Key Logistics and Supply Chain Trends to Expect in 2023
- Top supply chain and logistics trends in 2023
- How automation will change the supply chain landscape
- Production delays forecast to continue in 2023
- Focus on sustainability to increase
- Local sourcing to become the new global sourcing
The coronavirus pandemic impacted every aspect of the supply chain, from raw material sourcing to last-mile delivery. As a result, businesses worldwide have seen their commercial, operational, financial, and organisational resilience tested.
COVID-19 exposed cracks in the current supply chain system, and CEOs are now looking to make their operations more robust to better cope with external and internal disruptions and disturbances.
According to recent research, more than 65% of chief executives plan to increase investments in disruption detection and innovation processes. But, as COVID-19 and unpredictable demand continue to impact supply chains, how can businesses improve performance?
Creating a harmonious balance between robustness and efficiency will largely depend on staying on top of logistics and supply chain trends.
Top 7 Supply Chain and Logistics Trends for 2023:
To better meet the demands of customers and respond to market changes, we’ve outlined the most critical supply chain trends for retailers and logistics firms to look out for if you want to remain on the front foot in 2023:
- Addressing the driver shortage
- Automated trucking vehicles
- Production delays
- Crowdsourcing and multiple 3PLs
- Elastics logistics
- Local logistics
While some of these concepts may be familiar, a few have built momentum and could be the next big thing to dominate news headlines.
Addressing the Drivers’ Shortage
The shortage of truck drivers is expected to remain a key industry trend in 2023.
According to Forbes, there are nine job postings for every qualified truck driver. Small trucking firms are also reluctant to increase capacity and invest in new trucks amid financial strain caused by rising prices.
Although logistic firms could use other modes of transportation to deliver goods, currently, trucking is the primary source of cargo delivery. As a result, the shortage of drivers is causing lengthy delays at numerous points of the supply chain.
Logistics companies need to employ and retain truck drivers or address the ongoing shortage by utilising advances in technology to stay ahead of the curve. Digitisation is expected to take flight in 2023, and various committees are already seeking alternative solutions to the lack of truck drivers by considering:
- Automated driving options, e.g. self-automated trucks
- Changing transportation methods from road to rail
- Improving working conditions for truck drivers
To keep supply chains running in 2023, companies need to tackle the shortage and invest in driver retention by offering more attractive incentives such as better pay and safety measures.
One business model that’s being widely adopted is a pay-per-drop or pay-per-delivery model, which helps unlock the supply chain bottleneck by incentivising drivers to increase the number of deliveries they make each day.
Automated Trucking Vehicles
While machine-driven automation is not a new concept in fulfilment services, access to this technology has snowballed. It is no longer exclusive to the realm of global retailers such as Amazon.
Now that automation is within the grasp of many logistics organisations, this market is flourishing. According to Fortune Business Insights, the industrial automation market is forecast to grow from $191.74 BN in 2021 to a staggering $355.44BN in 2028 – a compound annual growth rate (CAGR) of 9.2% in the projected period.
We expect autonomous vehicles to become a key trend in the logistics and supply chain industry this year and have already seen a rise in automated equipment, including:
- Automated Storage & Retrieval System (ASRS): ASRS is a warehouse automation technology that utilises robots to find, pick and organise inventory in warehouses to increase efficiency and reduce safety risks.
- Automated Trucks: Self-driving trucks are on the horizon, with funding for this technology skyrocketing from $0.1BN to $5.6BN in 2021. Experts have warned that self-driving trucks could replace human truck drivers by 2027.
- Delivery Automation: Has the idea of drones delivering parcels crossed your mind? Autonomous cargo drones could be a real game changer for remote logistics, and Amazon is already working on “Prime Air”, intending to deliver parcels by air in thirty minutes.
- Starship Technologies already uses six-wheeled drones to deliver goods with a small radius and completed 2 million deliveries last year.
- Robots: Using industrial robots for assembly, inspection and automating menial tasks to allow human workers to focus on more purposeful, value-adding activity.
Manufacturers are competing for limited supplies of essential commodities, resulting in production delays and, in turn, empty shelves and long purchase lead times.
While production delays are expected to remain a key trend in 2023, supply chain constraints have encouraged many companies to revisit their long-term supply chain strategies and find new opportunities for growth and innovation.
To remain competitive in a post-pandemic world and remain ready to deliver amid challenges, logistic firms will need to recognise shifts in customers, business operations and ecosystems as early as possible.
While the long-term implications of COVID-19 are still unknown, the crisis has undoubtedly accelerated shifts in customer expectations and behaviour, with consumers more demanding than ever when it comes to receiving their goods.
Through awareness and evaluation of risks, manufacturers can overcome long-standing supply chain issues and build a more resilient, efficient operation that can position them as industry leaders in the new normal.
Crowdsourced Delivery and Multiple 3PL Partners
To save costs on cross-border shipping, meet customer demand and maintain supply chain efficiency, we expect to see a rise in the number of companies partnering with multiple logistics providers and using alternative delivery methods.
Partnering with multiple 3PL carriers could increase your bottom line by giving you the capacity to offer improved shipping options. Furthermore, as most consumers will readily pay a premium for same-day or next-day delivery, having more shipping options could provide a better consumer experience and help you capture increased market share.
Another promising strategy is crowdsourcing – a fulfilment method that uses non-professional, local courier services to deliver goods. For example, a takeaway may use its own employees to deliver in non-peak hours to reduce costs associated with outsourcing deliveries during open times.
Alternatively, you might want to use a pool of drivers to deliver from fulfilment centres or stories within a specific geographical area. However, this also requires technology to identify what driver is available to deliver the goods within the specified delivery window.
Nonetheless, partnering with multiple 3PLs or utilising crowdsourcing increases flexibility and reduces risk by providing companies with alternative solutions should something go wrong with one partner.
Green technology is revolutionising the logistics industry, cutting carbon emissions and shipping costs while creating new opportunities to solve rising demand.
With talks about the climate crisis intensifying, sustainability is no longer a choice but a requirement especially given that the transport and logistics sector contributes around 24% of global CO2 emissions.
One of the greener practices we expect companies to adopt is electric vehicles, which are already taking 2023 by storm.
The Rise in Electric Vehicles
So, we’ve mentioned automated trucks, but what about electric vehicles?
The speed with which EV vehicles are being adopted could transform the logistics industry. Although the pandemic and recession fears have weighed on vehicle sales, the EV trucking industry is projected to hit $1.89BN in 2027, up from $422.5M in 2019.
Other examples of sustainable initiatives in logistics and supply chain management include:
- Reducing the weight of packaging and using reusable materials
- Optimising supply chain practises
- Sourcing and selecting eco-friendly materials
- Powering operations with greener energy
- Adopting circular economy models by turning waste into value
Several logistic companies have already made steps towards a greener business, with Amazon vowing to go carbon neutral by 2030 and DHL by 2050.
Research also shows that a growing number of consumers favour sustainable brands. An independent study commissioned by SmartestEnergy also revealed that 90% of people agree that it is vital that society becomes more energy-conscious.
Growing consumer interest in environmental issues has created new demand for a niche segment, and companies are now expected to implement greener practices. As a result, failure to address climate concerns and build a greener business could end up harming your bottom line, so companies should look to reduce their carbon footprint to add value to their customers.
If the past two years have taught us anything, it’s that supply chains need to be flexible and responsive to deal with unforeseen challenges and potential disruption.
Logistics companies could overcome growing volatility by utilising “elastic” strategies, providing firms with the flexibility to meet fluctuating demand.
Elastic logistics is a term to describe a supply chain model that can be easily scaled in either direction and often leads to excellence in supply chain performance. Companies that embrace elasticity to guide their operations can provide the capabilities needed to become agile, adaptive and resilient during the most random demand patterns.
Elastic logistics can also help reduce costs, minimise risk and boost a company’s competitive edge by increasing efficiency and boosting overall customer satisfaction.
After COVID-19 disrupted access to global supply chains, logistics companies had no choice but to find new, local opportunities.
Amid ongoing coronavirus uncertainty, rising political tensions and concerns about the environment still prevalent, we expect local sourcing to remain a key trend in 2023.
Many businesses have also benefited from local sourcing. It reduces risk during times of unprecedented uncertainty and allows for better control of delivery times by connecting consumers with suppliers within the geographical area.
Local logistics also helps reduce carbon emissions as firms don’t need to rely on international freight, which contributes significantly to CO2. Small businesses have also benefitted from the shift to localisation.
Elastics logistics, driver shortages, production delays, sustainability and automation, have dominated industry discussion and require immediate attention.
In the wake of COVID-19, leaders are shifting their focus to running the business’s day-to-day operations and ensuring that staff and customers are satisfied instead of large-scale projects to respond quickly to challenges.
It’s now more important to ensure that operations are flexible and resilient so that management can enforce scalable measures to alleviate a crisis while ensuring corporate goals stay aligned with connected supply chains.
At Pointbid, we implement order fulfilment solutions for a range of e-commerce brands from start-ups to medium-sized businesses. If you think that outsourcing your order fulfilment could help your business grow in 2023, please give us a call on 0121 326 7368.
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