Logistics Predictions for 2018

whichwarehouse.com tries to keep its finger on the pulse of our industry as a whole. We’ve looked at the key developments in 2017 and we’re going to suggest that the following will be crunch points for many logistics and supply chain 2018 managers:

Shipping

Growth in trade volumes

Containerised trade volume is likely to increase in 2018, but projections vary from around 1.8% to 5.1%. What’s more, agreed on is that port volumes in Europe are likely to decrease by around half a percent while Africa’s port volumes could increase by as much as 25%.

Consolidation

While 2017’s intense consolidation has led to many analysts believing that we’ve seen as much change as the shipping freight industry can bear, some are suggesting that there could still be movement, especially within the Ocean Alliance consolidation. Over-capacity has a knock-on effect with consolidation and as capacity is going to grow in 2018 (via COSCO and OOCL in particular) we may see more blank sailings, especially on Asia to Europe routes, where this mechanism has been increasingly used in recent years to balance demand and capacity.

Threats

Piracy risks have been much reduced in the past 24 months, largely due to more active behaviour on the part of national coastguard services. However, a substantial risk has emerged around the hacking of shipping systems (Maersk in 2017) which can not only cause system-wide shutdowns but also trigger navigation errors which could lead to delays and even a slight risk of shipping loss.

Air Cargo

In contrast to shipping, which is in a state of flux, air freight is relatively stable. While a small increase in passenger volumes is likely to add pressure to airports, much more impact will be felt by the reduction of freight slots and the lack of belly-hold cargo space on charter holiday flights. Secondary airports are becoming more utilised (but not more popular, often due to slow processing speeds and limited customs capacity). More worrying, an increase in air freight costs is likely in 2018 as a result of limited petroleum deliveries from Russia and OPEC countries.

Haulage

Costs

In the USA, they’re predicting a price increase for road haulage of between 2 and 4%. This is partly because of increased administrative costs created by new legislation there, but a crunch on fuel distribution is likely to also impact prices around the world. Some firms are expecting a cost hike of up to 10%!  

Threats

Driver shortages are likely to be the biggest headache for the UK with hauliers becoming an ageing community, many experienced drivers leaving the UK to base themselves elsewhere in Europe as a result of Brexit fears and fewer apprentices coming forward to train in 2018. On the plus side, crowd-hauling is becoming an established fact with UberFreight being piloted in the USA and digital driver networks being beta tested in several countries. These will benefit owner/drivers who can consolidate loads to transport more goods per driver mile but are likely to be an increased threat to haulage companies.

Technology

We can expect a substantial change in 2018. Specifically, security will be a hot issue in warehouse technology, which will determine where high-value cargoes are placed, digital currencies and marketplaces will finally break through into the mainstream, at least at the top end of the market.

Transparency

This is an increasing pressure on supply chains – with home delivery organisations like Able and Cole aggressively marketing their veg boxes with ‘no air miles – we never air freight’ slogans, consumers are starting to ask more questions about where all their goods come from, not just their edibles. Being able to demonstrate supply chain transparency, especially in the value-added sectors, is likely to prove an advantage for logistics managers in 2018.

Bitcoin and blockchain

Don’t panic. The average importer/exporter/logistics manager isn’t going to be required to move into digital in 2018, but these developments are likely to begin to impact supply chain and logistics, especially if you’re trading in South East Asia, where blockchain is becoming the standard way to deal in digital currencies. We’re a long way from blockchain in shipping and freight where nearly half of all invoicing is manually handled, but at each extreme of the logistics chain: raw materials purchase and manufacturing at one end, last mile delivery at the other, digital technologies are increasingly popular.

Internet of Things (IoT)

Perhaps we’re not totally familiar with the IoT in the UK, but it’s spreading. Many customers are fully on board with the IoT – using it to track shipments and alter delivery times, on multiple IoT devices, for example, supply chain managers, especially those using 3PL, the IoT is likely to be a boon. Sensor tracking is becoming standard for hi-tech or designer cargoes prone to hijacking or grey market diversions. Perhaps the most innovative use of tracker technology in the IoT is attaching tracking devices to Kickstarter/Patreon products where an individual has funded a project and is then able to track their ‘reward’ on its journey from raw components to doorstep delivery. More useful in day-to-day logistics planning is the ability to track shipments, including returns, to allow better decision-making about staffing and warehousing.

Delivery: Parcel locker, last mile and white glove

Retailers are facing choices they never expected to be making. A delivery choice is an unexpected side effect of omnichannel marketing and the Internet of Things. What does it mean in practice?

  • Locker pick-ups – like Amazon, many retailers are hanging their hopes on the locker system. So far there’s no substantial locker system that can be accessed by small and specialist retailers, but plans for ‘lockering’ on the ‘Boris bike’ system are in the pipeline. Essentially this means that retailers pay a small price for every locker they use around the UK, and that locker capacity will be partly allocated in advance and partly available to bid on in the short term – interesting but nerve-wracking for supply chain managers
  • In-Store pickup – Argos inside Sainsbury’s has been the biggest in-store pickup success in 2017 and this is likely to have an increasing impact, with partnerships between complementary businesses leading to less demand for last mile delivery
  • White glove delivery – the big white goods and furniture retailers have discovered that their solution is often to farm out their deliveries to 3PL offering white glove service which includes taking away old items, setting up electronic items and putting together flat packs. This is likely to cascade down…perhaps not in 2018, but certainly, before the end of the decade, we could see white glove delivery mechanisms that stack your firewood or peel your freshly delivered organic vegetables and put the peelings in your compost bin for you!

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