Fueled by falling sensor prices and the emergence of high-speed 5G data networks, the internet of things (IoT) is helping transform manual logistics processes into “smart” supply chain operations.
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
One of the most widely used buzzwords in the logistics sector in 2022 is “digitalization.” The word is a useful umbrella term for the evolution to computer-based processes from manual procedures that relied on pencils and clipboards in the warehouse or printed manifests at the loading dock.
But references to the trend nearly always ignore the tactical steps needed to make digitalization happen. Your DC probably doesn’t have a magic wand that transforms basic paper checklists into cloud-based software platforms. So how are practitioners driving toward the goal of pulling logistics processes into the 21st century?
The answer in many cases is the internet of things (IoT), a network of web-connected sensors that can be attached to anything from crates and cases to forklifts, conveyors, and locomotives. Sure, it’s another industry buzzword, but the IoT has accelerated out of the garage and onto the racetrack in recent years, fueled by the falling price of sensors and the blazing speed of fifth-generation (5G) cellular data networks. A quick look around the supply chain sector reveals many examples of ways in which the IoT is already earning its keep, helping to speed deliveries, save money, and—yes—digitalize logistics.
MAKING THE RIGHT CONNECTIONS
One of the prime use cases where IoT solutions can deliver digitalization is in trucking—a sector in which sensors are fast becoming a critical tool for monitoring far-flung operations. So it’s no surprise that a recent report from the Swedish information technology (IT) specialist Ericsson found that cellular IoT connections continue to grow exponentially in the transport industry, where they’re expected to increase to 292 million in 2030 from 100 million in 2020.
The number of IoT connections will grow as older trucks are retrofitted with sensors and new trucks are equipped with fleet telematics, the report also said. In both cases, the new cellular IoT connectivity will give fleet managers and drivers access to data from an array of onboard sensors. According to Ericsson, the investment could pay off through overall cost savings of more than 6% for a mid-sized trucking company, with one-third coming from driver-assistance capabilities like accident and traffic avoidance, and two-thirds from truck and trailer monitoring.
DUDE, WHERE’S MY TRAILER?
One such asset-monitoring solution is the IoT system developed by telecommunications vendor Globalstar in partnership with TGI Connect, a Canadian company that provides asset-management solutions to the transportation industry. Under the arrangement, TGI uses Globalstar’s tracking devices and satellite network to map the locations of clients’ freight trailers.
Globalstar says the savings add up quickly, since millions of trucks crisscross North America every day. And every time a load is late or lost, carriers must walk through their yards looking for available trailers, call customers to see if they are detaining trailers, or lease extra trailers to ensure on-time delivery. To help clients avoid those extra costs, the partners keep tabs on the global positioning system (GPS) coordinates of each trailer through a solar-powered sensor attached to each unit.
Railroads are also using sensors to digitally track and monitor freight movements, according to Nexxiot, a Swiss provider of IoT hardware, software, and analytics. Rail networks span vast distances, with 140,000 miles of track across the U.S. freight network alone, and that sheer distance has traditionally made it difficult for rail operators to monitor their locomotives, cars, rails, and freight. But attaching connected IoT sensors to those assets now allows companies to monitor their operations in real time and identify opportunities for trimming costs as well as improving sustainability and safety, a Nexxiot white paper says.
For instance, companies can now detect safety problems like a handbrake activation issue, a train traveling past safe speed limits, or an abnormal shock as a result of an impact. With the information provided by those near real-time alerts, railroads can respond on a timely basis, Nexxiot says.
Logistics service providers are also applying IoT technologies to warehouse operations. One example is a joint effort by DHL Supply Chain and lighting systems provider Signify to create a DC with “smart” lighting. For the pilot, which was conducted at a 338,000-square-foot DHL Supply Chain facility in Lockbourne, Ohio, just south of Columbus, the companies installed internet-connected motion sensors in an effort to improve illumination, boost safety and productivity, reduce CO2 emissions and energy consumption, and cut operating costs.
And while switching off the lights when you leave a room sounds like advice you might get from a scolding parent, the strategy paid off due to DHL’s large scale. The pilot project has slashed energy costs by 49% at the test site. And with DHL’s big footprint—the company operates 500 sites in North America, covering over 140 million square feet of real estate under management—greater savings could come in the future.
The Pozyx RTLS sensors track bins, orders, pallets, returnable packaging, and vehicles both in the warehouse and on the road, providing a detailed overview of pallet and goods locations and their movements. Among other benefits, the RTLS system simplifies inventory management and can lead to better space utilization, reduced costs, and increased safety in the warehouse, Pozyx says. The company adds that the system will also allow users to evaluate and analyze material handling routes to enhance process workflows, resolve bottlenecks, and optimize the warehouse footprint.
Yet another way that IoT technologies are promoting the development of digitalized supply chains is by supplying the data that feeds automated operations, according to Patrick Hoffmann, senior vice president at the procurement and supply chain consulting firm Proxima.
“Most organizations lack transparency due to limited data and, more often, the skillset to interpret the data to define their organizational strategy,” Hoffmann said in a statement. “As organizations become even more lean, digital solutions such as artificial intelligence, machine learning, and robotic process automation (RPA) become more relevant for assuming transactional tasks. Repeatable processes can be automated to a degree to allow the human resources to focus on more strategic tasks that require specialized knowledge and the ability to interpret results.”
The proliferation of cheap, powerful sensors at every link of the supply chain is changing the way shippers and logistics service providers manage their daily business. Buoyed by a flood of instant data from IoT networks, managers of truck fleets, railroads, and DCs have suddenly gained the ability to see deeper into their own operations than ever before. And that digitalized approach is driving improvements at every step of the way.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
With the economy slowing but still growing, and inflation down as the Federal Reserve prepares to lower interest rates, the United States appears to have dodged a recession, according to the National Retail Federation (NRF).
“The U.S. economy is clearly not in a recession nor is it likely to head into a recession in the home stretch of 2024,” NRF Chief Economist Jack Kleinhenz said in a release. “Instead, it appears that the economy is on the cusp of nailing a long-awaited soft landing with a simultaneous cooling of growth and inflation.”
Despite an “eventful August” with initial reports of rising unemployment and a slowdown in manufacturing, more recent data has “calmed fears of a deteriorating U.S. economy,” Kleinhenz said. “Concerns are now focused on the direction of the labor market and the possibility of a job market slowdown, but a recession is far less likely.”
That analysis is based on data in the NRF’s Monthly Economic Review, which said annualized gross domestic product growth for the second quarter has been revised upward to 3% from the original report of 2.8%. And consumer spending, the largest component of GDP, was revised up to 2.9% growth for the quarter from 2.3%.
Compared to its recent high point of 9.1% in July of 2022, inflation is nearly back to normal. Year-over-year growth in the Personal Consumption Expenditures Price Index – the Fed’s preferred measure of inflation – was at 2.5% in July, unchanged from June and only half a percentage point above the Fed’s target of 2%.
The labor market “is not terribly weak” but “is showing signs of tottering,” Kleinhenz said. Only 114,000 jobs were added in July, lower than expected, and the unemployment rate rose to 4.3% from 4.1% in June. Despite the increase, the unemployment rate is still within the normal range, Kleinhenz said.
“Now the guessing game begins on the magnitude and frequency of rate cuts and how far the federal funds rate will be reduced,” Kleinhenz said. “While lowering interest rates would be good news, it takes time for rate reductions to work their way through the various credit channels and the economy as a whole. Consequently, a reduction is not expected to provide an immediate uplift to the economy but would stabilize current conditions.”
Going forward, Kleinhenz said lower rates should benefit households under pressure from loans used to meet daily needs. Lower rates will also make it more affordable to borrow through mortgages, home improvement loans, car loans, and credit cards, encouraging spending and increasing demand for goods and services. Small businesses would also benefit, since lower intertest rates could lower their financing costs on existing loans or allow them to take out new loans to invest in equipment and plants or to hire more workers.
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.”