce logistics have received notable attention as figures for e-commerce sales continue to climb along with the potential for growth in that sector. Other categories of start-ups receiving notable investments include: freight and supply chain visibility; sensors/asset tagging; last-mile delivery; enterprise resource management (ERP); inventory management; trucking; and warehousing.
How will TMS vendors adapt as multimodal transportation becomes the new norm?
Multimodal will become a top priority for industry leaders seeking ways to solve today’s most complex supply chain issues. Transportation management system (TMS) vendors will begin to provide more seamless multimodal offerings. The efficient combination of transportation modes reduces inventory costs, contains freight costs and optimizes lead times.
As shippers and their logistics providers look for systems that support multileg, multimode shipments, mode-agnostic technologies will see higher demand. In 2017, TMS vendors will invest in expansions of their TMS suites to allow for global and multimodal optimization within a single platform.
These are just a few of the dozens of predictions that can be made for how the industry will transform in 2017. These predictions will likely have the greatest impact in the short-term, but I look forward to seeing what other factors will overhaul the industry in the next five to ten years. If you have suggestions for short or long-term predictions, I’d love to hear your thoughts in the comment section below.