As we approach the end of each year, various articles appear that attempt to identify the trends that are currently active in the sector and that will continue to shape things over the next 12 months. This year I thought I’d have a go at writing one myself based on my experience as a logistics consultant in 2015. So below are some of the trends I have noticed:
1. Flexible delivery solutions
Business are continuing to compete through innovative and flexible delivery solutions, this is constantly raising the bar. The other day I came home to a card through the door from one of the delivery companies, with the old re-deliver tomorrow or pick up from the depot (miles away) options. It felt like taking a trip back to the 1990s. The minimum expectation now is a text message saying ‘Dave will be with you at 10:37, or text back to re-arrange delivery.’ Retailers are pushing the boundaries even further, for example, Argos using their larger stores as hubs to facilitate same day click and collect, and even offering same-day delivery in the evenings. These high expectations are starting to leak into the B2B world, and I expect this to continue.
2. Shortages, shortages
Meanwhile the reality of delivering all this amazing service is threatened by our old friends, seasonality and driver shortage. The rise of ecommerce has led to extreme demands on parcel networks over the Christmas and January sales, and sometimes next day deliveries are just not achievable. Sensible conversations are needed to agree what is really possible and make sure expectations are set accordingly.
Speaking of the driver shortage, this seems to be a product of an ageing driver population coupled with the industry taking a while to catch up with increased training requirements. It appears this is now biting to the point where it will start to exert upward pressure on rates over the coming year.
The market for warehousing space is another difficult area, with JLL reporting in the middle of the year that active demand was outstripping supply of grade ‘A’ warehousing by a ratio of 2.3:1. Driving around the UK I am noticing the market catching up, with some speculative building now happening, but for the next 12 months at least the situation will remain tight.
A happier story (for consultants!) lies in the continuing high demand for, and shortage of, analytical and solutions skills, particularly when coupled with practical experience that allows their effective application to logistics problems. The ever changing shape of the logistics world is keeping both logistics consultants and 3PL solutions departments very busy.
3. On-demand Warehousing and Transport Systems
One trend where there is no shortage involved is in the proliferation of high quality systems solutions with low upfront costs – this is a really positive story that is helping businesses be more agile in applying systems solutions, and bringing smaller companies on board. Here I am thinking of on-demand WMS and Vehicle Routing systems being provided on a pay-as-you-go basis, allowing the system to pay for itself and breaking down the traditional businesscase barriers around IT investment.
4. ‘Big Data’
For my final ‘trend’, I mention ‘Big Data’. Like most supposedly new ideas, this has been around a while, particularly for logistics consultants, who are used to analysing huge data sets to provide insights. However there is no doubt that with increasing computing power and better software, coupled with greater data capture and awareness of its usefulness, ‘Big Data’ is starting to make an impact, with various use cases identified in operational improvement, customer experience and new business models. If you don’t believe in the power of Big Data, have a look at the ‘people you may know’ feature on Facebook – how do you think they make it so eerily accurate?
I hope you’ve found the above useful as food for thought and wish you all the best for the holiday period and beyond.
Gavin Parnell, Director, Go Supply Chain Consulting. Current trends in the UK logistics sector
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