Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
The days when the transportation management system (TMS) was the latest killer app are long gone, yet demand has held surprisingly steady. TMS sales grew a respectable 4.4 percent last year, to about $950 million compared to $910 million in 2004, according to an early estimate from ARC Advisory Group. Projections for the remainder of the decade are still rosier. In a study released late last fall, ARC forecast sales would reach $1.2 billion by 2009, which translates to a cumulative annual growth rate of 6.4 percent.
Software makers owe much of their success to today's challenging business climate. The same market forces that have sent supply chain managers running for the Excedrin—rising rates, soaring fuel prices, demands to cut order cycles, pressure to provide better visibility—have presented vendors with an extraordinary marketing opportunity. It's not hard to understand why they're finding a receptive audience for software that analyzes gigabytes of data in seconds and spits out recommendations for the optimum mode, route and carrier, automatically sending an electronic manifest and auditing the freight bills later on. It doesn't hurt that many transportation management systems can generate forecasts for future freight capacity needs—a must for managers trying to cope with a crippling capacity shortage.
TMS sales have also gotten a boost from an unlikely source, Sarbanes Oxley. Adrian Gonzalez, a senior analyst with ARC Advisory Group, sees a direct link between the growing demand for transportation management systems and the scramble to comply with Sarbanes-Oxley's financial reporting requirements. "Chief financial officers are becoming better educated about the ... impact of logistics on financial performance, driven in part by the need to comply with the Sarbanes-Oxley Act," he says. "Many companies, however, do not have a clear ... understanding of their transportation costs. They're often bundled together with other costs and reported at an aggregated level, [making it impossible for companies to allocate] transportation costs to specific products, customers, or business units." But if a company has a TMS in place, he points out, it can call up that information at the tap of a key.
And though the software may seem ubiquitous, it appears that large segments of the potential market remain untapped. Gonzalez says that in the course of his research, he was surprised to learn how many large companies were not using a TMS, though he's persuaded that will soon change. The potential customers aren't limited to the heavyweights, either. As software prices drop, Gonzalez predicts that small and mid-sized companies will take the plunge as well.
Trading up
Those late adopters may be glad they waited. The TMS of tomorrow may well make today's versions look anemic by comparison. The next generation of software is likely to be more powerful. It's likely to be more versatile. And importantly, it's likely to be global.
At least that's what customers are starting to demand. Over the years, their needs have shifted. "They're getting more involved in intermodal, cross docking, and/or pooling to mitigate cost and time pressures," says Gonzalez. "They are saying, 'Here is what we want to do and how we want to change our processes and network.'"
Trouble is, many times they're finding that today's systems don't fill the bill. Gonzalez says he talked to one large manufacturer that had two TMS systems in place, neither of which was powerful enough to do the optimization the company considered essential.
The search for more power and control is leading some companies to consider on-demand solutions, which allow them to lease software as a service rather than purchase it outright. "I know of one ... company with many DCs and shipping sites [that felt it wasn't taking advantage of potential] economies of scale," Gonzalez says. "They faced a number of options—they could outsource or centralize internally." That company eventually chose to go with an on-demand system as a way to centralize the technology. "They will let the TMS vendor serve as a third-party logistics service provider, in a sense," he says. "The TMS vendor is providing a management layer."
Going global
But the development most likely to rock the industry is the explosion of global trade. As offshore sourcing grows, logistics professionals will need tools to help manage international shipping. And they're likely to want a single end-to-end solution, software that manages both domestic and international freight and offers the full gamut of global trade management (GTM) functions.
Gonzalez says he's already noticing that demand. "[W]e are seeing a need for a solution able to take a broader perspective, that can incorporate multiple modes, including ocean, air, and rail," he reports. Furthermore, he says, international businesses want systems with an "expanded footprint." That is, they want systems that include such functions as light inventory or order management and global trade management capabilities, like creating trade documents and screening for restricted parties.
Gonzalez says that most TMS vendors have not yet gone into much depth in developing that sort of functionality. "But they're beginning to get some inquiries about it," he says. "It's on customers' wish lists. The [vendors] are looking into how to provide it." Much of the demand, he adds, is coming from third-party logistics service providers, which are expanding their international service menus to include customs brokerage and freight forwarding.
Like Gonzalez, C. Dwight Klappich, a vice president of research at Gartner Group, believes demand for global trade management systems is certain to rise. In a December research report, Klappich predicted that within a year or two, GTM demand would outpace demand for other supply chain management applications.
Yet Klappich warns that no company has yet developed a holistic global trade management solution. And there's no telling how long the wait will be.
Some question whether it will ever happen at all. Greg Johnsen of GT Nexus says a big debate in the market is whether one company can provide both domestic and international solutions. Tackling the transportation portion alone would be no small feat, he says, given that international contracts, purchasing practices, and fees differ markedly from their domestic counterparts. Then there's the challenge of coordinating shipping with ocean liner schedules and the associated customs and security considerations. Furthermore, the large number of parties involved in most international moves would require visibility and communication capabilities far beyond those needed in domestic systems.
Still, no one's ready to abandon the vision of a single end-to-end system— software that seamlessly manages the entire global transaction. That's not to say customers will wait patiently, however. Klappich predicts that the more inventive companies will devise interim solutions, taking an array of specialized software and assembling their own global trade management systems piecemeal.
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Two European companies are among the most recent firms to put autonomous last-mile delivery to the test with a project in Bern, Switzerland, that debuted this month.
Swiss transportation and logistics company Planzer has teamed up with fellow Swiss firm Loxo, which develops autonomous driving software solutions, for a two-year pilot project in which a Loxo-equipped, Planzer parcel delivery van will handle last-mile logistics in Bern’s city center.
The project coincides with Swiss regulations on autonomous driving that are expected to take effect next spring.
Referred to as “Planzer–Dynamic Micro-Hub w LOXO,” the project aims to address both sustainability issues and traffic congestion in urban areas.
The delivery vehicle, a Volkswagen ID. Buzz battery-electric minivan, will feature Loxo’s Level 4 Digital Driver navigation software, a highly automated solution that allows driverless operation. The van was retrofitted to include space for two swap boxes for parcel storage.
During the two-year pilot phase, Loxo’s Digital Driver will navigate a commercial vehicle several times a day from Planzer’s railway center to various logistics points in Bern's city center. There, the parcels will be reloaded onto small electric vehicles and delivered to end customers by Planzer’s parcel delivery staff.
Following the completion of the pilot phase, Planzer and Loxo will build on the program for rollout in other Swiss cities, the companies said.
The partners said the project addresses the increasing requirements of urban supply chains and aims to ensure the “scalability of their disruptive solution.” With largely emission-free delivery, it contributes to greater levels of sustainability for the city as a living space, they also said.
“The uniqueness of this project lies in the fact that it will have a direct impact on society,” Planzer’s CEO and Chairman Nils Planzer said in a statement announcing the project. “We didn't just want to integrate automated technology into existing systems, we wanted to develop a completely new concept and a new business model.”
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.