Day: 24 November 2022

Anyone who works in the transportation industry knows that supply chains have never exactly been ‘normal’, writes Stephan Sieber (pictured), CEO of Transporeon. However, any semblance of normality or regularity that they did possess flew out of the window in 2022. From the war in Ukraine to petrol and driver shortages and rising inflation, transportation networks have remained under pressure.

This has all seen supply chains enter mainstream consciousness like never before. They have dominated global news cycles, while elevating supply chain leadership to the C-suite and boardroom.

The big question for transportation professionals as we head into the new year is what does 2023 have in store? Although it’s hard to know for sure, here are three trends that are likely to shape the supply chain industry over the next 12 months.

1. From resilience to optionality

The need for supply chain resilience has become a common theme within the industry. Building resilience into their operations, either through new business strategies or new digital capabilities, is now a key priority for all shippers, carriers and logistics service providers.

However, this will go a step further in 2023. The focus will be on creating optionality so that companies have the flexibility and freedom to choose alternative strategies before they are forced to change and recover. One example is multi-shoring. With the geopolitical situation remaining tense and unpredictable and costs rapidly rising in some formerly ‘low cost’ regions such as Asia, it is getting harder for many Western businesses to justify a single sourcing strategy. As such, many of them will gradually look to build capacities and alternatives in Europe or the Americas to secure revenue streams.

Creating this optionality will require deep real-time insights into markets and processes, along with interoperability between business partners and their digital systems. Ultimately, it comes down to adopting technology that has been proven effective. For example, 57% of carriers are now leveraging freight exchange platforms to find additional capacity when their own network reaches exhaustion. By embracing digital platforms and industry networks, supply chain stakeholders will be better placed to shape their own destiny – even when faced with the various external factors that are likely to cause further disruption.

2. Collaboration takes centre stage

For many years, true cross-business collaboration has been a much preached but rarely practiced exercise within transportation. But, as we look to the new year, collaboration will no longer be optional. It’ll be essential to more effectively addressing the challenges facing businesses – a notion that 71% of supply chain stakeholders ‘strongly agree’ with.

There’s certainly room for improvement. Just 17% of supply chains stakeholders rate their level of collaboration with 3PLs and carriers as ‘very high’ – with barriers such as poorly integrated IT systems, misaligned metrics and a lack of data sharing topping the list.

But collaboration is what will enable businesses to bridge the gaps that exist between shippers, carriers, logistics service providers. The gaps that hold many of the industry’s biggest challenges and opportunities. Enhanced collaboration through data sharing, for example, can empower supply chain stakeholders to reduce empty miles, increase cost efficiency and make more intelligent strategic decisions. Similarly, leveraging neutral platforms can connect companies at different stages of the supply chain to help ensure that everyone is pulling in the same direction.

Rather than just focusing on the digital aspect, this will require a hybrid approach that brings technology and humans together. As McKinsey explains, looking at digital through a human lens can help businesses enable greater trust, better communication and enhanced collaboration – representing the largest untapped and overlooked source of value in modern supply chains. That’s why, over the next 12 months, more transportation companies will make collaboration a key priority.

3. Environment vs economics

One positive we can take away from 2022 is that it has been a positive year for supply chain sustainability. Progress has been made on the road to decarbonisation, with 59% of carriers and 54% of shippers now able to calculate transport-related CO2 emissions (up from 45% and 37% respectively in 2021). However, despite the recent attention and investment, the market can’t ignore the current financial situation. With inflation at its highest level in decades and a recession looming, we have to expect that some environmental initiatives unfortunately will slow down.

But financial performance and sustainability shouldn’t be pitted against each other. It doesn’t have to be either/or. That’s why the most forward-looking companies will continue to lean into sustainability initiatives, albeit with a slightly different mindset. The question will become, how can we best combine our environmental aspirations with an economical target?

This is where data comes into play. Only by leveraging data generated across their entire operation – enhanced by the insights gleaned from cross-industry networks – will businesses be able to reduce waste and execute more efficiently. The visionaries in the industry will recognise this and start thinking about their sustainability investments through a long-term lens to ensure that the pilots of today become the programmes of tomorrow.

Ultimately, 2022 has shined a light on the structural inefficiencies that still exist within global supply chains. From fluctuating prices to cost pressures and the realisation that there’s no digital silver bullet, it has clearly been a challenging time. But there are opportunities on the horizon. For 2023, transportation leaders will just have to ensure that they build the right relationships and solutions to help them tackle whatever comes their way.