It is no surprise that the global pandemic had a devastating impact on the world's supply chain, with more than 75% of businesses saying they had at least one significant negative impact directly caused by the pandemic over the past 18 months. This is just one of the supply chain trends highlighted in a recent article by SupplyChainBrain that points out that most supply chain-related organizations "developed the ability to rapidly adapt business models and supply chain ecosystems to live with a high degree of volatility and disruption. In many cases, driven by necessity, companies used this period to increase overall investment in digital supply chain technologies, and replace legacy platforms to gain end-to-end visibility and bring risks under control."
Planning for industry changes and shipping costs in 2022 remains critical as companies look ahead to the new year. As recovery continues and supply chain directors and logistics managers look to the future, they need to keep some critical points regarding logistics for 2022 front and center.
One of the leading trends management needs to remain mindful of regarding logistics for 2022 and beyond is that the service as a whole will only become more sought after and in demand. Supply chain services are truly integral to day-to-day operations on a national and global scale. The pandemic shows just how much economies rely on these services. In 2022 and the years to come, these supply chain services will only grow to be more invaluable than they are today.
Building on strengths and addressing weaknesses highlighted by the pandemic will go a long way toward improving operations and keeping the supply chain strong for the years ahead. Supply chains are the lifeblood of the world as we know it, and economic growth and stability will rely heavily on a stable and reliable network to be in place.
That need will take on even greater importance as the retail logistics market expands. According to GlobeNewswire, the global retail logistics market will surpass $465 billion by 2030, hitting a CAGR of 12.4% over the same period. In tandem, industry experts project SaaS spending to exceed $171 billion before the end of 2022. That inherently includes TMS, WMS, and IT-aaS platforms.
Adaptability and scalability have long been integral characteristics of the modern supply chain. When discussing supply chain trends for the future, they are just as vital as they ever have been. Current disruptions and upheavals have shown clearly that older models and methods no longer work in the modern digital age of shipping and transportation. Supply chains that can stretch, adapt, scale, and adjust in real-time to address current market trends and statuses are those best prepared to take on 2022.
Networks and shipping companies that remain stuck in the past will continue to struggle and ultimately will be left behind by elastic and adaptable competition. What used to work in the past can no longer keep up, and while it can be difficult at times, change is inevitable. It is essential as the general rate increases and adjustments continue.
The linear supply chains of the past are changing. With the global supply chain expanding at a phenomenal pace, elastic supply chains will be critical to continued network diversification and expansion of services. Such elasticity helps companies identify and respond to supply chain risks.
Many new trends have emerged during the pandemic and this time immediately following reopening. Still, one of the most surprising in many cases is the increased interest in sustainability in shipping. Trends expected to help shape the industry in 2022 and beyond include the green movement. Shippers, carriers, brokers, forwarders, and transporters need to make going green a higher priority, be mindful of green decisions and options, and integrate as sustainable a business model as possible.
Current trends show an increasing interest in green services among consumers—so much so that many will change providers so they can be greener and more sustainable themselves.
This includes continued investment in sustainability goals, including labor welfare, waste reduction, and renewable energy. Naturally, less deadheading and better use of transportation capacity go hand in hand with sustainability. And according to a CSCMP and MIT study cited by Supply & Demand Chain Executive, 59% of companies invested in sustainability through 2020 and 2021.
Clearly, companies that want to appeal to the next generation of shoppers need to keep their eyes on green initiatives and trends, such as improved reverse logistics, to appeal to new customers in 2022.
Logistics for 2022 also points to the growing focus on circular supply chains as vital for the years to come. Traditional supply chains have operated on a linear chain, where trucks load up, drive, drop off goods, and return empty. Circular chains shift the focus to keeping trucks on the road and full. Rather than driving back to Point A empty, trucks proceed to Point C or D or elsewhere to pick up loads and make additional deliveries while working their way back to the original starting point. This model keeps the supply chain active, productive, and profitable while also proving to be more sustainable and manageable. Circular supply chains are easier to maintain, can be much more profitable, help companies be more eco-friendly, allow for easier shipping cost monitoring, and provide an even broader service area and customer base.
Supply chain trends worth keeping an eye on in the coming years include finding and retaining reliable carriers and maintaining active contracts with drivers. Working with brokers and utilizing online load boards and platforms makes it easier to find available and vetted carriers to pull from whenever needed. Additionally, keeping contracts active and competitive can make it easier to take advantage of spikes in the market and better prepare for downtimes as well.
Still, the industry faces a massive shortage of drivers and owner-operator-type carriers. According to the American Trucking Association's Chief Economist Bob Costello, reports Desi Trucking Magazine, the driver shortage could reach nearly 240,000 by the end of 2022. Furthermore, the ability to overcome the deficit depends on continued enrollment in more CDL courses and growth within the industry. While shippers continue to pay above-average rates, the low number of drivers in the industry limits the power of carriers. That's the simple reality of the industry. However, continued investment in the existing driver base, including reducing the stress and hassle of scheduling and managing shipments in transit, can help.
Shippers who can increase carrier and driver retention will have a competitive edge going into the 2022 market, so it is, of course, something worth keeping an eye on regularly. Improving carrier network access and knowing with a certain level of assurance that capacity needs can be met gives shippers a certain level of freedom that cannot otherwise be achieved.
All the predictive planning and data analysis in the world will be of little use to shippers and carriers if they cannot properly apply it to real-world situations and trends. Risk management remains a critical focal point for supply chain managers and logistics directors, especially in these uncertain times of recovery and instability.
As they continue to emerge from the pandemic, many more supply chain professionals can successfully identify disruptions before or as they occur. However, the specifics on which supply chains survive are cloudier. Before the pandemic, only 8% of supply chain professionals reacted when a disruption hit. Now, that number has increased to 13%. There is still room for improvement, and finding the path forward lies in leveraging more forecasting capabilities to derive actionable insights and help companies stay strategic.
Knowing in advance what risks are involved with specific loads, shipments, customers, or cargo types can help managers weigh options and opportunities better. Being able to look ahead with a certain degree of confidence and plan for the short-term and long-term needs of the supply chain network can put providers in a much better place than their competition. Leveraging predictive analytics can help in planning, forecasting, and risk management enabling you to remain competitive for future growth and success.
Proper forecasting and planning of shipping routes and delivery lanes is another crucial aspect of the modern supply chain that management must keep in check in the year ahead. Among the top trends within logistics for 2022, improving market insights, predictive planning, budgeting metrics, and customer marketing can improve everything from inventory management to delivery services.
Yes, it is still a forecasting tool. However, the ability to plan and account for changes within inventory is an absolute necessity.
With more precise insights and better end-to-end visibility, supply chain directors can better monitor trends and adjust operations to account for major and minor disruptions and changes seen within the modern supply chain networks and local economies.
Shippers with more forecasting data around inventory can better respond to sudden changes within the market, especially for goods originating overseas.
For example, the Drewry World Container Index is at $9,292.39 per TEU as of December 16, 2021. While experts have projected a decline on the horizon, it's still significantly higher than December 2020, 169% higher in fact. That is complicated by the ongoing uncertainty of the COVID-19 omicron variant. As the variant spreads and more information regarding its susceptibility to the vaccine comes to light, the existing strain on ocean transportation capacity could skyrocket again. In turn, shippers will see tighter capacity and more trouble managing their inventories flowing from the APAC region.
When predicting trends and forecasting processes, doing so far in advance helps prepare the network to adapt to whatever the market brings and shifts in customer demands.
Something as integral to the modern supply chain network as capacity availability is finding drivers who can handle current load needs and requirements. The more diverse the carrier pool shippers can choose from, the more opportunities they will have to capitalize on RFPs and accept loads that others may not be willing or able to accommodate. Specialized loads often bring higher profit margins so long as carrier costs and expenses can be monitored properly to offset any additional fees involved.
A reliable pool of available and pre-vetted carriers will help keep shippers poised and ready to capitalize on all new and recurring bids. The freedom to pick and choose RFPs to respond to and choose carriers with a more critical and less desperate eye can allow for increased profits and longer-term contracts to handle capacity strains.
Supply chain trends take on many forms, but those dealing with cost management and shipping issues are among the most influential. When supply chains remain optimized and laid out with adaptable modes and options, like with multimodal optimization and shipping services, it becomes much easier to respond to disruptions. For instance, shippers might quickly solve Issues with ocean freight by shifting to a road or air-based shipment mode.
Shippers looking to offset peak season congestion on roads and rails might consider pushing more cargo to air transport for faster delivery or ocean transport if deadlines are more flexible. This level of optimization and flexibility will be critical in 2022 and beyond, and avoiding additional fees, even just pennies per load, can quickly add up and make a considerable difference for overall profits and growth for the short term and long term.
Of all the lessons learned over the last 18 months with the pandemic, change and adaptability had been the most vital ones for supply chain managers, drivers, partners, and customers to learn. Companies unable to adapt quickly and effectively struggled to survive, and many have not made it now to see 2022 roll around. Shippers need data and improved methods to stay competitive.
Recall that UPS and FedEx have announced higher-than-usual GRIs for the coming year. GRIs may seem trivial, but a mere difference in zone can significantly impact total landed cost. For example, FedEx parcel rates are increasing 5.9% in general, but shippers using FXF 1000 and 501 will see a 7.9% increase. That gain effectively means nearly double what shippers have grown accustomed to in the years leading up to the pandemic. Therefore, changing the fulfillment model is the only real solution and way to avoid excess costs, including zone-skipping.
Expanding and growing the supply chain, utilizing new tools and processes, and changing the "way it's always been done" to accommodate new situations and market trends is what will separate successes from failures in the year ahead. Alternative methods and processes will help relieve strain and support the supply chain network so that future growth and future disruptions can be managed more effectively to maximize benefits while reducing any negative impact felt.
Logistics for 2022 will be varied and complex, with all stakeholders having a much stronger focus on integration and automation. Times change, and so too must the processes used to manage essential supply chains and transportation services. Outdated technology, traditional platforms, and dated resources and data sources must be replaced with innovative technology, collaborative platforms, and real-time sourced data points.
According to Allied Market Research, the supply chain management market likely will hit a CAGR of 10.7% through 2030. With the rise of cloud-based systems—in other words, SaaS platforms—such growth mandates more integration between systems. Integration allows different platforms to communicate. With the proliferation of SaaS platforms showing no signs of slowing, shippers need a way to create a single source of truth for shipping data. That's where a platform like Intelligent Audit can unify the data streams and create a more strategic supply chain strategy, putting data-backed, actionable insights to work. And by using on-demand and custom reporting capabilities, shippers can create more agility within their operations through the coming year.
The world is changing, and the supply chain must be willing to adapt alongside it. Some might argue that the supply chain must find a way to adapt faster to predict basic trends and shifts in the market to keep up and remain profitable in 2022 and beyond. Integrated systems, collaborative tools, and new approaches and processes will make this all possible.
Many recent trends have emerged in response to and compensating for the constant upheaval of the supply chain as we once knew it. None of these trends have been more impactful or seemingly permanent as the rise of e-commerce. From a shopping and shipping standpoint, digital shopping and transportation services have forever altered the way the modern supply chain works and operates.
Consider the record-setting growth of e-commerce over the past 20 months. E-commerce grew 33.6% in 2020, according to The Future of Customer Engagement and Experience. Meanwhile, the U.S. Census Bureau reports, e-commerce in the U.S. grew 28.2% in Q2 2021 compared to 2020 and 13.1% in Q3 2021 compared to 2020. While Q4 statistics are not yet available, a 30% growth rate compared to 2020 is certainly possible. And such growth rates will almost inevitably amount to at least 20% YoY growth in e-commerce by the year-end.
With such expansion of e-commerce well documented and expected, shippers need to advance their investment in new technologies and systems radically. Doing so will help them avoid issues and delays caused by anomalies within packaging labels, and such capabilities enable them to correct problems before they cause disruption. Meanwhile, more technology will help drive better planning for variations in rates by mode, knowing when to go by ground versus air, and what other options might be viable for lowering landed shipping spend.
Companies that invest in new technology and embrace innovative processes are better prepared to handle the virtual side of the supply chain. It may be a while before brick-and-mortar stores are replaced outright, but the shift to e-commerce is here and cannot be ignored. Preparing for continued growth and interest in digital shopping and shipping services is vital for growth and success in 2022 and years to come.
As supply chain managers and directors prepare for the coming peak season and the new year ahead, a keen eye must remain with innovative changes and advances in logistics for 2022 and beyond. The recent global pandemic has forever changed the way consumers shop for goods and products and shipping services in general. Supply chain trends have always changed along with consumer demands and market trends. Still, on the heels of global shutdowns and unprecedented changes in the supply chain network as a whole, change is likely to be more far-reaching than ever before. Make sure your team is future-ready with some help from the supply chain trend pros, and contact Intelligent Audit today to get started.
Set up a call with one of our experts to discuss how Intelligent Audit can help your business uncover opportunities for cost reduction and supply chain improvements through automated freight audit and recovery, business intelligence and analytics, contract optimization, and more.
Major carriers have now released holiday shipping deadlines for the 2021 peak season. Learn what they are and their implications for shippers now.