World economies declined slightly in the past 18 months but domestically the U.S. has stayed strong. However, the momentum may be difficult to maintain in the coming years. Trump's tariff policy and international conflict is creating uncertainty in global markets. One major risk in the coming year is the sharp drop-off in world trade growth. The risk of an escalation in trade conflicts remains elevated. If such an escalation were to occur, a contraction in world trade could slow the world economy even more. At the same time, the sell-off in equity and commodity markets, on top of the gradual removal of accommodation by some central banks, means that financial conditions worldwide are tightening. Potential military conflicts may also threaten future growth. For the balance of 2019, U.S. economic fundamentals are expected to remain fairly solid.

Trucking Concerns

Oil production is among the many concerns on the minds of logistics planners. Chief among them is on the supply side of the equation. Shippers and carriers are eager to learn the extent of threats made by OPEC and Russia to follow through on recent agreements to cut oil production by 1.2 million barrels per day. It's unclear if shale producers alone will be able to lift production at a rate that’s commensurate with rising global demand but one solid economic principle is in play hear. Limited supply means higher prices. Possible resurrection of the Fuel Surcharge Expense is but one of the many challenges facing logistics managers reliant on motor carriers in 2019. While this transport sector remains robust, increasing driver wages and insurance costs are eroding profits. Furthermore, costs associated with labor, maintenance, equipment, licensing and compliance have increased steadily for several years. And least we forget the ever-present driver shortage problem which has plagued the industry for years.

Truckers are charging higher fees for shipping services, but much of the increase is going to cover rising driver wages, which leaves many companies still struggling to make sufficient profit. David Ross, transportation equities analyst for Stifel Financial Corp., forecasts truckload (TL) rates to rise from 5% to 7%, with less-than-truckload (LTL) rates rising 3% to 4%. However, he does not find this particularly alarming. Capacity is expected to remain tight. Make an effort to improve your preferred shipper status and carrier relationship. Finally, seek out the counsel of a qualified 3PL to maximize your freight spend.

Air Cargo Remains Strong

Air freight rates are expected to remain strong this year thanks largely to the on-line shopping boom. The velocity with which the supply chain is now expected to operate also creates demand for air transportation. Overall the air cargo industry is expected to finish 2019 strong.

Rail Is Always An Option

Rail service has improved dramatically in the last decade. CSX is creating precision scheduling railroad (PSR) techniques which will continue to transform the pricing and rate landscape while improving service. Union Pacific and Norfolk Southern are following CSX's lead. Rail service has positioned itself to be a viable alternative to over the road transportation. The days of special or low ball rates from the railroad are likely over. Trucking’s capacity constraints have provided a windfall for rail and inter-modal. The railroads made a lot of money in 2018. The same results are expected for 2019, as coal transport had a significant uptick and steel manufacturing strengthened.

Ocean Freight

Fuel prices are a major concern of ocean carriers. Carriers, on some routes, are no longer prepared to sign contracts with fixed all-in rates that include bunkers. Over the second half of 2019, refineries and ship owners will begin preparing for the final phase in compliance with the IMO 2020 sulfur regulations. These rules stipulate that as of January 1, 2020, all bunker fuel consumed on ships will need to have a sulfur content that is no greater than 0.5%. The cost of IMO 2020 compliance is estimated to be $10 billion. You can bet the rates will reflect this cost. Changes to contract terms, fuel surcharge structures, a potential slowing down of vessels, the demolition of many fuel-inefficient vessels and the possibility of an escalation of the U.S.-China trade war are worrisome to the industry. Without a long-term agreement between the two global powers this year, shippers may have to confront a massive disruption in global ocean cargo supply chains and vessel deployments.

The current logistics environment is largely positive but there are potential hazards ahead. Now may be a wise time to talk to us at Land Link Traffic systems to help you navigate what's ahead. We can help insure availability at competitive rates.

Robotic applications in the manufacturing process is nothing new but until recently has been limited to simple repetitive processes. The implementation of more sophisticated robotic applications is well on its way in many commercial and retail environments. Self-driving forklifts and pic-and-pack robots are common in warehouses worldwide. Inside Amazon's warehouse in southern New Jersey, U.S., it isn't uncommon to find giant beetle-like robots moving around busily with vertical shelves stacked on them. In retail environments, Lowes is testing customer service robots that cruise the isles to direct and escort customers to what they seek. Walmart has two types of robots supporting inventory management, including shelf scanners and fast unloaders, machines which automatically scan and sort items unloaded from trucks based on priority and department. As robots increasingly move from warehouses to shop fronts, embedding Artificial Intelligence (AI) in them will allow retailers to dramatically transform their customer interactions. While a basic sensor-based robot can bring customers what they are looking for, an AI-led robot can offer personalized product recommendations. The robot's advice is invariably driven by analytical insights gleaned by combining data, such as customers' age and location, with their purchase histories. From logistics and supply chains to back-office operations, store operations, merchandising, sales and marketing, customer-facing experiences, and robotics can drive innovation and help boost top and bottom-line outcomes. Online retailers are developing systems that are user-individualized for customers at the front-end and business users at the back-end.

Making A Smooth Integration In The Workplace

The Transportation industry has evolved dramatically in the last several years all thanks to the smartphone. Without it Uber and Lyft would not exist, nor would Uber Freight. It seems now you can request a Uber helicopter in New York City. Uber is adding regular helicopter air service to the heaviest users of its platform with Uber Copter; a new service line launched this month that will provide on-demand transportation from Lower Manhattan to JFK airport for, on average, between $200 and $225 per person, which includes car service to and from the helipad at each end. A ground transportation ride to the same destination is less than half the helicopter ride but the convenience and thrill may be worth it. Given the NYC traffic it may be worth the extra fare to not miss your flight. Plus, this isn’t something just anyone can access: It’s reserved for Platinum and Diamond members of Uber’s Rewards program, which means you’ll have to already be dropping a lot of cash on rides to even qualify for whirligig service. If you qualify, the rides are available either on-demand, or bookable up to five days ahead of time. Each helicopter has room for up to five passengers. In time the service will be available to anyone. The depths of service which technology has opened up is truly staggering.

Safety Is Always A concern

In the non asset world of transportation providers, we all depend upon equipment providers. Vetting these providers on behalf of our shippers is a primary responsibility. This is only one of the values of contracting with a 3Pl. A helicopter crashed this week in NYC which had previously dropped off passengers. The weather turned foggy over Manhattan that morning. Turns out the pilot did not have the required certificate that would have allowed him to legally fly when the visibility was less than 3 miles and where he could use the instruments on his chopper to guide him through the gloom and rain that enveloped the city. So the question here is who is vetting these helicopter pilots, weather private or for Uber. I question whether Uber, which is a mere child in the transportation industry at 7 years old, is schooled in the transportation vetting process which is necessary to provide safe cargo and personal conveyance in both inter and intra state transportation. It seems technology is setting such a pace that safety cannot keep up. Speed and convenience seems to have taken a back seat to safety.

How Much Risk Are You Willing To Take?

With the convenience of transactions comes risk. Sure you can hail a car, a helicopter, or who knows, even a boat to transport you or your loved ones. But how much do you know about who is picking up your precious cargo? It is also possible to hail a truck to transport your freight through Uber or several other apps...same question applies. Are you seriously going to trust your brand equity to some trucker you assume has been professionally vetted? While all of these conveniences have their acceptable levels of risk you must consider your options when the stakes are high. When you need a quick ride downtown or your late for the airport and want to take a helicopter ride that's your risk. But when you freight shipment is of high value or the client satisfaction is of great importance you need to consider everyone's risk. That's when you need to go with the experienced and proven freight transportation providers like Land Link Traffic Systems. We will provide the most reliable assets available and track the shipment throughout its journey. Satisfaction is guaranteed. Give us a call today for more information. We look forward to hearing from you!

The transportation and logistics industry are currently going through some major transformations. The current metamorphosis is creating opportunities as well as challenges. Successful shippers are looking for ways to adjust to the challenges and take advantage of the opportunities. The economy, labor, and I believe, most dramatic, is the technology component which will be the game changer. Astonishingly what seemed like an unrealistic idea ten years ago, today, is now plausible because of technology. From robotics to radio frequency identification technology to block chain applications, the possibilities are intriguing to say the least. The challenge for supply chain professionals is how to stay current on these applications and how they can give your business the competitive edge that often makes the difference between black and red on the financial statements. Here are a few key areas in which every supply chain professional should have a firm understanding.

Economic Forecasts

Everyone is enjoying a robust economic environment at home even with the Trump administrations tariff threats. The domestic manufacturing economic forecast is a practical place to start in planning your logistics budget both operationally and financially. It's not all about the dollars.  Shippers need to assure themselves of available assets to deliver and receive goods.  The driver shortage is real, there are no significant players entering the asset-based transportation industry so capacity issues will be a common challenge. Existing carriers can only add as much capacity as drivers available to operate the equipment. Online retail spending is estimated to increase up to 20-30% over the next 3-4 years. These growth estimates will impact future freight distributions and patterns by creating additional density for retailer’s networks. Crowd sourced delivery options, much like Uber, will become a significant pool of delivery drivers.  Automated trucks will become more increasingly in demand as soon as the technology can be trusted.

The Labor Outlook

Driver positions are not the only area in logistics that are suffering shortages. Qualified warehouse personnel are also in demand. Particularly, as warehouse and distribution centers evolve into a more complex and technology driven environment. There are many reasons why labor is a problem, but two hurdles stand out. First, trucking has historically paid less than other business’ competing for the same potential employee. Second, the nature of the job requires drivers to be away from home in some cases for weeks at a time. As freight volume continues to grow labor will become an even bigger issue. To attract more recruits, some experts have proposed establishing more enticing industry standards such as a higher base pay and a flex time policy. Neither idea has yet to gain much traction. The simple fact is that truck driving as a career does not appeal to today's young people. On the operations side colleges and universities have historically offered somewhat limited programs in logistics as a science. I would expect the training options should improve as demand for these services increases.

Technology and Big Data

There is little doubt that data and the technology which allows us to interpret and leverage that data will be the future of supply chain management. It is well known that many transportation and logistics companies are late adapters of technology. Some are starting to be shut out of contracts if they cannot provide the data and technology required by customers, especially cyber security. Larger customers are adding minimum levels of cyber security to their contracts; this requirement will eventually become SOP.

Many carriers are even more behind in using analytics to make smart operational decisions. They do not understand the competitive edge analytics can give them even the simplest terms like route maximization. Successful shippers are thriving by seeking the guidance of logistics professionals who are trained in and equipped with the latest technology that mitigates risk to their supply chain and brand value. We are in the middle of a paradigm shift in the way transportation and logistics is executed. Adapt accordingly or die.

Count on the logistics professionals at Land Link Traffic Systems to navigate your company through what is certain to be some challenging supply chain waters in 2019 and beyond.

There are several developing factors refining the world of freight transportation as we currently know it. Technology in the form of ELDs is forcing fleet managers to become more scientific in the management of their assets. The apparently insatiable appetite for immediate gratification from the millennials will force carriers to improve speed to market. This will likely put pressure on trucking companies to better integrate their small parcel and LTL operations so local distribution centers can concentrate on meeting on time final mile deliveries. Data engineering will be at the forefront of everything that goes on in supply chains. Data engineering, according to Dr. Michael Watson of Northwestern University, is "the art and science of blending data from multiple sources, automatically cleaning and filtering the data, and transforming the data to be useful for analysis."  You may have heard the term "Big Data" referring to the volumes of pertinent data accumulated from various sources along the supply chain. This big data will be the source of information in the data engineering process. Another term you've likely heard is IoT or The Internet of Things. The IoT is the network of physical devices, vehicles, home appliances and other items embedded with advanced electronics capable of exchanging data with a central computer over the internet.  

In a bid to keep pace with their number one competitor, Walmart announced yesterday that they will offer free one day shipping on many items. Starting May 14, Walmart customers in Phoenix and Las Vegas who buy more than $35 worth of goods enjoyed free one-day shipping. The offer, which Walmart had hinted was in the works and will be applied to as many as 220,000 items, will extend to Southern California in the coming days and will reach about three-quarters of the United States by the end of the year. The $35 minimum was set with the expectation that the average Walmart at that price point would include several items thereby reducing individual unit shipping cost by sending the entire order in one box. Walmart's e-commerce business has not been profitable. In fact, management expects to lose more this year than they did in 2019. Amazon expects to spend $800 million this quarter to cut their shipping costs. Walmart's same day shipping is available to all customers without any membership fees. Amazon's service, on the other hand, is available only to Prime members at an annual cost of $119.

Walmart's Strategy

One thing is clear. The big package companies don't have enough capacity to handle the expected volume of same day deliveries from the big retailers. They may not even want the business. You can expect Target to be adding to the volume as well as other retailers.  Same day delivery from UPS or Fedex would be cost prohibitive. You'll find a range of about $27 to $55 at FedEx and about $30 to $63 at UPS which is clearly not a viable option. So what is Walmart's strategy for this same day service? Walmart is using a surprising strategy on free, next-day shipping that doesn't involve any of its 4,700 US stores. Instead, orders will be filled and shipped from 6 fulfillment centers across the U.S. Walmart plans to further drive down the costs of next-day shipping by making "aggressive investments" in automation and boxing technology. Fulfillment centers are better equipped for those kind of investments according to Walmart CEO, Marc Lore. Walmart will be utilizing its stores for same day order pickup. 

Who Is Gonna Make All These Same Day Deliveries   

The big retailers will have to utilize additional resources to UPS and FedEx. Dozens of start up companies are already in business offering same day delivery. The boom in        e-commerce sales has lead to a surge in package volume and shippers don't have the capacity or network to quickly deliver parcels. This has created a new market and presented a significant opportunity for last mile delivery startups to emerge.

Capital investment and labor are the deterrent to most companies entering the parcel market. For that reason, Deliv.com, Rodie and many others have opened up across the country with limited capital investment. They depend on private van and car owners to make the deliveries as contract workers which is very much like the Uber platform. With the driver unrest Uber has been recently experiencing, these start ups may find some new, willing drivers. The companies won't last if the drivers are not making an adequate wage and one also can't help but wonder when everyone became in such a hurry? To keep informed on this and other industry news, subscribe to our blog.

Digitize Your Communication

In this era of rapid digital transformation, new technologies have opened up opportunities and created challenges, fundamentally transforming customer experiences, operating models and the work environment. Today's transportation providers need to explore their value added viability features to attract new customers and instill confidence in shippers. It has never been more important to provide real time tracking and tracing options for domestic and international shipments.  Shippers basically expect it in this market. Doing it at digital speed is the key. Digitalization is about leveraging technology to create, enable or transform a business process. The basic advantage of digital applications is data compression to improve the speed of transactions. Speed is king in today's logistics world in all facets of execution. Data automation also provides enhanced communication between shipper, consignee and any other interested party. All technologies aside, there is still a strong personal aspect to our business in terms of negotiating contracts, customer service and the commitment of everyone in the organization to be mistake free.

Cloud Technology

Cloud computing is really the internet as we know it today on a commercial scale. Cloud technologies help mitigate the need for physical IT infrastructure, and on-premise support personnel to manage computing capabilities, by running operations across server farms or data centers. Using cloud-based services providers, businesses can leverage IT assets as programmable resources, which are global and scalable on demand. This allows a business to access or lease computing resources and storage power far greater than what it may have been able to access on local infrastructure, while still being able to scale up or down in a cost-efficient manner. Simplicity, affordability and ease of expansion are all enhanced with cloud computing. Enterprise IT is among the fastest growing segment of computing easily set to replace on site systems.

Be Sure Of Your Needs

Everyone wants to utilize the latest technology to remain competitive. The race is on to define the industry’s future. With an estimated US$4.6 trillion of revenues at stake, companies can’t afford to sit back and watch; they need to adapt to changing markets proactively. Before rushing in, consult an industry export to provide the direction and pace of technology applications to stay on point and within budget. Like most other industries, transportation and logistics is currently confronting immense change; and like all change, this brings both risk and opportunity. New technology, new market entrants, new customer expectations, and new business models. There are many ways the sector could develop to meet these challenges, some evolutionary, others more revolutionary. These are indeed interesting times. And its in these times that the council of an expert is vital. For a consultation regarding your current supply chain protocols, please contact us today. To keep informed on these emerging topics and more subscribe to our weekly blog on our site.

President Trump took to Twitter this week to voice his concerns over the Chinese tariff debate. Trade protection is something Trump has believed in for years and was a significant issue during his presidential bid. He seems to have some support from Democrats on Capitol Hill including Senate Minority Leader Chuck Schumer. But talk of tariffs tends to rattle financial markets, both because the actual tariffs themselves are costly to the United States and because they inevitably raise the prospects of further rounds of tit-for-tat retaliation. Wall Street does not react positively to such declarations regarding international trade. The Dow Jones Industrial Averages plunged 450 points Monday morning in reaction to the twitter feed. In case you’re not on twitter below is a summation of Mr. Trumps Posts.

The grocery home delivery market is ultra competitive. The big grocery players like Giant, Shop Rite and Wegmans all offer home delivery via manned delivery vehicles. Kroger appears to be first in the autonomous grocery delivery service race. After successful testing last year in Scottsdale Arizona, Kroger, the nation’s largest grocer, has launched a self-driving grocery delivery service in Houston, the latest salvo in a massive grocery market that has supermarket chains investing heavily in new technology to win over online shoppers. Company officials this week showcased the first of dozens of autonomous delivery vehicles planned for Houston: Toyota Priuses outfitted with cameras, sensors and self-driving computer software. In today's competitive grocery market, companies are turning to autonomous vehicles, automation, robotics and artificial intelligence to stand out. Kroger is competing with Amazon, Walmart and other businesses to capture consumers who want fast deliveries without hassles.