Supply Chain Outlook for 2020
By Len Batcha,
President
Technical Transportation, Inc
Each year brings new opportunities and new challenges, and 2020 is no different. So as we start this new decade, below are some trends we can likely expect to see this year.
1. The U.S. economy remains in the “Goldilocks” zone.
This year kicks in with a healthy economy, and there are some great economic indicators that show that the gross domestic product is going to be somewhere in the 2 to 3% range, which is — as they say — “just right.” However, economies in other parts of the world face more uncertainty, which can reverberate back to the U.S., and we need to keep watch for that.
Part of that uncertainty revolves around tariffs and how they’ll play out this year. Many large businesses, including some top manufacturers and shipping companies, are holding off on large capital expenditures while waiting to see how this is all going to shake out.
Other events that will play a role in the economic outlook include the U.S. presidential election and the emerging coronavirus outbreak in China, which has temporarily halted a lot of manufacturing in that country as of this writing. Those two wildcards have the potential to make big impacts this year.
2. Technology Takes Stage
For the past few years, electronic logging devices (ELDs) were the buzz of the supply chain industry, and as of December, all carriers were required to have them implemented in all of their trucks.
Sadly, these regulations bankrupted some smaller providers in 2019 because many were unable to increase their rates enough to offset the capital equipment costs, in addition to other factors. That said, we believe competitive pricing will come back into play in the transportation industry this year.
Technology-wise, we also believe that the large transportation companies will look to make a bigger investment in electric vehicles to replace their aging fleets, and to reduce their carbon footprints. While technologies like driverless vehicles are still years away from being in the mainstream (if at all), advances in smart car technologies will be changing the landscape over the next decade.
Manufacturers could take these tasks on themselves, however, it will likely be more efficient and cost-effective to engage with a logistics partner that already has the knowledge base, skill sets and processes in place to handle the entire process seamlessly. An ideal partner should also serve as a single-source logistics provider for all the moving parts and take the management burden off of you.
3. Infrastructure Enables Quick Deliveries
In consumer-based logistics, the infrastructure in most urban areas is already set to easily address and ensure delivery on the same day, next day, or second day. This helps many companies compete against the Amazon Effect. However, when you get out to the farther suburban areas, it’s still an issue that many logistics companies will need to deal with this year.
In B2B logistics, where the size and scope of many products (think large equipment and technology) might not rival the speed seen in the consumer sector, I think the supply chain infrastructure is well-enough established and set up to transport and deliver products faster and safer than ever before. From where I sit, however, I think the demand for B2B logistics likely will remain flat in 2020 compared to the last couple of years.
Many changes in the B2B space over the past three to five years have addressed several of the pertinent issues the industry faced. This includes recommendations for the LTLs and changes to the requirements for drivers, upgrades in equipment, and better wages for drivers, which has improved the driver shortage. Because of these initiatives, I think we’re going to see a lower accident rate in 2020.
4. Industry Changes Are Paying Off
In summary, I think the logistics industry today has higher quality equipment and has built in flexibility to address any anomalies to shifts in the supply chain. I also think the logistics arena has been growing for years and there’s a lot more opportunities in it. Companies are embracing analytics to improve operations so we can plan and predict better now.
The whole supply chain has gotten significantly smarter and has become a strategic asset for most industries, and we see that trend continuing strongly in 2020.
Have Questions?
If you have questions about logistics for smart lockers, then contact us today and we can give you more insight.
