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Transportation, logistics sector are ‘ripe for disruption’- PwC report
THE traditional logistics models of the transportation and logistics sector are “ripe for disruption”, according to a new report from PricewaterhouseCoopers.
The consulting firm identified five trends that could lead to such disruption in its 2016 Commercial Transportation Trends report.
Factors include the fracturing of supply chains, which increasingly feature a mix of offshore, nearshore, and onshore locations, and the expanding number of nodes in shipper distribution networks aimed at reducing delivery time to customers from days to hours, reported American Shipper.
The rising recognition among shippers that transportation and logistics can yield a considerable competitive advantage for them.
Shipping is no longer a tactical decision influenced solely by cost, but rather a strategic consideration based on such factors as customer expectations, sales volume and product mix.
The expanded presence of high-margin shippers selling valuable and sensitive products, such as specialty pharmaceuticals and fragile electronic equipment, that require exceptional handling, security, reliability and tracking procedures.
The frequency and magnitude of disruptive events: higher peaks in demand, natural disasters, labour strikes, and geopolitical uncertainties that are causing shippers to re-evaluate their procurement tactics and the efficacy of their logistics networks.
And the double-digit growth of e-commerce and the inroads that it is making in the business-to-business arena, where shipment complexity is higher and transparency and tracking requirements are greater.
“Shippers particularly seek carriers that can accommodate spikes in volume and maintain a high level of performance during disruptions,” it said. “And they are looking for business-enhancing opportunities, such as 3D printing and digitally enabled solutions that provide visibility into multiple vendors, greater price transparency, and a consumer-like user experience.”
The report analyses several types of companies PwC’s Strategy & Group views as potentially disruptive to the traditional way of doing business in the industry as “established” operators may not be capable of meeting the expectations of an evolving market.
The result is a group of new competitors “slicing off bits and pieces of the logistics sector, offering targeted services that some shippers perceive as providing more value and innovation than the more traditional, wider but less specialised, menus of the larger companies.”
Among the disruptors are what PwC calls “local network builders,” which buck the conventional model of centralised warehousing and distribution for a more localised structure; and “crowd sourcing fillers” like Cargomatic and Roadie that connect shippers directly with carriers via online and mobile apps.
“Startup simplifiers”, which target small, up-and-coming cargo owners and provide them with a more tailored, specialised service offering; “big data manipulators” companies like Echo Global Logistics and Keychain Logistics that leverage the power of data analytics to cut carrying costs and provide shippers with greater flexibility; and “hybrid carriers” like XPO Logistics.
Further, companies should be prepared to deploy internal data analytics as well as advanced customer-facing digital tools, and enhance their network agility and support capacity management using local or third-party networks to buck the traditional hub-and-spoke methodology.
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