Top 10 logistics challenges for 2013 (and beyond)
What's in store for shippers in the coming year? Several trends bear watching—including the resurgence of a 50-year-old method of shipping.
For the past few Januarys, I've attempted to identify the top 10 challenges facing the logistics/supply chain community in the year ahead. My score for 2012 was not too bad, but I have to admit my predictions were pretty safe. This year, I'm going to stretch it a little and see what happens. Herewith, my list of 10 developments that bear watching in 2013:
- The usual. Not to trivialize any of these issues, but I believe it's pretty much a given that we'll continue to struggle with driver shortages and hours of service, fuel costs, carrier pricing, possible capacity shortfalls, infrastructure, and sustainability.
- Treatment of truck drivers. While salaries certainly enter into it, it is becoming increasingly clear that lifestyle factors keep many from pursuing a career as a truck driver. It will be incumbent upon shippers and receivers to help ease the pain by making their facilities more welcoming to drivers. Consider, for example, that many DCs lack adequate facilities for women and pets, which are on the road in growing numbers. Some minor expenditures can yield some major results.
- CSA 2010. Although the driver safety initiative was initially denounced as a huge blow to the industry, I believe CSA 2010 will turn out to be anticlimactic. As carriers and drivers gain experience with the program, the new regulations will prove to be more help than hindrance.
- Air travel. Let's face it. Even in first class, air travel is ugly; and unless Singapore Airlines starts flying domestically, it will continue to be that way. Fares and fees have skyrocketed, while service, seat availability, and comfort continue to deteriorate. With no solution in sight, we can expect to see a renewed push to regulate the industry in 2013.
- Use of boxcars. As rail service continues to improve and truckers' challenges mount, some companies will begin looking back 50 years and start shipping some products in boxcars. While this might not seem like a step in the right direction, improved rights-of-way, better equipment, and faster, more reliable service can make rail a reasonable alternative to trucks.
- Pricing options. As transportation costs continue to rise, more companies will quit trying to be Six Sigma suppliers and begin offering slower, but cheaper, shipping options to customers who don't require premium service. Not everyone needs overnight or even second-day delivery.
- Alternative fuels. Several motor carriers already have had excellent results with natural gas, and there is no reason to expect that these experiments will end anytime soon.
- Outsourcing. Continuing uncertainty in the economy and the supply chain will give a boost to logistics service providers (LSPs). Contracting with an LSP gives shippers the flexibility to modify their distribution networks relatively swiftly in response to changing market and transportation conditions.
- Panama Canal. The expansion of the Panama Canal, scheduled for completion in 2015, will open up new port options for U.S. importers. Although the change won't happen overnight, this could have big effect on where they locate DCs in the future. For example, expect to see an upsurge in interest in a misshapen geographic triangle bordered by Columbus, Memphis, Dallas, and Kansas City that promises to give U.S. companies both the inbound and the outbound flexibility they need.
- Freight bill payment. For 50 years, freight bill audit and payment firms have provided a valuable service to the industry, but the widespread availability of transportation management systems with freight payment modules could take a big bite out of that business. Freight bill payment companies will need to broaden their horizons and look for innovative ways to package the valuable information they can provide.
Some readers of this column may believe that I've "lost it" on this one, but let's regroup in December 2013 and see how we did.
Clifford F. Lynch is principal of C.F. Lynch & Associates, a provider of logistics management advisory services, and author of Logistics Outsourcing – A Management Guide and co-author of The Role of Transportation in the Supply Chain. He can be reached at firstname.lastname@example.org.
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