Pro Voices: What Big Changes Are Coming to Logistics?
What are two big changes expected to take place in logistics throughout the 2020s?
Building Indiana Business reached out to logistics experts from around the state to learn more about what changes they’re expecting the industry to experience over the next decade.
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Amanda Williams, Vice President, General Manager
FedEx Express, Indianapolis
Innovation has been a part of our DNA since FedEx first created the overnight shipping industry 46 years ago. As we approach a new decade, technology and e-commerce will transform the shipping industry and how we serve our customers.
Last year, we announced a 1.5-billion-dollar expansion and modernization of our hub at Indianapolis International Airport. As we also modernize and expand our Memphis World Hub and our air/ground network around the globe, FedEx is uniquely positioned to serve a market that is simply exploding with growth.
Thanks mostly to e-commerce, the U.S. parcel market is expected to more than double in size to over 100 million shipments per day by 2026. We have numerous exciting innovations in our pipeline to meet the challenges of that growth.
One new technology in particular, Blockchain, holds significant potential for enhancing logistics. Using a cloud-based platform of shared data that is transparent, accurate and secure adds a layer of authenticity that will make customer supply chains more reliable and efficient. There is simply more power in validated and verifiable information, which is where blockchain can potentially benefit our industry.
Being on the leading edge of innovation helps us connect people and possibilities around the world and provide new and better solutions for our customers.
Matt VanderLinde, Vice President of Business Development
Atlas Logistics Inc.
First and foremost, the B2C e-commerce market will continue to grow exponentially. With more consumers relying on home delivery, e-commerce will continue to expand as a significant component of the supply chain. Consumers will increasingly demand shorter delivery lead times and enhanced visibility to their orders. As a result, logistics providers strategically positioned with an extensive first and final mile white-glove delivery network will experience opportunity for growth.
Secondly, the logistics and transportation industries will continue to be affected by driver shortages. Overcoming this challenge will require evolution in how LTL and truckload shipments are delivered as capacity decreases due to the lack of drivers in the marketplace. Many transportation providers have already changed how they route their fleets by reengineering their transportation networks to help maximize capacity. Over time, we will also see alternative modes of transportation introduced.
Both of these trends will be critical to logistics providers as they navigate the industry throughout the next decade. No matter the opportunities or challenges, technology and innovation are where providers will gain a competitive edge.
Doug Sunkel, Executive Director, Logistics
Cummins Inc.
Two big changes in Logistics throughout the 2020s:
Increasing consumer preference for direct delivery – An increasing consumer preference for direct delivery has resulted in huge changes in this area in the last decade with the advent of the “Amazon” fulfillment model and other advances in e-commerce. This trend will continue, and the economics of the industry will shift to replacing “store replenishment” with “direct consumer delivery.” This change will result in fewer big box retail establishments, and more local fulfillment centers. This will also result in a shift of labor demographics with increased pressure on wages and hiring in the warehousing industry. Finally, with more flexible and cost-effective options becoming available for “last mile delivery,” a new market for delivery services will replace some traditional retail jobs. This will require logistics professionals to understand how to take advantage of these new service models to effectively operate their networks.
“Smart” roadway infrastructure – Direct delivery preferences will put increasing pressure on already strained transportation infrastructure. Federal, state and municipal governments may implement “smart” vehicle integration technology to effectively manage traffic volumes. Autonomous and semi-autonomous delivery vehicles will be a more prevalent alternative to drones, especially as “smart” roadway technology advances with infrastructure upgrades. These developments will also present many opportunities for vehicle manufacturers and suppliers like Cummins and logistics companies to provide new and innovative solutions leveraging this infrastructure.
Mark Sell, President & CEO
MD Logistics
As the logistics industry continues to evolve, there are a myriad of changes that I think we will be witnessing over the course of the next decade.
In recent years, finding available people to fill the ever-growing needs of the warehouse has been a challenge. To offset these vacancies, logistics professionals will continue to turn to technology to compensate, further sparking the continued advancement of automation, making every move in the warehouse intentional while maximizing productivity. I think we will also see a heightened use of IoT predictability to better forecast the demands of the consumer and increase communication along all points of the supply chain.
We have also witnessed the evolution of the customer experience. The end consumer continues to expect faster delivery options and a more connected, communicative experience with their delivery. These evolving expectations will continue to drive the adoption of automated delivery options; driverless vehicles, drones and other automated mechanisms that will change the way we think about physical deliveries. In addition, communication with the consumer will be more enhanced with real-time tracking capabilities throughout the delivery process. Widespread automation throughout the logistics process will aid an overall enhanced customer experience.
Marvin Logan, Vice President of Consulting & Integration
Bastian Solutions
Two of the biggest changes that will impact logistics throughout the 2020s are the growing demand for same-day delivery and a decreased labor pool. For companies to achieve same-day delivery, there must be a continued increase in logistics infrastructure. This is not just for the Amazons and Wal-Marts; from grocery stores to small e-commerce retailers, companies need the right mix of technology and processes to compete.
It is anticipated that millennial spending will account for 25% of total U.S. retail sales in 2020, or $1.4 trillion annually according to Accenture. It is logical to assume that millennials, and their desire for choice and convenience, will drive requirements on fulfillment and logistics creating a new “on-demand e-commerce” model throughout the 2020s.
Considering the effects of increased e-commerce and demands for same-day delivery noted above, the logistics industry is growing in size and complexity driving a need for more labor. Simultaneously, U.S. unemployment recently touched its lowest level in 49 years. The combination of these factors is creating an extremely high interest in robotics and automation. Oftentimes, these solutions are the only way companies can achieve the speed and accuracy demanded by customers.
The decade of the 2020s will see continual increase in automation, with “lights out” distribution centers being the goal.
Mark Howell, President and CEO
Conexus Indiana
In the coming decade, expect to see more logistics companies using innovative advanced technologies to improve their operations and efficiency and grow their businesses.
One example is transportation companies in Indiana using platooning technology to make freight travel safer for drivers and other passengers on the road, as well as reduce their huge fuel costs. Platooning, where two or more tractor-trailers are electronically tethered in a convoy on the highway, allowing them to travel in a close formation with the help of sensors and software technology, triggers brakes in the second truck of the platoon as soon as the first truck brakes, and can reduce braking differences and the amount of safe space needed between the trucks. Keeping the trucks so close together also cuts down on drag for the second truck and results in lower fuel costs. More widespread use of this technology is likely to be seen on the roads with increasing regularity.
Data-gathering and connectivity between companies, their customers and the delivery process is also revolutionizing the logistics industry and will continue to in the foreseeable future. New advanced technologies are providing connections at every point in the supply-chain process and disseminating that information to managers and customers. Large-scale analysis of data is being utilized to reduce inconsistencies, produce reports for quick decision-making, and facilitate better product management. This leads to other benefits such as better asset tracking, increased productivity, improved accessibility for all stakeholders, and stronger communication between carriers and shippers.
The next step will be expansion of another innovation that will be possible because of this access to data: prediction. Data will feed into an automated predictive system that will result in prospective and precise planning and scheduling for companies. Prediction at this scale is currently unprecedented in the world of logistics. The cost savings and customer service benefits will make a huge impact on the field.
Bill Haley, Executive Director, Global Planning and Logistics
Cummins, Inc.
Deglobalization and unpredictable trade wars may impact businesses like Cummins that have spent decades shaping themselves to compete in a global economy. Changes to U.S. trade relationships with China and Mexico and other major trading partners could have significant implications for our supply chain. China is a particularly important global market for companies like Cummins, and we are hopeful both sides will focus on a deal that allows both economies to thrive. We support the Administration’s efforts to improve the systemic issues that the U.S. business community encounters when dealing with and in China but believe that the tariffs are the wrong approach and are a tax on American businesses and American workers.
Companies must continue to invest in their workforces to build loyalty and employee retention and to create alignment in changing environments where employees may be physically separated from plants, sites, peers and leaders. At Cummins, we see opportunities to leverage automation, additive manufacturing and other Industry 4.0 technologies to complement the unique skills and talents of workforce as our products dramatically evolve over a shorter development cycle.
Brian Halaschak, Chief Revenue Officer
Lakes & Rivers Logistics, Inc.
Lakes & Rivers Logistics, Inc. is a lake terminal that provides access to a marine dock, rail, and trucking, placing Gary at a key advantage because of its access to major interstates, rail, an inland river system and lake and ocean vessels. Buffington Harbor in Gary is uniquely poised for anticipated growth in the industry, with more than 300 acres available for the development of a fully robust port. Lakes & Rivers currently handles both bulk and break-bulk products.
Technological advances to streamline the currently fragmented delivery system will change the industry in the near future. Soon, systems will be in place to integrate efficiencies in all transportation modes such as trucking, stevedoring and rail while providing warehousing and inventory management system processes.
Efforts to reduce emissions through the use of clean diesel and customer demand for environmentally friendly operations are also expected to rise. Over the last two years alone, customers have begun actively reviewing our environmental initiatives, including our implementation of clean diesel vehicles and equipment through grant awards from the U.S. EPA in partnership with South Shore Clean Cities.
Technology, growth, and a reduced carbon footprint can and should define the next decade in the industry.
Danette Garza, CEO
Jack Gray Transport, Inc.
Jack Gray Transport, Inc. has been a leader in the dumper hauling industry for nearly 70 years. As we look ahead to the next decade, we anticipate creative methods for solving long-term problems with driver recruitment and harmful levels of diesel emissions. Although recently truck driver demographics have been highly weighted by male drivers over the age of 50, we anticipate a strong future emphasis on driver recruitment targeting younger people and women coupled with improved driver incentives.
We foresee the expansion of clean diesel usage as our customers ask about our efforts to combat climate change as well as our safety record. Jack Gray has won awards over the past 2 years for its environmental efforts and its fleet safety programs.
While autonomous vehicles will likely be a part of the future of the industry, it is highly unlikely to be adopted in the 2020’s as mainstream due to the extensive need for infrastructure and nationwide alternative fueling stations.
We anticipate a more socially engaged client base as we move into the 2020’s as well, making job creation for women and sustainability initiatives a positive selling point in the competitive market.
Maricha Ellis, Vice President of Marketing and Sales Operations
Stericycle Environmental Solutions
Sustainability will remain a continuous pursuit for the industry. As Corporate Social Responsibility (CSR) initiatives are becoming more important for any type of business, the logistics space will be expected to examine all aspects of the transportation process and work to further protect the environment, people and public health. This includes taking a look at policies, procedures, operations, community impacts and more.
Along the same lines, the entire life cycle of logistics will move into the forefront as an important tool in measuring performance. Industry professionals are already developing these innovations to minimize environmental impact for generations to come.
Local and federal environmental regulations will also play a bigger role throughout the next decade. Stricter regulations are on the horizon, and businesses that fail to achieve sustainability in their logistics practices could face fines, penalties and brand damage. This all plays a role in the sustainable logistics outlook.
Mike Daigle, CEO & Executive Director
South Bend International Airport
With e-commerce showing no signs of slowing down and the increased demand for same-day deliveries, more communities will see the addition of distribution centers. Distributors will be looking to locate near airports where they can get their cargo from air to road or rail efficiently. Tied to this, I also expect to see increased demand for services provided by reliever airports. A reliever airport, by definition, is built to offer additional capacity when the primary airport has reached capacity. Although South Bend International Airport (SBN) is not a reliever by definition, we do offer solutions for cargo operators. Benefits of using a smaller airport include less congestion which means goods get to the end-user quicker and for a fraction of the cost of operating in major hub cities. SBN is located in a prime position for cargo to reach distribution centers quickly. Over 118 million people can be reached within a one-day drive of SBN.
The use of drones and autonomous vehicles for deliveries direct from distribution centers will become more commonplace as well. I expect to see further FAA regulations regarding the use of drones especially around airports as this delivery method increases. Capital investment and facility planning will be significant in order to accommodate emerging technologies, regulatory measures, and operations.
These two opportunities are economic drivers for the communities they serve. As such, our team has identified opportunities that are under development.
Gary Cardenas
President, TOC Logistics
CEO, ProTrans
The next decade will be an exciting time of evolution for the logistics and supply chain management industries. One undeniable change that we will see in the 2020s is an even larger, or complete, reliance on digital technology. While the industry has largely shifted from paper to digital records, we will continue to see companies using technology for advanced initiatives, like real-time supply chain decision making, shipment tracking, predictive analysis, and optimization. The shift to digital means a more streamlined, responsive, and effective process. Blockchain, which has been a major buzzword in the industry as of late, will also be a gamechanger in the digital space.
Aside from the increase in digital solutions, there are several other amazing innovations that will rock the industry moving forward. Technology like driverless trucks, drones to transport cargo, and modern warehouses equipped with robot technology will help to cut down on labor costs and drive up efficiencies. Technology has been advancing at an amazing rate, and these innovations won’t stop anytime soon. It’s cliché to say, but in the next decade, we very well may have hovering cargo or another similarly mind-blowing innovation.
The 2020s will undoubtedly be a renaissance of sorts for our industry.
Jamal Anabtawi, PE, Owner / Director of Business Development
A&Z Engineering, LLC
In my 30+ years’ experience working with municipalities, developers and agencies across Indiana, I have seen logistics and related transportation demands evolve significantly along with their impact on our state’s long-term economic health. With the current strain on the overall transportation network across Indiana, there is an increased need for improving the efficiency, safety and capacity of our transportation system.
One trend we see is how improving our internal technology and systems impacts the efficiency of our clients’ projects. By utilizing the latest software and technologies to collect data, share information and communicate, we improve our internal design processes and ultimately help our clients by providing a more efficient and higher quality end-product. Our role as a consultant has changed in such that we now also need to educate and guide some of our smaller community clients on available technologies to bring their systems up to speed and improve efficiency.
While these infrastructure projects range in size and scope from local streets to major highways, they all involve making sure the connectivity is in place to bring in businesses and improve the quality of life for those who live and work in those communities. These improved efficiencies ultimately help communities of all sizes as they focus on enhancing their transportation network and interconnections to plan for the future and stay competitive.
