Victoria Kickham started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for DC Velocity.
Russia’s invasion of Ukraine is striking a blow to already battered global supply chains, and North American logistics professionals say the ripple effects will be felt here at home in the weeks to come.
Locally, businesses will feel the most immediate impact at the fuel pump, where already high prices are rising. Oil prices surged this week, raising concerns about higher transportation costs industry-wide. Transportation prices have been climbing since June of 2020, according to the Logistics Manager’s Index (LMI)—which tracks logistics industry growth across transportation, warehousing, and inventory—and have hit record highs over the past year. LMI researchers said this week they expect “broad and very strong upward pressure on transportation prices across the supply chain,” especially in light of geopolitical events.
Shippers and carriers can expect to pay more in the near term, according to Ryan Closser, director of program management and network collaboration at supply chain visibility platform FourKites.“It will cost more to go from A to B than it did last week, and more next week than this week,” Closser said Wednesday. “The cost of oil going up is going to be top of mind to all of us who are heavily involved in the North American transportation market. That will have a direct effect on the business.”
Delays and disruptions across Europe will spur longer term effects on global supply chains. FourKites tracked a decrease in loads delivered to Russia beginning last week, at the start of the invasion, with overall Russian imports down 28% week-over-week as of Monday and further double-digit declines mid-week. Similarly, logistics software vendor Project44 tracked a 35% decline in vessel traffic to and from Russian ports since sanctions against the country began in late February.
The sanctions, restricted airspace, and dangerous conditions in the region are forcing shippers and carriers to find alternate routes, leading to delays and backups, especially on freight routes from Asia to Europe. Rail lines through Russia are closed, causing Asian exporters to find new routes to European customers. Much of that will eventually convert to ocean shipping, Closser said, but it is having a more immediate effect on air freight, where he said prices are already rising.
“[Air freight] is the only quick path right now from Asia to Europe, and we’ve heard that air freight is going up significantly,” he said. “[We don’t have] any metrics on ocean rates increasing, but word on the street is that it is coming.”
Auburn University’s Glenn Richey said the shutdown of Russian air space is complicating both passenger and freight transportation because airlines must reroute volumes of traffic that utilize the space. Finnair said this week it may furlough hundreds of pilots and cabin crew due to cancelled flights to Russia and some destinations in Asia. Prior to the pandemic, more than half of Finnair’s revenue came from passenger and cargo traffic between Asia and Europe, with strong cargo demand continuing to support many of its Asian routes over the past two years, the airline said.
“So much of that air transportation goes over the top of the planet. [This is] causing both passenger and freight transportation to be more complex,” said Richey, who is the Harbert Eminent Scholar and chair of the department of supply chain management at Auburn. “We’re coming out of the coronavirus [pandemic] and things are starting to look better, and now we have another disaster.”
The immediate effects on ocean freight are being felt in Europe, where trade and container movements have ceased at the Ukrainian ports of Odessa and Mariupol, on the Black Sea. Movement has been restricted elsewhere in the area, causing Germany-based logistics technology company Container xChange to warn of container buildups at ports there as well as along the Baltic Sea.
“Russian and Belarussian ports in the Baltic and Black Sea will likely see a build-up of boxes if carriers refuse to make port calls due to the security situation and sanctions,” Container xChange co-founder and CEO Christian Roeloffs said in a statement Wednesday. “Overall, the situation for container availability is likely to worsen, but this will vary by port and region. Central and Northern Europe is already congested, and any further trigger to the cargo flow will only worsen the state of container pileups.”
Roeloffs also said he expects trade with Russia to worsen in the coming months and even years, a sentiment echoed by U.S.-based logistics professionals as well. Oleg Yanchyk, chief information officer for freight procurement software provider Sleek Technologies, said long-term concerns include the readjustment of supply chains when the crisis comes to an end.
“Things will be different when all this is over,” he said, adding that regardless of what happens next “this is a huge change. You cannot run supply chains as smoothly for a long while once it's over. Things will have to be readjusted.”
FourKites’ Closser agreed.
“Whether this is a two-week affair, a six-month engagement, we don’t know,” he said. “But the longer this goes on, the wider impact we’ll see across the global supply chain.”
For more on how the conflict is affecting the supply chain, listen to the episode of the Logistics Matters podcast below.
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.”