Logistics in 2016: The Year for Online Supply Chain Optimization

June 1, 2016 by FreightCenter Team
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We’re barely halfway through the year and there’s already a couple hot topics circulating around the logistics industry.

For starters, there’s the uberization of freight. An idea that stemmed from the founding father of disruptive technology: Uber. Before we delve deeper into what a mobile app has to do with freight, I first want to introduce one more trending topic. That’s ecommerce giant, Amazon.

Amazon is slowly joining the logistics party by creating the most powerful in-house supply chain management out there. Amazon just signed a contract with Atlas Air Worldwide which will allow the company to try its hand in air freight delivery. It’s also requiring seller-fulfilled Prime shipments to be shipped using only Amazon Logistics, further solidifying internal control over its supply chain. And, we can’t forget to mention the effect Amazon Prime has had on the logistics industry.

There’s few ecommerce companies that have the resources it takes to manage their supply chain using in-house logistics as efficiently as Amazon. You would need a whole fleet of planes, trains and automobiles to get even close. So, how do online retailers optimize their supply chains when they don’t have the resources to do it in house? They turn to third-party logistics companies (3PLs).

This year, 3PLs are paying closer attention to the needs of online retailers. Which is a smart move considering the fact that ecommerce sales made up 7.5% of retail sales in 2015 and are continually rising.

3PLs offer many benefits: access to more carrier resources, and therefore better negotiated rates due to purchasing power; experts that understand the ebb and flow of the industry; logistics technology or transportation management software (TMS), and much more. But, most logistics providers, especially those who have been around for decades, are used to providing services for more “traditional” shippers like manufacturers and brick-and-mortar stores. That’s why many 3PLs are improving and expanding their services.

For example, this year FreightCenter made several changes to its business strategy that would improve an area where they were previously lacking: repeatability. Up until recently, the business of outsourcing logistics has traditionally been transactional in nature. FreightCenter realized, like many other 3PLs, that transactional services aren’t enough to optimize the supply chains of ecommerce retailers.

That’s why ideas, such as the uberization of freight and the Amazon Prime effect on logistics are such hot topics.

The uberization of freight would connect supply and demand in trucking with just a few taps on a mobile device. This concept is motivating logistics and trucking companies to explore mobile service options.

FreightCenter, for example, is in the midst of testing a new mobile-friendly website and quote system that will allow customers to access FreightCenter.com and all of its features on their phones and tablets. This move brings the company one-step closer to creating a mobile app that could do the same.

An Uber-like app might not be the answer for FreightCenter or other similar companies, though. Logistics companies and larger carriers develop established relationships that a mobile app can’t replace. This means the key audience for mobile trucking apps are more likely to be smaller carriers that lack the means to find freight and smaller businesses who don’t need long-term relationships to meet their shipping needs.

Online retailers usually spend somewhere between 6-10% of their operating costs on logistics, and logistics has a direct impact on a customer’s experience. This means it’s important for online retailers to optimize their supply chains. With the direction logistics is headed this year, they’ll have more options than ever to make that happen.

Do you think the uberization of freight is the answer to optimizing the supply chain? If not, what other types of disruptive technology options do you think would benefit the industry?

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