Supply Chain Council of European Union | Scceu.org
Freight

Five ways digitization and ecommerce changed freight shipping

Digitization
is an ongoing process that’s proving consequential in nearly every industry.
This is certainly true of freight shipping, where digitization, along with
online shopping, global marketplaces and new productivity technologies, have
had a lasting impact.

Logistics,
cargo handling, last-mile fulfillment, customs and compliance and many other
aspects of this business are responding to these and other influences. Here’s
how.

1. Ecommerce yields a massive rise in freight volume

According
to Statista, the global retail ecommerce market – the B2C market – could be
worth more than $6.5 billion by 2023. Additional findings say the
B2B market

is six times this size. The sheer volume of products is a major change and
challenge for the freight shipping industry.

It’s
fair to state that ecommerce has had a direct impact on the amount of freight
being transported.  According to freight industry
research
:

  • Intra-regional truck trips for last-mile delivery are on the rise, even
    as the average length of those trips is falling.
  • Moreover, as retailers have built out their omnichannel sales
    strategies in order to reach more people from more places, the freight industry
    has responded by building new distribution hubs to shorten the value chain even
    further.
  • Some 13% to 30% of purchases made online are returned – a major
    increase compared to brick-and-mortar purchases, which have an 8% return rate.
    Online retail increases reverse logistics demands as well.

It’s
not news that the ability to buy and sell things online creates online
shoppers. What’s more interesting is how the ubiquity of ecommerce has fed into
the other technologies and trends on this list, including the call for better
trust mechanisms, global demand, eco-friendliness and the construction of an Industrial
Internet of Things for freight carriers.

Ecommerce
doesn’t just compound the problem of volume. It also raises the bar for
turnaround times and lowers the bar for price expectations. The freight
industry must answer in kind.

Dale Chrystie, chair of the BiTA Standards Board and business fellow and blockchain strategist at FedEx.
(Photo credit: FreightWaves/Josh Roden)

2. The industry pursues blockchain standards

The
Blockchain in Transport Alliance (BiTA) represents more than 300 members of the
global transportation business community that see blockchain as the foundation
to a new kind of freight industry. As a BiTA
spokesperson explained
, “Over the next five years, we envision the massive adoption of
several digital technologies, including blockchain, that will provide for the
nearly seamless transportation of goods from origin to destination.”

TradeLens
is one blockchain initiative that already has impressive cargo and freight
industry buy-in. Five of the biggest cargo lines, representing 60% of global
maritime cargo capacity
, have signed on already. This type of trading system will lower costs
and offer a much shorter value chain thanks to blockchain’s common distributed
ledger technology.

The
issue isn’t that blockchain will disrupt freight carriers, forwarders and
third-party logistics companies – it already is disrupting them. Smaller
companies need to know what’s on the horizon and which technologies stand the
greatest chance of disrupting their business models and workflows.

(Photo credit: Shutterstock)

3. A global ecommerce marketplace delivers
environmental pressures

One
of the biggest freight carriers, Maersk, has signaled that it intends to go
carbon-neutral by the year 2050 – a pledge made with the knowledge that oceangoing freight represents 90% of global trading, and so
has an outsized environmental and climate change impact.

Transparency
is one of the major pressures of a global, commerce-focused marketplace. When
customers have a choice, they increasingly choose products or services from the
greener of two companies if both offer similar products and services. That goes
for choosing freight services as much as it does any other product. Freight
carriers and other companies play an enormous role in the overall
sustainability of a supply chain, and a global marketplace means they can’t
hide outdated practices anymore.

As
the U.S. Environmental Protection Agency (EPA) notes, companies should use the
technologies at their disposal
, like sensors and enterprise analytics platforms,
to engage in “measuring, benchmarking and assessing freight transportation
activities and strategically making better choices that reduce emission[s].”

One
place to begin is the EPA’s greenhouse gas emissions
calculator
,
which helps companies quantify the kind of environmental impact they have. From
there, making a difference means knowing which technologies may provide a
credible solution, including the Internet of Things.

The third-generation Sprinter now offers Mercedes PRO, an Internet of Things connectivity platform.
(Photo credit: Daimler Benz)

4. The Internet of Things makes freight more
accountable

As
Deloitte notes, companies that deal with cargo and freight transported by rail,
ground, sea or air have a unique opportunity to
take advantage of
“widely distributed networks” to gather information rapidly about
freight processes and react to emerging conditions. The IoT provides data
mobility down to individual assets and items in the freight carrier supply
chain.

For
instance, consider the problem of keeping foods, beverages and medications at
fixed temperatures. Shippers and freight forwarders that use sensors in
climate-controlled vehicles or facilities can tell in an instant if a product
is no longer in compliance. Smart refrigeration systems can even adjust the
temperature automatically.

Sensors
improve the detail in paper trails and chain of custody documents in other ways
too. Fragile products, including delicate parts and carefully calibrated
equipment, often require especially close inspections on arrival. Shippers have
to make the right
packaging decisions
to begin with, but having sensor data available from the journey helps
manage risk and makes any questions about fault easier to answer should the
need arise.

Trucks
and other vehicles are extensions of the industrial IoT in freight too.
Electronic data loggers for trucks help eliminate unnecessary idling, identify
more expedient routes and deliver data in
close to real-time
about vehicle and operator performance. Route optimization software
may even incorporate weather and traffic data to provide new suggestions in
real-time.

(Photo credit: Amazon)

5. Automation saves resources and streamlines
operations

Automation
is one of the most important digital breakthroughs in the cargo and freight
handling industry. Here are just three reasons why:

  1. Distribution and sorting
    centers can make use of connected material handling equipment that monitors its
    own condition and proactively flags maintenance issues, helping to
    eliminate failure patterns
    , optimize parts life cycles and keep talent focused on other
    priorities.
  2. Smart inventory and
    warehouse management systems give carriers tools to automatically identify
    available storage space in their own warehouses and find partners with less-than-truckload
    cargo ready for consolidation, while automated systems store or retrieve
    merchandise without allocating pickers or stowers.
  3. The task of inspecting
    freight on arrival or before departure benefits from modern advancements in
    machine vision. Robotic inspection stations can help reallocate talent to more
    demanding work and bring down defect
    rates
    at
    the same time.

The
shift to just-in-time business processes, not to mention pipe dreams of
“anticipatory shipping,” means the freight industry is under constant pressure
to modernize and streamline all that it does.

The
ecommerce explosion is both an opportunity and a major headache for companies
in this space – and exciting new technologies are helping them weather the
changes.

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