Shifting Economic and Industry Fundamentals
Economic upturn is initiating a new environment in the transportation industry. With lower taxes and a boom in manufacturing and consumer confidence, demand is steadily increasing. This coincides with a driver shortage in the trucking industry, putting more pressure on the transportation sector and resulting in higher transportation costs overall. According to Bloomberg, truck cargo costs are forecast to rise over 12 percent this year, the highest surge in over a decade. As a result, the need for reliable, efficient and innovative transportation logistics is greater than ever.
A Changing Delivery Model
Thanks to the so-called “Amazon effect,” the model for order fulfillment and delivery is transforming. Amazon’s next-day delivery has led customers to expect rapid order turnaround, requiring transportation companies to take a different approach when it comes to delivery and distribution. This means warehouses located closer to end-customers and an increasingly intricate network of hand-offs to get packages to their destinations as quickly as possible. Kansas City’s position as a central US hub is valuable in this situation — located within a two-day drive of more than 85 percent of the country’s population, the city, and the transportation companies based here, are primed to meet rising freight needs. Not to mention the fact that the city welcomed a massive Amazon.com fulfillment center in April 2018.
Perhaps the most notable shift in transportation practices is the infusion of new technology. Fueled by high demand and driver shortages, many companies are working on developments in robotics and automation. Although full automation looks to be still a ways out, the advancements are innovating transportation along the way, with technology like platooning, aerial drone delivery and many safety adaptations. “Smart” technology is also making tracks on the scene in innovations such as AI, blockchain and machine learning. This is a whole new arena of transportation technology — the use of computing power for decision-making, planning, optimization and performance improvement — and one that comes with powerful competitive potential for companies and necessity for logistics.
SmartWay Transportation is a third party logistics company located in the Kansas City area. To learn more about our shipping services and how to use logistics to maximum benefit, visit our website.