COMMENTARY: Dealing with the "3 D's" of transportation
Shippers and carriers face an exceptionally challenging time in a trucking market that is being shaped by three
significant forces: a rise in demand, a shortage of drivers, and increasing decrees from government.
Let's face it. There's been a lot of discussion about the future of transportation. Carriers are in the midst of the
long-predicted driver shortage, and capacity is increasingly constrained. Shippers are pressing for lower rates while experiencing
higher turndown ratios, higher costs, and reduced services. It's a potentially dismal state of affairs. One that is often
difficult to explain to your colleagues in procurement or to senior management.
Results of
the "23rd Annual Study on Logistics and Transportation" that we conduct each year for Logistics Management
magazine suggest shippers can point to three D's when discussing the forces impacting transportation: demand, drivers, and decrees
from the government.
Demand.The demand for transportation has been increasing. At the "State of the Union-Transportation Industry Executive Panel"
discussion held at the Council of Supply Chain Management Professionals (CSCMP) Annual Global Conference, carriers expressed
cautious optimism that demand for transportation services will continue to grow, pointing to the U.S. Bureau of Economic Analysis'
estimate of 4.6 percent growth in gross domestic product (GDP) in the second quarter of the year. While more conservative
estimates suggest only 2-percent to 3-percent growth in GDP, it is seems reasonable to conclude the demand for transportation
will continue to rise.
Drivers.How long have we been talking about the driver shortage? (Here is a hint, it was before iTunes, gas cost $1.30
a gallon, and phones were getting smaller—not bigger.) It turns out, experts were not "crying wolf." The shortage is here,
and it is here to stay. The forces driving the driver shortage are a near "perfect storm." The pool of available drivers is
shrinking rapidly, while demand for their services is increasing. According to a recent American Trucking Associations (ATA)
study, 37 percent of carriers point to pending retirements as the biggest reason for the shortage, followed closely by industry
growth (36 percent).
What will it take to fix the shortage? Obviously, the answer is complex. However, Craig Harper from JB Hunt, speaking at the
CSCMP Annual Conference, provided an especially insightful response: "What would it take to get your child or nephew to become a
driver?"
Decrees from the government. Strong headwinds. Is that a polite enough way to describe the current legislative climate
in Washington and its impact on the transportation industry? It has been generations since we have experienced such an intense
regulatory environment. Hours of service rules are in flux. CSA is rolling out. All trucks were originally mandated to have
electronic on-board recorders by 2016; now it's been moved to 2017.
As daunting as these current regulations are, the more concerning fact may be the federal government's predilection for more
regulation. This is in sharp contrast to the late 1970s and early 1980s, when the shift was toward deregulation of the industry.
In fact, some have suggested the transportation industry is in the midst of a new era of re-regulation.
A DIFFERENT APPROACH
Add up the 3 D's, and shippers get higher costs! The cumulative effect of increases in demand, reduction in driver availability,
and regulatory changes resulting in productivity losses (such as from hours of service regulations) and increased equipment costs
(such as from converting to electronic on-board recorders) is estimated to be a 17-percent increase in transportation costs.
This is certainly a daunting challenge given today's increasingly demanding and cost-sensitive market. However, with great
challenge comes great opportunity. In fact, the incentives for carriers and shippers to work together have rarely been greater.
Shippers who embrace collaboration and seek strategic long-term relationships with carriers (rather than a one-year contract) will
be rewarded with improved service and availability. As shipper scorecards become as common as carrier scorecards, shippers who
treat a carrier's drivers (and administrative staff) professionally can expect to be given higher priority for available capacity
while those that don't may find themselves searching for another carrier.
By working together, shippers and carriers can face the 3 D's together and change the industry for the better.
Editor's Note: Karl Manrodt is a professor in the Department of Marketing and Logistics at Georgia Southern University,
located in Statesboro, Ga. He is also the Director of the Southern Center for Logistics and Intermodal Transportation.
Christopher Boone is an assistant professor of logistics in the Department of Marketing and Logistics at Georgia Southern
University.
Progress in generative AI (GenAI) is poised to impact business procurement processes through advancements in three areas—agentic reasoning, multimodality, and AI agents—according to Gartner Inc.
Those functions will redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs). And 72% of procurement leaders are already prioritizing the integration of GenAI into their strategies, thus highlighting the recognition of its potential to drive significant improvements in efficiency and effectiveness, Gartner found in a survey conducted in July, 2024, with 258 global respondents.
Gartner defined the new functions as follows:
Agentic reasoning in GenAI allows for advanced decision-making processes that mimic human-like cognition. This capability will enable procurement functions to leverage GenAI to analyze complex scenarios and make informed decisions with greater accuracy and speed.
Multimodality refers to the ability of GenAI to process and integrate multiple forms of data, such as text, images, and audio. This will make GenAI more intuitively consumable to users and enhance procurement's ability to gather and analyze diverse information sources, leading to more comprehensive insights and better-informed strategies.
AI agents are autonomous systems that can perform tasks and make decisions on behalf of human operators. In procurement, these agents will automate procurement tasks and activities, freeing up human resources to focus on strategic initiatives, complex problem-solving and edge cases.
As CPOs look to maximize the value of GenAI in procurement, the study recommended three starting points: double down on data governance, develop and incorporate privacy standards into contracts, and increase procurement thresholds.
“These advancements will usher procurement into an era where the distance between ideas, insights, and actions will shorten rapidly,” Ryan Polk, senior director analyst in Gartner’s Supply Chain practice, said in a release. "Procurement leaders who build their foundation now through a focus on data quality, privacy and risk management have the potential to reap new levels of productivity and strategic value from the technology."
Businesses are cautiously optimistic as peak holiday shipping season draws near, with many anticipating year-over-year sales increases as they continue to battle challenging supply chain conditions.
That’s according to the DHL 2024 Peak Season Shipping Survey, released today by express shipping service provider DHL Express U.S. The company surveyed small and medium-sized enterprises (SMEs) to gauge their holiday business outlook compared to last year and found that a mix of optimism and “strategic caution” prevail ahead of this year’s peak.
Nearly half (48%) of the SMEs surveyed said they expect higher holiday sales compared to 2023, while 44% said they expect sales to remain on par with last year, and just 8% said they foresee a decline. Respondents said the main challenges to hitting those goals are supply chain problems (35%), inflation and fluctuating consumer demand (34%), staffing (16%), and inventory challenges (14%).
But respondents said they have strategies in place to tackle those issues. Many said they began preparing for holiday season earlier this year—with 45% saying they started planning in Q2 or earlier, up from 39% last year. Other strategies include expanding into international markets (35%) and leveraging holiday discounts (32%).
Sixty percent of respondents said they will prioritize personalized customer service as a way to enhance customer interactions and loyalty this year. Still others said they will invest in enhanced web and mobile experiences (23%) and eco-friendly practices (13%) to draw customers this holiday season.
That challenge is one of the reasons that fewer shoppers overall are satisfied with their shopping experiences lately, Lincolnshire, Illinois-based Zebra said in its “17th Annual Global Shopper Study.”th Annual Global Shopper Study.” While 85% of shoppers last year were satisfied with both the in-store and online experiences, only 81% in 2024 are satisfied with the in-store experience and just 79% with online shopping.
In response, most retailers (78%) say they are investing in technology tools that can help both frontline workers and those watching operations from behind the scenes to minimize theft and loss, Zebra said.
Just 38% of retailers currently use AI-based prescriptive analytics for loss prevention, but a much larger 50% say they plan to use it in the next 1-3 years. That was followed by self-checkout cameras and sensors (45%), computer vision (46%), and RFID tags and readers (42%) that are planned for use within the next three years, specifically for loss prevention.
Those strategies could help improve the brick and mortar shopping experience, since 78% of shoppers say it’s annoying when products are locked up or secured within cases. Adding to that frustration is that it’s hard to find an associate while shopping in stores these days, according to 70% of consumers. In response, some just walk out; one in five shoppers has left a store without getting what they needed because a retail associate wasn’t available to help, an increase over the past two years.
The survey also identified additional frustrations faced by retailers and associates:
challenges with offering easy options for click-and-collect or returns, despite high shopper demand for them
the struggle to confirm current inventory and pricing
lingering labor shortages and increasing loss incidents, even as shoppers return to stores
“Many retailers are laying the groundwork to build a modern store experience,” Matt Guiste, Global Retail Technology Strategist, Zebra Technologies, said in a release. “They are investing in mobile and intelligent automation technologies to help inform operational decisions and enable associates to do the things that keep shoppers happy.”
The survey was administered online by Azure Knowledge Corporation and included 4,200 adult shoppers (age 18+), decision-makers, and associates, who replied to questions about the topics of shopper experience, device and technology usage, and delivery and fulfillment in store and online.
Supply chains are poised for accelerated adoption of mobile robots and drones as those technologies mature and companies focus on implementing artificial intelligence (AI) and automation across their logistics operations.
That’s according to data from Gartner’s Hype Cycle for Mobile Robots and Drones, released this week. The report shows that several mobile robotics technologies will mature over the next two to five years, and also identifies breakthrough and rising technologies set to have an impact further out.
Gartner’s Hype Cycle is a graphical depiction of a common pattern that arises with each new technology or innovation through five phases of maturity and adoption. Chief supply chain officers can use the research to find robotic solutions that meet their needs, according to Gartner.
Gartner, Inc.
The mobile robotic technologies set to mature over the next two to five years are: collaborative in-aisle picking robots, light-cargo delivery robots, autonomous mobile robots (AMRs) for transport, mobile robotic goods-to-person systems, and robotic cube storage systems.
“As organizations look to further improve logistic operations, support automation and augment humans in various jobs, supply chain leaders have turned to mobile robots to support their strategy,” Dwight Klappich, VP analyst and Gartner fellow with the Gartner Supply Chain practice, said in a statement announcing the findings. “Mobile robots are continuing to evolve, becoming more powerful and practical, thus paving the way for continued technology innovation.”
Technologies that are on the rise include autonomous data collection and inspection technologies, which are expected to deliver benefits over the next five to 10 years. These include solutions like indoor-flying drones, which utilize AI-enabled vision or RFID to help with time-consuming inventory management, inspection, and surveillance tasks. The technology can also alleviate safety concerns that arise in warehouses, such as workers counting inventory in hard-to-reach places.
“Automating labor-intensive tasks can provide notable benefits,” Klappich said. “With AI capabilities increasingly embedded in mobile robots and drones, the potential to function unaided and adapt to environments will make it possible to support a growing number of use cases.”
Humanoid robots—which resemble the human body in shape—are among the technologies in the breakthrough stage, meaning that they are expected to have a transformational effect on supply chains, but their mainstream adoption could take 10 years or more.
“For supply chains with high-volume and predictable processes, humanoid robots have the potential to enhance or supplement the supply chain workforce,” Klappich also said. “However, while the pace of innovation is encouraging, the industry is years away from general-purpose humanoid robots being used in more complex retail and industrial environments.”
An eight-year veteran of the Georgia company, Hakala will begin his new role on January 1, when the current CEO, Tero Peltomäki, will retire after a long and noteworthy career, continuing as a member of the board of directors, Cimcorp said.
According to Hakala, automation is an inevitable course in Cimcorp’s core sectors, and the company’s end-to-end capabilities will be crucial for clients’ success. In the past, both the tire and grocery retail industries have automated individual machines and parts of their operations. In recent years, automation has spread throughout the facilities, as companies want to be able to see their entire operation with one look, utilize analytics, optimize processes, and lead with data.
“Cimcorp has always grown by starting small in the new business segments. We’ve created one solution first, and as we’ve gained more knowledge of our clients’ challenges, we have been able to expand,” Hakala said in a release. “In every phase, we aim to bring our experience to the table and even challenge the client’s initial perspective. We are interested in what our client does and how it could be done better and more efficiently.”