If you just can't wait to see what the future holds, you're not alone. Scientists, business leaders and even MIT researchers are pondering how the world will change and what it means for our lives, our businesses and, yes, our supply chains.
Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
The rise of the Internet. Virtual reality. The end of the Cold War. The World Future Society's Outlook called them all. It also predicted a shortage of worms and the advent of all-day eating (a consequence of the vanishing distinctions between breakfast, lunch and dinner).
No subject is too arcane for the Outlook, a report published annually by the World Future Society since 1985. The Outlook features some of the more thought-provoking ideas that have appeared in the society's bimonthly magazine, The Futurist, during the previous 12 months. The predictions are based not on original research, but on observations by scientists, academics and business leaders on social and technological developments that may affect how we live, how we work and, yes, how we manage our supply chains.
Because the wide-ranging ideas come from all aspects of human endeavor—business, economics, demographics, education, the environment, technology and even terrorism—the Outlook tends to be an intriguing brew, not to mention a lot to absorb. But Timothy Mack, president of the World Future Society, sees that as a strength. By bringing a wide range of topics together, the Outlook spotlights how developments in one area affect others, emphasizing what he calls their "cross impact." It's important to get the big picture, he says. Failure to watch overall patterns because you're looking solely at your business "will come back and bite you."
What trends are highlighted in the 2006 edition of the Outlook? Predictably, they vary all over the map. Some will come as no surprise—like the rising demand for health care and biotech professionals, or the projected surge in wind-generated and tidal power. Others may be more startling—like the prediction that nanotechnology will be used for everything from monitoring the health of soldiers in the battlefield to transforming waste into edible material.
As for trends in business, it's all about technology—specifically, the information technology that will help to network workers, connecting both enterprises and individuals. "Connectivity will likely shift the way businesses are structured and how decisions are made," Mack observes. In that same vein, the Outlook forecasts the coming of the Digital Age—an era "characterized by inter-connectivity, complexity, acceleration of human activity, convergence of media, and rising significance of intangibles such as reputation."
Some of the trends hold out promise for solving society's ills; others are troubling. One of the more worrisome is the decline in the number of U.S. citizens enrolled in engineering programs in the United States. The World Future Society reports that by 1999, half half the engineering students in this country were foreign born, an indicator that the United States may someday face a shortfall of engineers.
The post-modern supply chain
At the same time the World Future Society is tracking big-picture trends, researchers at the Massachusetts Institute of Technology's Center for Transportation and Logistics are trying to do the same for a microcosm of the business world, supply chain management. A five-year research project known as the Supply Chain 2020 Project is currently under way, as researchers endeavor to find out how supply chains will look in the year 2020. The project's goals are to determine what makes a supply chain effective and to identify emerging trends managers should take particular note of in their supply chain planning. The year 2020 was chosen in part because of the double meeting—the year and the visual acuity needed to obtain a clear view of what lies ahead.
Those looking for predictions or advice will be disappointed. Larry Lapide, who heads the project, cautions that the research will offer no prescriptions; nor will it attempt to predict the future. The premise is that the future is unknowable but that understanding key drivers can help managers prepare for what may come.
Lapide, who was formerly a consultant at AMR Research, expects the five-year project to open a few eyes. As part of the groundwork, researchers analyzed existing studies on the future of supply chains. More often than not, they found, those studies tended to bubble over with optimism, portraying the kind of future that Mr. Rogers might have envisioned: where it's always a beautiful day, where global trade unfolds seamlessly, where highly connected companies engage in endless partnering and collaboration.
But Lapide's not buying it. "The problem with that is it's too utopian," he says. "It does not bring competitiveness into it." It also makes some assumptions that many would question. Will companies really share information? Is it realistic to expect to overcome the difficulties of crossenterprise integration when cross-functional integration within companies has proven so difficult?
Beyond best practices
In the face of all this uncertainty, how can businesses even begin to plan for the future? Lapide's advice is to select several possibilities and concentrate on their implications for supply chains. "We can't forecast the future 15 years from now," he says. "What we can do is consider three or four possibilities."
What Lapide describes, in essence, is a form of risk management based on understanding how various developments may play out, and understanding what "sensors in the ground" a business should put in place so it receives early warning of those developments. The idea is that companies have to look "beyond best practices," as the MIT researchers like to say. That is, changes in processes should be based on understanding underlying principles of supply chains, not simply on who is doing what well today.
In fact, the project's first phase concentrated on defining and understanding supply chain excellence. The researchers examined several successful supply chains, including Dell's and Wal-Mart's, to find out why they work so well. But their goal was not to use the findings to come up with a prescription for success. "What's best for each of those companies is not necessarily the best for everybody," Lapide points out. "We're trying to understand why it's the best for them."
As for what makes a supply chain excellent, Lapide points to four hallmarks: it is an integral part of a company's strategy; it makes use of a distinctive model to sustain its competitiveness; it executes well against measured objectives; and it focuses on just a few business practices that support the operating model. "You can't do everything well," he says. "Companies with excellent supply chains recognize this and concentrate on the few things they can do well."
In the project's second phase, the focus will shift to creating models for future supply chain operations. Lapide stresses that the 2020 project is not developing a quantitative model predicting how things will change; rather, it will look at the process of adapting to change. Business leaders first have to understand what factors are influencing change, says Lapide. Then they have to decide which of those factors they can exercise control over and focus their efforts there. The goal, he says, is to gain an understanding of how supply chains can react to the changes that do come.
What to watch
The 2020 project has already identified several factors that could have a major impact on business supply chains, for good or ill. Among them: a shift of economic and military strength toward China, India and Russia; technological advances that allow knowledge-based workers to be located anywhere; the imposition of tougher environmental laws around the world; and fuel price volatility.
Few would argue with that last choice, which has already forced companies to re-examine their business plans. "[O]ver the last several decades, most supply chains were predicated on cheap oil," says Lapide. But rising energy costs and the potential for supply disruptions, whether from terrorism, labor actions or something else, may require shifts in strategy. For example, just-in-time (JIT) manufacturing makes sense when energy costs are low and supply is predictable—that is, when the inventory savings offset the added transportation costs. But skyrocketing fuel prices will likely alter that equation. "JIT may not make sense in the future," he says. "The concept is still good, but we still may need just-in-case inventory."
Most of the apparel sold in North America is manufactured in Asia, meaning the finished goods travel long distances to reach end markets, with all the associated greenhouse gas emissions. On top of that, apparel manufacturing itself requires a significant amount of energy, water, and raw materials like cotton. Overall, the production of apparel is responsible for about 2% of the world’s total greenhouse gas emissions, according to a report titled
Taking Stock of Progress Against the Roadmap to Net Zeroby the Apparel Impact Institute. Founded in 2017, the Apparel Impact Institute is an organization dedicated to identifying, funding, and then scaling solutions aimed at reducing the carbon emissions and other environmental impacts of the apparel and textile industries.
The author of this annual study is researcher and consultant Michael Sadowski. He wrote the first report in 2021 as well as the latest edition, which was released earlier this year. Sadowski, who is also executive director of the environmental nonprofit
The Circulate Initiative, recently joined DC Velocity Group Editorial Director David Maloney on an episode of the “Logistics Matters” podcast to discuss the key findings of the research, what companies are doing to reduce emissions, and the progress they’ve made since the first report was issued.
A: While companies in the apparel industry can set their own sustainability targets, we realized there was a need to give them a blueprint for actually reducing emissions. And so, we produced the first report back in 2021, where we laid out the emissions from the sector, based on the best estimates [we could make using] data from various sources. It gives companies and the sector a blueprint for what we collectively need to do to drive toward the ambitious reduction [target] of staying within a 1.5 degrees Celsius pathway. That was the first report, and then we committed to refresh the analysis on an annual basis. The second report was published last year, and the third report came out in May of this year.
Q: What were some of the key findings of your research?
A: We found that about half of the emissions in the sector come from Tier Two, which is essentially textile production. That includes the knitting, weaving, dyeing, and finishing of fabric, which together account for over half of the total emissions. That was a really important finding, and it allows us to focus our attention on the interventions that can drive those emissions down.
Raw material production accounts for another quarter of emissions. That includes cotton farming, extracting gas and oil from the ground to make synthetics, and things like that. So we now have a really keen understanding of the source of our industry’s emissions.
Q: Your report mentions that the apparel industry is responsible for about 2% of global emissions. Is that an accurate statistic?
A: That’s our best estimate of the total emissions [generated by] the apparel sector. Some other reports on the industry have apparel at up to 8% of global emissions. And there is a commonly misquoted number in the media that it’s 10%. From my perspective, I think the best estimate is somewhere under 2%.
We know that globally, humankind needs to reduce emissions by roughly half by 2030 and reach net zero by 2050 to hit international goals. [Reaching that target will require the involvement of] every facet of the global economy and every aspect of the apparel sector—transportation, material production, manufacturing, cotton farming. Through our work and that of others, I think the apparel sector understands what has to happen. We have highlighted examples of how companies are taking action to reduce emissions in the roadmap reports.
Q: What are some of those actions the industry can take to reduce emissions?
A: I think one of the positive developments since we wrote the first report is that we’re seeing companies really focus on the most impactful areas. We see companies diving deep on thermal energy, for example. With respect to Tier Two, we [focus] a lot of attention on things like ocean freight versus air. There’s a rule of thumb I’ve heard that indicates air freight is about 10 times the cost [of ocean] and also produces 10 times more greenhouse gas emissions.
There is money available to invest in sustainability efforts. It’s really exciting to see the funding that’s coming through for AI [artificial intelligence] and to see that individual companies, such as H&M and Lululemon, are investing in real solutions in their supply chains. I think a lot of concrete actions are being taken.
And yet we know that reducing emissions by half on an absolute basis by 2030 is a monumental undertaking. So I don’t want to be overly optimistic, because I think we have a lot of work to do. But I do think we’ve got some amazing progress happening.
Q: You mentioned several companies that are starting to address their emissions. Is that a result of their being more aware of the emissions they generate? Have you seen progress made since the first report came out in 2021?
A: Yes. When we published the first roadmap back in 2021, our statistics showed that only about 12 companies had met the criteria [for setting] science-based targets. In 2024, the number of apparel, textile, and footwear companies that have set targets or have commitments to set targets is close to 500. It’s an enormous increase. I think they see the urgency more than other sectors do.
We have companies that have been working at sustainability for quite a long time. I think the apparel sector has developed a keen understanding of the impacts of climate change. You can see the impacts of flooding, drought, heat, and other things happening in places like Bangladesh and Pakistan and India. If you’re a brand or a manufacturer and you have operations and supply chains in these places, I think you understand what the future will look like if we don’t significantly reduce emissions.
Q: There are different categories of emission levels, depending on the role within the supply chain. Scope 1 are “direct” emissions under the reporting company’s control. For apparel, this might be the production of raw materials or the manufacturing of the finished product. Scope 2 covers “indirect” emissions from purchased energy, such as electricity used in these processes. Scope 3 emissions are harder to track, as they include emissions from supply chain partners both upstream and downstream.
Now companies are finding there are legislative efforts around the world that could soon require them to track and report on all these emissions, including emissions produced by their partners’ supply chains. Does this mean that companies now need to be more aware of not only what greenhouse gas emissions they produce, but also what their partners produce?
A: That’s right. Just to put this into context, if you’re a brand like an Adidas or a Gap, you still have to consider the Scope 3 emissions. In particular, there are the so-called “purchased goods and services,” which refers to all of the embedded emissions in your products, from farming cotton to knitting yarn to making fabric. Those “purchased goods and services” generally account for well above 80% of the total emissions associated with a product. It’s by far the most significant portion of your emissions.
Leading companies have begun measuring and taking action on Scope 3 emissions because of regulatory developments in Europe and, to some extent now, in California. I do think this is just a further tailwind for the work that the industry is doing.
I also think it will definitely ratchet up the quality requirements of Scope 3 data, which is not yet where we’d all like it to be. Companies are working to improve that data, but I think the regulatory push will make the quality side increasingly important.
Q: Overall, do you think the work being done by the Apparel Impact Institute will help reduce greenhouse gas emissions within the industry?
A: When we started this back in 2020, we were at a place where companies were setting targets and knew their intended destination, but what they needed was a blueprint for how to get there. And so, the roadmap [provided] this blueprint and identified six key things that the sector needed to do—from using more sustainable materials to deploying renewable electricity in the supply chain.
Decarbonizing any sector, whether it’s transportation, chemicals, or automotive, requires investment. The Apparel Impact Institute is bringing collective investment, which is so critical. I’m really optimistic about what they’re doing. They have taken a data-driven, evidence-based approach, so they know where the emissions are and they know what the needed interventions are. And they’ve got the industry behind them in doing that.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”
That result showed that driver wages across the industry continue to increase post-pandemic, despite a challenging freight market for motor carriers. The data comes from ATA’s “Driver Compensation Study,” which asked 120 fleets, more than 150,000 employee drivers, and 14,000 independent contractors about their wage and benefit information.
Drilling into specific categories, linehaul less-than-truckload (LTL) drivers earned a median annual amount of $94,525 in 2023, while local LTL drivers earned a median of $80,680. The median annual compensation for drivers at private carriers has risen 12% since 2021, reaching $95,114 in 2023. And leased-on independent contractors for truckload carriers were paid an annual median amount of $186,016 in 2023.
The results also showed how the demographics of the industry are changing, as carriers offered smaller referral and fewer sign-on bonuses for new drivers in 2023 compared to 2021 but more frequently offered tenure bonuses to their current drivers and with a greater median value.
"While our last study, conducted in 2021, illustrated how drivers benefitted from the strongest freight environment in a generation, this latest report shows professional drivers' earnings are still rising—even in a weaker freight economy," ATA Chief Economist Bob Costello said in a release. "By offering greater tenure bonuses to their current driver force, many fleets appear to be shifting their workforce priorities from recruitment to retention."