What will 2019 bring the logistics sector? Will growth continue and, in the process, will costs and labour market tightness also increase? What role will technology play? LogistiekProfs' writing experts once again cast a glance into the crystal ball. They express both their expectations and wishes for the new year. "I hope that in 2019 we will see a reaction to the trend that everything has to go faster and faster."
'Slow logistics'
Marcel te Lindert - journalist logistics & supply chain
"I hope that in 2019 we will see a reaction to the trend that everythinghas to go faster and faster. Just recently, Albert Heijn outlined to us the prospect that soon professional shoppers will be whizzing around the supermarket grabbing ten to 15 groceries and delivering them to the door within an hour. In Amsterdam, according to the FD, Albert Heijn is even opening its own kitchen to prepare and deliver Allerhande meals. I read these reports with mixed feelings: even more underpaid delivery boys driving me nuts on their scooters.
I increasingly get the same feeling with all those online shops with their cut-off times around midnight. Admittedly, I too have sometimes ordered something late at night on the internet. But it starts to bother me that thousands of people frustrate their biological clock for a trifle because they have to pack, ship and sort parcels at night. Whereas, with a little better planning, most consumers could well have placed their orders a bit earlier. And moreover, could have ordered a bit less to avoid returns. Enlightening for many consumers was the contribution recently on NOSop3 entitled 'Return Rumour; the growing pains of the delivery state'.
Can we blame consumers? Only partly. As long as we as an industry make fast, cost-free delivery the norm, consumers will take advantage of it. This is also the reason why, in the new year, I am trying to lose a few kilos again: if that bag of crisps is in the house, it will go. Supply creates demand. At best, the media can try to educate consumers like NOSop3 about the consequences of ordering too late and too much.
Webshops are more likely to succeed if they try to manage demand. This can be done by increasing shipping costs for quick deliveries. Or perhaps even better: give consumers a discount if they are willing to wait two or three days, as trend watcher Howard Saunders recently suggested at a conference in Amsterdam. That might well work. After all, consumers are also willing to wait weeks for their cheap gadgets ordered through AliExpress. And if consumers are willing to pay more for fast delivery anyway? Then we can at least pay those order pickers and delivery people a bit better."
'The year of exponential connectivity'
René de Jong - Sales Director Benelux at TomTom Telematics
"One of the leading technology trends is the exponential growth of connectivity, connecting everything to everything. Both in private and business environments. In 2019, more and more vehicles, drivers and customers in the logistics process will be connected to the office and each other in real time.
This vehicle connectivity will enable logistics players to make better decisions for their customers and operations. This will also be necessary as urbanisation will have continued to increase. Combined with the need to design business processes in a more mileage-conscious manner, fine-grained distribution will be even more differentiated. Exponential connectivity enables logistics companies to respond successfully to this."
'The end of the generic parcel tariff'
Ken Zschocke - Lecturer in Logistics & Supply Chain Management
"After all the fuss around delayed and undelivered parcels, we are slowly beginning to understand: We can no longer just keep accepting the parcel wave. This certainly applies to the Dutch government as well. The 'measures' that carriers take every year to prevent disruptions during the Christmas period are therefore long overdue. Some large online shops even reported this year that their primary carrier temporarily stopped collecting parcels due to the rush. There will have to be a steering mechanism in which costs incurred on delivery are passed on fairly, and such capacity constraints are taken into account. Initially, this can come from the carrier towards the web shop, but eventually the consumer himself will also have to be involved. Nobody yet dares to switch to a (real) pricing model other than numbers/kilo, because of a possible loss of customers. However, the issue is playing out at every major carrier, and a number of innovative players are starting 2019 with pilots around dynamic pricing.
The goal next year should therefore be to flatten the huge shipping peaks caused in e-commerce and spread them over a longer period. This can be done through ratio pricing, where the carrier assumes actual or expected demand during the day. If, for example, it is Monday in a week before Christmas, then factors are charged over the average price leading to a higher rate because of: a) the general busyness on the Monday and b) the higher demand during the Christmas period. Furthermore, it is possible to encourage early delivery through price differences during the day (low price in the morning, high price in the evening). One can thus assume peaks caused by season, weekday or clock time in such pricing models. This approach encourages proactive behaviour and works both ways: Webshops and consumers who place less value on definitive next-day will also pay less if they inject parcels at advantageous times, e.g. Thursday morning.
Parcel country therefore needs to start moving towards dynamic pricing models that have long been self-evident for other sectors - Surge pricing being a possible example of this. Ultimately, then, this choice lies in the interest of all stakeholders: Carrier and shop suffer less from peaks, consumers get the best price and service, and society makes progress on sustainable delivery."
'Digitalisation becomes more important as uncertainty increases'
Hans Groen - Consultant Supply Chain and Performance Management
"Both the uncertainty caused by the distorted relationships between the
United States and China as climate change will play a crucial role in 2019. However, digitisation offers opportunities to meet these challenges.
To cope with the increasing complexity of supply chains and tariff wars, technology is providing more and more opportunities to make the right decisions. When making strategic decisions, artificial intelligence, or forms of it, can no longer be ignored. Data analysis and data mining to predict buyer choices and design your supply chain accordingly is essential. This can lead to, for instance, rethinking production locations, other forms of transport and, as a result, redesigning your supply chain.
China continues to gain momentum. With an entirely new infrastructure, not only in China itself but also with the establishment of the Silk Road. This creates complete new opportunities for your supply chain. China is also investing more and more in infrastructure projects in the West. In southern Europe, China is investing in new ports and transport solutions. It is opening up the Southern European route.
The climate is not going to get any less turbulent. The forecasts are anything but rosy. This can and will lead to disruptions to your supply chain. Shortening your overall supply chain, reducing the number of 'tiers' and producing closer to home can be a strategic consideration.
On the transport front, you will increasingly face charges on fossils. Invest in new sustainable technologies. This development is unavoidable. Much freight traffic of Dutch transporters stays closer to home. Long international trips are taken over by Eastern European carriers. Shorter routes also make electric driving an increasingly practical option.
To summarise: the supply chain will change firmly in terms of its organisation and use of resources in the coming years. Digital solutions, analytics, mining, artificial intelligence can help make the right choices in a highly complex environment that will remain uncertain and volatile for the foreseeable future."
As a logistics person, do you have something to add to our experts' predictions? Then leave your comments below.
