The Evolution of Transportation

Introduction:

Descartes’ Evolution conference, the largest in their history, continues to reflect the ever-expanding functions, technologies, services, and trends in the transportation sector. Attending one of the largest transportation technology conferences allows one to learn, listen, and mingle with an array of professionals who have history and perspective. There is, as well, a newer, younger entrepreneurial presence with a vibe that makes this conference exciting. Talking to leading transportation professionals is also a reality check of what is realistic and worthy to be accomplished.

What’s Driving Transportation Today

Ecommerce is a huge force driving change in the industry today. In fact, Ed Ryan, CEO of Descartes, mentioned that parcel shipment has grown 50% just in the last three years! In addition, cross-border trade continues to increase worldwide. Though we tend to think about our country-specific issues,most of us work in worldwide businesses. Thus, having data and content about world markets, methods for communicating across and managing global business processes with trading partners, knowing and adhering to trade regulations, and creating exceptional customer service are all front and center issues in logistics today. And we have to manage on all fronts. This broadness of concerns has fueled many changes in the transportation industry.

Change has come in several areas including carriers’ corporate structures and services, a proliferation of shipper requirements, the creation of new industry segments, and has catalyzed technology development and implementation. Echoing these changes, Mark Holifield, Executive VP of Supply Chain at the Home Depot, and one of the keynote speakers, said, “When I started in supply chain it was just about moving a box from one loading dock to the next. Today it is about creating a great customer experience.” Transportation, generally the backwater of retail and manufacturing, has become a strategic element in the growing ecommerce and customer service objectives.

Sharing Lessons

There were many diverse panel topics presented by shippers and carriers, such as the day-to-day challenges of increasing driver productivity, the latest implementation of crowdsourcing for home delivery, the impact of changes in regulations, and the competitive environment in home delivery. These sessions highlighted the fact that major improvements are quite possible and within reach, given some focus by the user organization.

Many lessons emerged from these presentations. Here are some quick highlights:

1. Capacity management and driver productivity is essential.
   1. “We are not going to find any more drivers,” one presenter stated, “so this means we need to manage the data.” With the driver shortage only getting worse, companies are turning to tools and better management skills to manage drivers and equipment.
   2. In spite of some new solutions which claim they can eliminate brokers, with the capacity crunch, companies are actually turning more to brokers. As a result, brokers are responding and upping their game with more visibility solutions so they can see capacity — beyond their favored carriers.
   3. Over and over we heard — accept it, drivers will be late. Thus, communication with drivers and customers, and better routing are all required to adapt quickly and keep customers informed.
   4. Companies need very adaptive transportation systems to manage both their own fleets and partners’ services.¹
   5. Though everyone says they have a solution for backhaul, a large percentage of capacity goes unused. Software alone is insufficient and requires more truck and driver tracking, not just using planned ETAs. Interoperable sharing hubs (that use a variety of tracking methods) are required to get masses of truckers into sharable streams of data in order to find capacity — and customers.
   6. Driver/truck tracking is now within reach at the minutiae level² by leveraging some practical technologies.
2. Intermodal trade is still where things break down. Illuminating the blind spots from end to end is still a challenge.
3. Multiple technologies and standards will have to be integrated. It is just not going to happen that the world will migrate to a single set of standards. So the core communication hub today is not just for EDI, but processes, APIs, mobile devices and IoT, as well as for tracking people. All this data needs to be harmonized to create a complete view of a process.³
4. In Omnichannel there is not one-size-fits-all. To wit:
   1. Some retailers learned, as they leaned more and more into ecommerce, that their customers still wanted to come into the store for a final examination of the merchandise. While the website catalogue and home shipping suit some e-shoppers, others care more about availability at a location so they can check things out before making a big purchase.
   2. Pick up in store is preferred for some merchandise and markets. Get to know your customers’ preferences really well, so in your zeal for ecommerce you don’t miss your true customer.
   3. There is great variety among B2B and B2C customers who expect onsite/home delivery, and their orders vary greatly in size, value, etc. Hence, having access to and deploying a variety of fulfillment methods, and delivery vehicles and equipment may be more appropriate — and economical. For example, The Home Depot mentioned that they will be using, not just large trucks, but vans and cars, leveraging partners such as Lyft. They are also investing in other types of fulfillment depots, including expanding fulfillment processes in key stores in a territory.
5. Returns are a critical component of the business and can be very costly and time consuming if not managed well.
   1. For companies who drop ship or carry multiple brands, it is essential to have processes to be able to identify the source of shipment, so personnel at store or returns centers can quickly identify the source.
   2. Better labeling is not just for outbound, i.e., from supply outbound to the market, but should be complete enough to support an efficient return.
   3. Evaluating the complexity of returns should help drive better processes for customer convenience and experience.
   4. Stores still matter! For fulfillment and returns. (For more on returns, go here. )
6. Keep your eyes open and wallet closed on emerging technologies. Drones, Blockchain, etc. are being heavily invested in, so, ultimately, we will see solutions emerge. However, there are huge obstacles ahead and many of us will not see any practical solutions in our professional lives.
7. AI and automation (robotics) are a part of everything. They have been a part of our logistics world for a long time: embedded in our equipment, warehouses, and other optimization software. In fact, we take them for granted. However, there will be more to come as solutions get smarter and as they become more connected and leverage more web data.
8. Driverless will emerge in limited cases. Autonomous vehicles have already been in use in mining, construction, and farming for many years. Auto manufacturers are embedding more hands-free options in standard automobiles, as well as investing heavily in driverless vehicles. There are already some driverless routes that have started in select locations. These will help shake out the kinks and ultimately lead to major deployments.
9. IoT means lots and lots of data. Though users generally have a value-based reason for implementing IoT, they are not prepared for the deluge of data and generally have not thought through the many applications that can leverage it. Of course, for the cloud provider this is a huge “add-on,” as they now have to upload huge data streams, secure them, and then provide real-time data access.

More to the Journey — Challenges and Disappointments

Descartes also hosted an executive track that looked more at the business side of managing change in transportation. Several excellent research surveys were presented on a variety of topics about the state of transportation technology implementation in ecommerce/home delivery practices.

Investments in Transportation Technology

In one survey, done by DC Velocity and Descartes, it was highlighted that the senior executive is often still not focused on logistics and, therefore, some investments necessary to help companies excel are not happening. This is disappointing, since companies, in their surveys, did say transportation was considered strategic (about half the respondents). If you think about this, the strategic view looks at what you gain by more advanced transportation services vs. the cost management view that looks at what will you lose (cost). Companies probably need a little of both in their thinking, but, unfortunately, cost-only driven thinking is missing a key competitive aspect: the growth through added revenue derived from adding services. As well, customer loyalty is enhanced by an improved customer experience.

Part of the challenge is, of course, that even the smartest logistics functional managers tend to speak their own language — not the language of the CEO. Chris Jones, of Descartes, pointed out in this research that companies are struggling to articulate the business value. He noted that some of the successful projects Descartes had been working on with firms like John Lewis, The Home Depot, BASF, Restoration Hardware, Best Buy, Woolworths in Australia, Tesco in Asia, and so many others had deep engagement by the lines of business who took ownership for change and validated it in their own terms (metrics and benefits gained from these projects). These types of companies — large or small — seem to have a continuum of investment, too, as they strategize, implement, evaluate, amend, and begin the cycle again. They do not remain stagnant. And the results are demonstrated by those companies’ success in overcoming some of the biggest challenges facing their industries.

Ecommerce

Ecommerce is having a huge impact on the industry, but within many enterprises leadership is often lacking for the more advanced approaches. However, that is improving as companies hear from customers about what’s wrong — or right — with their fulfillment approaches and they also see their competitors’ strategies paying off. Companies stated they are using a variety of methods which still include the store. It appears that retailers are beginning to rationalize, to some degree, the role of the store in the fulfillment process. This they must do, since, as product moves closer to the consumer, the additional transportation costs are huge margin eaters if not done well. (See the breakdown-of-costs chart in this article.)

Companies, whether manufacturing or retail, still need more rationalization of inventory strategies in the light of demanding fulfillment models, time-definite delivery, same-day, drop ship, and so on.

Conclusion — Fragmentation of the Industry

Let’s face it — the transportation sector is just too big and too diverse to settle on one solution that is going to do everything. Each trade zone has its own standards and processes. Each industry and the big players within it have their own requirements. The modes and data that are part of the assets deployed to complete a journey are diverse, as well as being managed by different firms.

Companies can defend themselves from all this complexity and do themselves a huge favor by at least aligning themselves with a technology firm that has a robust network along with content and global applications, and supports all modes. You may not need them all. Many firms don’t think they do,but somewhere in your supply chain, supply is coming from Timbuktu, Tierra del Fuego, or Katmandu. So, you need to do all you can to make sure all those moves of product, cash, people, and information flow.

And frankly, in the transportation sector, most carriers, LSPs, and shippers are under implemented and are struggling with business integration.Gaps still exist even in the most well-traveled lanes. The burden of information required to manage the logistics and comply with requisite reporting continues to grow each year.

In this current climate, logistics is one of the cornerstones of success. In that, some firms left the parking lot with brilliant strategies a long time ago and, wisely, some are fast followers. Yet some still sit in the yard waiting, while their competitors continue to grow. If we point to a few things that leading companies have in common that made them successful, we know logistics mastery is one of those elements. We all learned long ago that the key to Walmart’s success was their mastery of supply chain. Firms like Amazon learned that too. In spite of their own and others’ success, the die has not been cast — for all. Even the most seasoned companies, who invested in the past, should take note, though, since process and technology innovation continues at rapid pace. So, it is time to move out of the gate before the journey will be too long, and the road blocked or too crowded to succeed.

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¹ Read about fleet or for-hire options: or Unifying Fleet for Hire in Transportation — Return to article text above
² Telematics, mobile, ELD and GPS can harmonize: read here, and read about MacroPoint here.– Return to article text above
³ Read: Business Transformed – B2B Communications Hold the Key for Success in Today’s Economy — Return to article text above

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