Posted on 03-30-2017 by Lucia Garza
There’s never a dull moment in the logistics and freight forwarding business: every day brings new and unexpected challenges and opportunities that demand our attention, and we should take any chance we can get to adjust our expectations and plan for the future.
As the first quarter of 2017 draws to a close, it’s time to do just that. During the rest of 2017 and beyond, we expect the following supply chain and logistics trends to shape our approach; thanks to Steve Banker at Forbes for providing another take on many of these issues.
1. Ongoing Overcapacity
Overcapacity has plagued the global maritime shipping industry for years. It’s partially responsible for the multi-year collapse in dry bulk shipping prices, which in turn contributed to numerous carrier bankruptcies. This Hellenic Shipping News chart shows an inverse correlation between dry bulk shipping prices and carrier failures.
According to Sri Laxmana, capacity is actually likely to increase in 2017. Laxmana expects delivery of about 1 million twenty-foot equivalent units (TEUs), against a supply reduction of about 600,000 TEUs. This development is likely to keep shipping rates low relative to historical averages.
This development is likely to keep shipping rates low relative to historical averages.
2. Additional Carrier Consolidation
Laxmana also expects ongoing carrier consolidation, partly in response to capacity challenges. He identified three major shipping alliances – 2M + Hyundai, The ALLIANCE, and Ocean Alliance – that will collectively control the vast majority of Trans-Pacific and Asia-Europe trade. Such consolidation could provide some support for prices, but it’s too early to tell whether it will be enough to counteract overcapacity.
3. Accelerating Warehouse Automation
Back on dry land, it’s an exciting time to be in the warehouse automation business. Clint Reiser wrote about an ARC Advisory Group survey highlighting warehouse operators’ technological wish lists: popular items included: autonomous mobile robots and conveyor systems with automated sorting capabilities. As these and other innovations work their way into the supply chain, shippers stand to reap the rewards:
- lower costs
- fewer errors, and
- greater efficiency overall
This trend will likely take years to fully play out, but we might remember 2017 as the year it really gained steam.
4. Predictive Analytics Improves Logistics Safety and Efficiency
Banker expects the first stirrings of a next-generation, data-driven supply chain in 2017. He calls it the “supply chain control tower,” and it’s driven by a multitude of connected sensors (Internet of Things) that collect data to be fed into intelligent predictive models. He specifically mentions ClearMetal, a software company whose work helps ocean carriers remain profitable, and other companies that “[use] Big Data and advanced analytics to predict which truck drivers will have an accident.”