It is super exciting for me to come back to an advisory role with NYSHEX after having spent the last couple of years on the 3PL and service provider side of the business.
Whether in my role managing Walmart’s supply chain for over 20 years, working closely with NYSHEX retail customers, or the past couple of years on the 3PL/service provider side, embracing change and adaptation are mandatory competencies for anyone in logistics. I mean, who could have seen the events of the past three years coming? Anyone who’s been in the industry as long as I have knows 2020-2022 won’t be the last tumultuous period we see in logistics. However, what we can celebrate is that over the past 2-3 years, three key trends have emerged, changing the industry for the better:
1. Better Collaboration and a Renewed Customer-Centric Focus
Today, carriers and 3PLs (Third-Party Logistics providers) are heeding the call of their customers to enhance the overall experience. They recognize that customer satisfaction is becoming a primary differentiator in a highly competitive market. We can see this in the multiple mergers/acquisitions between carriers and 3PLs in hopes of creating cross-sell, or holistic end-to-end solutions for their customers. There’s quite a bit of focus on how these value-added services (VAS) are bundled to ultimately improve service levels and reduce costs for their customers over time.
Businesses are recognizing the value of long-term, strategic partnerships that allow for continuous improvement. Both parties benefit when they work together towards common goals. As carriers assess their networks and capabilities, they’re increasingly becoming more collaborative with their customers in understanding trends, sourcing pattern shifts, and desired technological capabilities which is a plus for everyone in the industry.
The key takeaway: Logistics is no longer just about moving goods; it's about delivering high service levels and an exceptional customer experience.
2. Building Resilient Supply Chains
The logistics industry has always been familiar with cycles of boom and bust. However, recent market corrections have been both swift and dramatic, catching many by surprise. Asset-owning logistics companies must react swiftly to dramatic fluctuations in demand to safeguard their market share and P&L health by, e.g., laying up or injecting capacity. However, this creates variability for shippers. As we saw during the pandemic, businesses far exceeded their freight budgets for the better part of two years due to a lack of capacity. Then, as suddenly as it all began, inflationary pressure kicked in and sales quickly slowed, creating extreme inventory challenges and inciting cost-cutting initiatives. Efficiency and cost-saving initiatives have become a lifeline during challenging times.
Disruptions in supply chains are inevitable, and recent events have highlighted this vulnerability. To address this, logistics professionals are incorporating resiliency and multiple alternatives into their strategies. With all the unknowns, diversifying ports and partner choices is now a risk mitigation strategy. Many procurement teams are maintaining a blended portfolio of short-term, long-term, fixed, and flexible contracts.
The lesson learned: Adaptability and the ability to navigate economic downturns are crucial for long-term sustainability.
3. Embracing Technology
Both logistics companies and shippers are actively investing in technology. Many carriers have founded or are working with incubator-type organizations where they explore mutually beneficial, emerging technologies. Meanwhile, shippers are deploying their own supply chain technology aimed at identifying potential disruptions early to avoid extra costs, collaborating seamlessly with all their partners, increasing forecast accuracy, and driving continuous improvement. While most businesses still rely on Excel, automated alternatives are emerging, providing key insights such as performance scorecards and benchmarking data to help businesses stay nimble in an ever-changing landscape.
The bottom line: Embracing technology isn't an option; it's a necessity.
In conclusion, the logistics industry is undergoing a transformation. Customers are at the forefront of this change, demanding better service and experience. Market corrections are driving efficiency and resiliency, while technology is shaping operations and decision-making.
Over my first couple of weeks back at NYSHEX, I’ve gotten a glimpse of many of the developments the team has been working on since I've been away. The NYSHEX vision and mission has always been near and dear to my heart, and I've always believed in enhancing collaboration between shippers, NVOs, and carriers. I’m truly excited to reengage my passion for helping shippers manage their business and also become better supply chain partners with 3PLs and carriers.