The volatility in the transportation market may leave shippers feeling more than a little seasick. A recent industry report offers suggestions for how to make it through these tumultuous times.
Susan Lacefield has been working for supply chain publications since 1999. Before joining DC VELOCITY, she was an associate editor for Supply Chain Management Review and wrote for Logistics Management magazine. She holds a master's degree in English.
The transportation market has been a volatile and stormy one these past few years, with shippers trying to weather a confluence of issues including rising rates, shrinking capacity, driver shortages, increasing government regulation, and greater demand for smaller, more frequent shipments.
Indeed, a recent report by researchers from Auburn University compares managing the transportation function to "living along coastal waters in perpetual hurricane season." The report, titled Logistics 2030: Navigating a Disruptive Decade, Year 1—Freight Transportation, presents the findings of research on what companies are doing to ride out the storm, according to Gail Rutkowski, executive director of the National Shippers Strategic Transportation Council (NASSTRAC), which was one of the main sponsors.
The report, which is part of a multiyear study on key aspects of logistics and supply chain management, is based on survey responses from 420 industry professionals as well as focus-group discussions and in-depth one-on-one interviews. (See sidebar for more on the study.) Based on these discussions, the researchers concluded that for many companies, navigating the storm will involve establishing a clear transportation strategy that incorporates outsourcing. Companies will also need to create a formal, structured plan for recruiting and developing transportation leaders and make thoughtful investments in emerging technologies, they added.
SILVER LINING
If there has been a silver lining to all these storm clouds, it's this: Companies are becoming increasingly aware of the strategic importance of transportation. Three-fourths of the survey respondents say transportation is a priority for their organization, and 89 percent expect that it will be a company priority in 2030. Similarly, although 40 percent of respondents currently believe that their C-level executives do not understand the transportation function, that number is expected to drop to 16 percent by 2030, according to the survey findings.
"Double-digit rate increases, risks of freight not moving due to capacity shortages, and increasing customer expectations for fast, consistent transportation service combined to create a transportation crisis that C-level executives could no longer ignore," says report author Brian Gibson, professor at Auburn University's Raymond J. Harbert College of Business. "When your corporate strategies are threatened by an essential function like transportation, you are compelled to learn more about it and pay more attention to it going forward. These C-level executives are becoming well-attuned to my mantra that you can develop, build, and market a great product, but if you can't get it to the customer, then your money and efforts have been wasted."
While transportation is becoming increasingly important, it is also becoming increasingly complex. The growing demand for smaller, more frequent shipments and for greater visibility of delivery status requires sophisticated tools and capabilities. It's perhaps not surprising, then, that respondents expect to outsource more of their transportation responsibilities in the decade ahead. Almost 70 percent projected that their use of outsourced transportation services would increase by 2030. (See Exhibit 1.)
As for which tasks they'll hand off, the report indicated that technology, operations, and regulatory compliance would be the most widely outsourced transportation activities. (See Exhibit 2.) "We're not doing anything directly like we used to with spreadsheets and analysis, we're handing all that over to 3PLs (third-party logistics service providers)," said one focus-group participant.
As their outsourcing activity ramps up, however, companies will need to grow their own capabilities with regard to vetting, selecting, and managing service providers. The report also suggested there will be some changes in the way they manage their 3PLs. While review meetings, key performance indicator (KPI) dashboards, and service scorecards will continue to be important, the report indicates that the use of onsite representatives—where service provider representatives work directly in the customer operations or customer representatives work directly at the service provider's operations—will increase by 50 percent.
BUILD YOUR BENCH
Regardless of how they structure their outside partnerships, it's clear that companies will require in-house transportation expertise in the coming decade. However, filling those jobs will continue to be difficult as competition for top talent intensifies. Gibson believes there are currently not enough transportation professionals available who could step into the shoes of today's leaders if they were to retire or change jobs. "There's a great deal of technical transportation knowledge and savvy that will be difficult to replace," he says.
To complicate matters, most survey respondents believe it takes more than just technical skills and experience to be an effective transportation leader. It also requires strong skills in problem solving, communication, and analysis, they say. (See Exhibit 3.) However, 40 percent of survey participants said this combination of analytical skills, leadership capabilities, and transportation expertise is either "rarely available" or "not available" in the marketplace today.
This means that companies will have to devote significant time and resources to training and development. No longer can they rely on on-the-job training; instead, they must establish formal, structured leadership training programs, according to the report. But nearly all of the survey respondents agree that their current training programs are lacking, with 94 percent saying they will have to revise their development programs to better attract and retain talent. Indeed, fewer than 30 percent of companies currently have a formal structured training program, although there are signs others are starting to fall in line. More than 55 percent of the respondents say they will likely have a formal transportation management talent-development program in place by 2030.
EXCEL WON'T DO
For companies looking to stormproof their operations, developing a championship-caliber leadership team won't be enough, however. They also have to give their people the right tools. "The more complex the freight market and customer requirements become over the next decade, the more companies will need strong technology to manage transportation planning and operations," Gibson says. "Legal pads, maps, and Excel spreadsheets just won't do in the current and future transportation environment."
For years, the "go-to" application for transportation managers has been the transportation management system (TMS), with its suite of planning, execution, and control applications. Seventy percent of survey respondents use TMS for carrier selection, cost analysis, performance measurement, and visibility, while a smaller number use the software for labor planning, event management, requirements forecasting, and analytics. In spite of the widespread use, the software does not receive rave reviews, according to the report. The majority of respondents rated their TMS tools as only moderately or minimally effective for such tasks as cost analysis. Those shortcomings notwithstanding, survey respondents say they intend to expand their use of all TMS capabilities.
At the same time, they're keeping an eye on emerging technologies that promise to drive operational gains. According to the survey, 87 percent of respondents think next-gen technologies will fundamentally change transportation operations, although the timetables will vary. For example, respondents believe that advanced analytics and the Internet of Things (IoT) have a high potential to upend transportation operations in the next three years, and that blockchain and artificial intelligence (AI) have significant "disruption potential" over the next five years. (See Exhibit 4.) On the other end of the spectrum, "Logistics 2030" respondents are not convinced that driverless trucks are coming in the near future, Gibson says. They predict it will be 10 years or more before the market sees significant implementations.
"That's quite a departure from the hype that we've been hearing in the popular media over the last three to five years," Gibson says.
While respondents were excited about the potential of emerging technology, their optimism was tempered by realism—and an awareness of obstacles they face. For instance, 61 percent said they did not have adequate funding to support a major technology initiative, and 82 percent believe there's a significant risk that heavily hyped technology will not achieve the promised benefits.
FIVE STEPS TO GET AHEAD
Transforming transportation management to meet the demands of a new world order will not be easy, but the report has five common-sense suggestions to help companies get there. They are as follows:
1. Establish coherent, data-driven plans. Managing transportation via intuition and a day-to-day firefighting approach will no longer cut it.
2. Strengthen key relationships. The balance of power currently lies in the hands of the carriers. To get reasonable rates and guaranteed capacity, shippers will have to don their sales hats and sell themselves to potential carriers and third-party logistics service providers.
3. Give transportation a seat at the "adult" table. In a world where speed is a priority, it's imperative that C-level executives acknowledge the key role played by transportation and include it in corporate strategic planning efforts.
4. Adopt 21st-century technology. Companies can no longer base key decisions on spreadsheets and instinct; instead, they need sophisticated analytics capabilities and tools that can provide visibility and insight into what's happening in the supply chain right now.
5. Show transportation professionals the money (and respect). To attract and retain people with the right skills, companies must commit to recruiting, developing, and properly compensating top transportation talent.
The way forward may be tough going, but if anyone knows how to ride out a storm, it's transportation and distribution professionals. As corporate leadership wakes up to the critical nature of transportation, the function will likely command the resources and attention it needs to address these challenges.
"One happy takeaway [from the study] is that companies are finally allowing the transportation functions a seat at the table and are including them in their supply chain strategy," Rutkowski says. "Too often in the past, transportation was left out or brought in too late to be an active contributor. The recent 'perfect storm' or transportation disruption was one of the catalysts for this change."
About the study ...
Logistics 2030: Navigating a Disruptive Decade is a multiyear study conducted by the Center for Supply Chain Innovation at Auburn University's Harbert College of Business, the National Shippers Strategic Transportation Council (NASSTRAC), the Council of Supply Chain Management Professionals (CSCMP), CSCMP's Supply Chain Quarterly, and DC Velocity, and sponsored by the transportation spend management company TranzAct Technologies Inc. The goal of the study is to "assess the strategies, requirements, and tools that will shape supply chains and drive success over the next decade." In 2018, the first year of the study, the researchers looked at freight transportation. Next year's study will address warehousing and distribution. The report can be downloaded from DC Velocity's website, or purchased in hard-copy form for $25 at NASSTRAC's website.
Economic activity in the logistics industry expanded in January, growing at its fastest clip in more than two years, according to the latest Logistics Managers’ Index (LMI) report, released this week.
The LMI jumped nearly five points from December to a reading of 62, reflecting continued steady growth in the U.S. economy along with faster-than-expected inventory growth across the sector as retailers, wholesalers, and manufacturers attempted to manage the uncertainty of tariffs and a changing regulatory environment. The January reading represented the fastest rate of expansion since June 2022, the LMI researchers said.
An LMI reading above 50 indicates growth across warehousing and transportation markets, and a reading below 50 indicates contraction. The LMI has remained in the mid- to high 50s range for most of the past year, indicating moderate, consistent growth in logistics markets.
Inventory levels rose 8.5 points from December, driven by downstream retailers stocking up ahead of the Trump administration’s potential tariffs on imports from Mexico, Canada, and China. Those increases led to higher costs throughout the industry: inventory costs, warehousing prices, and transportation prices all expanded to readings above 70, indicating strong growth. This occurred alongside slowing growth in warehousing and transportation capacity, suggesting that prices are up due to demand rather than other factors, such as inflation, according to the LMI researchers.
The LMI is a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
As commodities go, furniture presents its share of manufacturing and distribution challenges. For one thing, it's bulky. Second, its main components—wood and cloth—are easily damaged in transit. Third, much of it is manufactured overseas, making for some very long supply chains with all the associated risks. And finally, completed pieces can sit on the showroom floor for weeks or months, tying up inventory dollars and valuable retail space.
In other words, the furniture market is ripe for disruption. And John "Jay" Rogers wants to be the catalyst. In 2022, he cofounded a company that takes a whole new approach to furniture manufacturing—one that leverages the power of 3D printing and robotics. Rogers serves as CEO of that company, Haddy, which essentially aims to transform how furniture—and all elements of the "built environment"—are designed, manufactured, distributed, and, ultimately, recycled.
Rogers graduated from Princeton University and went to work for a medical device startup in China before moving to a hedge fund company, where he became a Chartered Financial Analyst (CFA). After that, he joined the U.S. Marine Corps, serving eight years in the infantry. Following two combat tours, he earned an MBA from the Harvard Business School and became a consultant for McKinsey & Co.
During this time, he founded Local Motors, a next-generation vehicle manufacturer that launched the world's first 3D-printed car, the Strati, in 2014. In 2021, he brought the technology to the furniture industry to launch Haddy. The father of four boys, Rogers is also a director of the RBR Foundation, a philanthropic organization focused on education and health care.
Rogers spoke recently with DC Velocity Group Editorial Director David Maloney on an episode of the "Logistics Matters" podcast.
Q: Could you tell us about Haddy and how this unique company came to be?
A: Absolutely. We have believed in the future of distributed digital manufacturing for a long time. The world has gone from being heavily globalized to one where lengthy supply chains are a liability—thanks to factors like the growing risk of terrorist attacks and the threat of tariffs. At the same time, there are more capabilities to produce things locally. Haddy is an outgrowth of those general trends.
Adoption of the technologies used in 3D printing has been decidedly uneven, although we do hear about applications like tissue bioprinting and food printing as well as the printing of trays for dental aligners. At Haddy, we saw an opportunity to take advantage of large-scale structural printing to approach the furniture and furnishings industry. The technology and software that make this possible are already here.
Q: Furniture is a very mature market. Why did you see this as a market that was ripe for disruption?
A:The furniture market has actually been disrupted many times in the last 200 years. The manufacturing of furniture for U.S. consumption originally took place in England. It then moved to Boston and from there to New Amsterdam, the Midwest, and North Carolina. Eventually, it went to Taiwan, then China, and now Vietnam, Indonesia, and Thailand. And each of those moves brought some type of disruption.
Other disruptions have been based on design. You can look at things like the advent of glue-laminated wood with Herman Miller, MillerKnoll, and the Eames [furniture design and manufacturing] movement. And you can look at changes in the way manufacturing is powered—the move from manual operations to machine-driven operations powered by steam and electricity. So the furniture industry has been continuously disrupted, sometimes by labor markets and sometimes by machines and methods.
What's happening now is that we're seeing changes in the way that labor is applied in furniture manufacturing. Furniture has traditionally been put together by human hands. But today, we have an opportunity to reassign those hands to processes that take place around the edges of furniture production. The hands are now directing robotics through programming and design; they're not actually making the furniture.
And so, we see this mature market as being one that's been continuously disrupted during the last 200 years. And this disruption now has a lot to do with changing the way that labor interacts with the making of furniture.
Q: How do your 3D printers actually create the furniture?
A:All 3D printing is not the same. The 3D printers we use are so-called "hybrid" systems. When we say hybrid, what we mean is that they're not just printers—they are holders, printers, polishers, and cutters, and they also do milling and things like that. We measure things and then print things, which is the additive portion. Then we can do subtractive and polishing work—re-measuring, moving, and printing parts again. And so, these hybrid systems are the actual makers of the furniture.
Q: What types of products are you making?
A: We've started with hardline or case goods, as they're sometimes known, for both residential and commercial use—cabinets, wall bookshelves, freestanding bookshelves, tables, rigid chairs, planters, and the like. Basically, we've been concentrating on products that don't have upholstery.
It's not that upholstery isn't necessary in furniture, as it is used in many pieces. But right now, we have found that digital furniture manufacturing becomes analog again when you have to factor in the sewing process. And so, to move quickly and fully leverage the advantages of digital manufacturing, we're sticking to the hardline groups, except for a couple of pieces that we have debuted that have 3D-printed cushions, which are super cool.
Q: Of course, 3D printers create objects in layers. What types of materials are you running through your 3D printers to create this furniture?
A: We use recycled materials, primarily polymer composites—a bio-compostable polymer or a synthetic polymer. We look for either recycled or bio-compostable [materials], which we then reinforce with fibers and fillers, and that's what makes them composites. To create the bio-compostables, we marry them with bio-fibers, such as hemp or bamboo. For synthetic materials, we marry them with things like glass or carbon fibers.
Q: Does producing goods via 3D printing allow you to customize products easily?
A: Absolutely. The real problem in the furniture and furnishings industries is that when you tool up to make something with a jig, a fixture, or a mold, you tend to be less creative because you now feel you have to make and sell a lot of that item to justify the investment.
One of the great promises of 3D printing is that it doesn't have a mold and doesn't require tooling. It exists in the digital realm before it becomes physical, and so customization is part and parcel of the process.
I would also add that people aren't necessarily looking for one-off furniture. Just because we can customize doesn't mean we're telling customers that once we've delivered a product, we break the digital mold, so to speak. We still feel that people like styles and trends created by designers, but the customization really allows enterprise clients—like businesses, retailers, and architects—to think more freely.
Customization is most useful in allowing people to "iterate" quickly. Our designers can do something digitally first without having to build a tool, which frees them to be more creative. Plus, because our material is fully recyclable, if we print something for the first time and find it doesn't work, we can just recycle it. So there's really no penalty for a failed first printing—in fact, those failures bring their own rewards in the form of lessons we can apply in future digital and physical iterations.
Q: You currently produce your furniture in an automated microfactory in Florida, with plans to set up several more. Could you talk a little about what your microfactory looks like and how you distribute the finished goods?
A: Our microfactory is a 30,000-square-foot box that mainly contains the robots that make our furniture along with shipping docks. But we don't intend for our microfactories to be storage warehouses and trans-shipment facilities like the kind you'd typically see in the furniture industry—all of the trappings of a global supply chain. Instead, a microfactory is meant to be a site where you print the product, put it on a dock, and then ship it out. So a microfactory is essentially an enabler of regional manufacturing and distribution.
Q: Do you manufacture your products on a print-to-order basis as opposed to a print-to-stock model?
A: No. We may someday get to the point where we receive an order digitally, print it, and then send it out on a truck the next day. But right now, we aren't set up to do a mini-delivery to one customer out of a microfactory.
We are an enterprise company that partners with architects, designers, builders, and retailers, who then distribute our furnishings to their customers. We are not trying to go direct-to-consumer at this stage. It's not the way a microfactory is set up to distribute goods.
Q: You've mentioned your company's use of recycled materials. Could you talk a little bit about other ways you're looking to reduce waste and help support a circular economy?
A: Yes. Sustainability and a circular economy are really something that you have to plan for. In our case, our plans call for moving toward a distributed digital manufacturing model, where we establish microfactories in various regions around the world to serve customers within a 10-hour driving radius of the factory. That is a pretty large area, so we could cover the United States with just four or five microfactories.
That also means that we can credibly build our recycling network as part of our microfactory setup. As I mentioned, we use recycled polymer stock in our production, so we're keeping that material out of a landfill. And then we tell our enterprise customers that while the furniture they're buying is extremely durable, when they're ready to run a special and offer customers a credit for turning in their used furniture, we'll buy back the material. Buying back that material actually reduces our costs because it's already been composited and created and recaptured. So our microfactory network is well designed for circularity in concert with our enterprise customers.
Generative AI (GenAI) is being deployed by 72% of supply chain organizations, but most are experiencing just middling results for productivity and ROI, according to a survey by Gartner, Inc.
That’s because productivity gains from the use of GenAI for individual, desk-based workers are not translating to greater team-level productivity. Additionally, the deployment of GenAI tools is increasing anxiety among many employees, providing a dampening effect on their productivity, Gartner found.
To solve those problems, chief supply chain officers (CSCOs) deploying GenAI need to shift from a sole focus on efficiency to a strategy that incorporates full organizational productivity. This strategy must better incorporate frontline workers, assuage growing employee anxieties from the use of GenAI tools, and focus on use-cases that promote creativity and innovation, rather than only on saving time.
"Early GenAI deployments within supply chain reveal a productivity paradox," Sam Berndt, Senior Director in Gartner’s Supply Chain practice, said in the report. "While its use has enhanced individual productivity for desk-based roles, these gains are not cascading through the rest of the function and are actually making the overall working environment worse for many employees. CSCOs need to retool their deployment strategies to address these negative outcomes.”
As part of the research, Gartner surveyed 265 global respondents in August 2024 to assess the impact of GenAI in supply chain organizations. In addition to the survey, Gartner conducted 75 qualitative interviews with supply chain leaders to gain deeper insights into the deployment and impact of GenAI on productivity, ROI, and employee experience, focusing on both desk-based and frontline workers.
Gartner’s data showed an increase in productivity from GenAI for desk-based workers, with GenAI tools saving 4.11 hours of time weekly for these employees. The time saved also correlated to increased output and higher quality work. However, these gains decreased when assessing team-level productivity. The amount of time saved declined to 1.5 hours per team member weekly, and there was no correlation to either improved output or higher quality of work.
Additional negative organizational impacts of GenAI deployments include:
Frontline workers have failed to make similar productivity gains as their desk-based counterparts, despite recording a similar amount of time savings from the use of GenAI tools.
Employees report higher levels of anxiety as they are exposed to a growing number of GenAI tools at work, with the average supply chain employee now utilizing 3.6 GenAI tools on average.
Higher anxiety among employees correlates to lower levels of overall productivity.
“In their pursuit of efficiency and time savings, CSCOs may be inadvertently creating a productivity ‘doom loop,’ whereby they continuously pilot new GenAI tools, increasing employee anxiety, which leads to lower levels of productivity,” said Berndt. “Rather than introducing even more GenAI tools into the work environment, CSCOs need to reexamine their overall strategy.”
According to Gartner, three ways to better boost organizational productivity through GenAI are: find creativity-based GenAI use cases to unlock benefits beyond mere time savings; train employees how to make use of the time they are saving from the use GenAI tools; and shift the focus from measuring automation to measuring innovation.
According to Arvato, it made the move in order to better serve the U.S. e-commerce sector, which has experienced high growth rates in recent years and is expected to grow year-on-year by 5% within the next five years.
The two acquisitions follow Arvato’s purchase three months ago of ATC Computer Transport & Logistics, an Irish firm that specializes in high-security transport and technical services in the data center industry. Following the latest deals, Arvato will have a total U.S. network of 16 warehouses with about seven million square feet of space.
Terms of the deal were not disclosed.
Carbel is a Florida-based 3PL with a strong focus on fashion and retail. It offers custom warehousing, distribution, storage, and transportation services, operating out of six facilities in the U.S., with a footprint of 1.6 million square feet of warehouse space in Florida (2), Pennsylvania (2), California, and New York.
Florida-based United Customs Services offers import and export solutions, specializing in remote location filing across the U.S., customs clearance, and trade compliance. CTPAT-certified since 2007, United Customs Services says it is known for simplifying global trade processes that help streamline operations for clients in international markets.
“With deep expertise in retail and apparel logistics services, Carbel and United Customs Services are the perfect partners to strengthen our ability to provide even more tailored solutions to our clients. Our combined knowledge and our joint commitment to excellence will drive our growth within the US and open new opportunities,” Arvato CEO Frank Schirrmeister said in a release.
And many of them will have a budget to do it, since 51% of supply chain professionals with existing innovation budgets saw an increase earmarked for 2025, suggesting an even greater emphasis on investing in new technologies to meet rising demand, Kenco said in its “2025 Supply Chain Innovation” survey.
One of the biggest targets for innovation spending will artificial intelligence, as supply chain leaders look to use AI to automate time-consuming tasks. The survey showed that 41% are making AI a key part of their innovation strategy, with a third already leveraging it for data visibility, 29% for quality control, and 26% for labor optimization.
Still, lingering concerns around how to effectively and securely implement AI are leading some companies to sidestep the technology altogether. More than a third – 35% – said they’re largely prevented from using AI because of company policy, leaving an opportunity to streamline operations on the table.
“Avoiding AI entirely is no longer an option. Implementing it strategically can give supply chain-focused companies a serious competitive advantage,” Kristi Montgomery, Vice President, Innovation, Research & Development at Kenco, said in a release. “Now’s the time for organizations to explore and experiment with the tech, especially for automating data-heavy operations such as demand planning, shipping, and receiving to optimize your operations and unlock true efficiency.”
Among the survey’s other top findings:
there was essentially three-way tie for which physical automation tools professionals are looking to adopt in the coming year: robotics (43%), sensors and automatic identification (40%), and 3D printing (40%).
professionals tend to select a proven developer for providing supply chain innovation, but many also pick start-ups. Forty-five percent said they work with a mix of new and established developers, compared to 39% who work with established technologies only.
there’s room to grow in partnering with 3PLs for innovation: only 13% said their 3PL identified a need for innovation, and just 8% partnered with a 3PL to bring a technology to life.