This article is yet another dose of enlightenment on our technology series to keep our clients informed on the pace and direction of supply chain industry standards. Previously we have discussed the importance and applications of Blockchain technologies and IoT (the Internet of Things) in logistics and supply chain management. These technologies are transforming the way we do business. To stay up to date and competitive we must stay informed. The issue is most of this stuff is so new and so dynamically changing that keeping up is a challenge for most of us from the old school way we’ve been managing transportation for decades. We have some catching up to do in a hurry.

Digital Supply Chain Defined

I always insist my readers have a firm understanding of our discussion topic. To that end; A Digital Supply chain is defined as A digital supply chain is a supply chain whose foundation is built on Web-enabled capabilities. Many supply chains use a mix of paper-based and IT-enabled processes. A true digital supply chain goes far beyond this hybrid model to fully capitalize on connectivity, system integration and the information-producing capabilities of "smart" components.

Digital Supply Chain 101

Ultimately, virtually every aspect of business will be transformed through the vertical integration of research and development, manufacturing, marketing and sales, and other internal operations, and new business models based on today’s advances. In effect, we are evolving toward the complete digital ecosystem. If you recall from our blogs on Blockchain technology and IoT. The common thread of these and other emerging technologies in the web-based component which allows for inter-connectivity and sharing of real-time information. The days of fax transitions and telephone calls are all but extinct. Email may survive but will likely be phased out in favor of peer to peer communication. Peer to peer communication is a direct connection between users operating on a shared platform bypassing the delay of email or analog communication.

What To Expect

So, the race is on. Companies across industries are already investing heavily to develop their own versions of the DSC. According to a recent PwC study on the rise of Industry 4.0, a third of the more than 2,000 respondents say their companies have started to digitize their supply chains, and fully 72 percent expect to have done so five years from now.

In keeping with our Supply Chain Technology series, we want to discuss in this article the applications and benefits of IoT technology in the supply chain and logistics functions. So, let's begin with a firm understanding of what the "Internet of Things" is. 

Let's start with understanding a few things:

High speed, broadband internet has become the standard, the cost of connecting is decreasing, more devices are being created with Wi-Fi capabilities and sensors built into them, technology costs are going down, and smartphone penetration is sky-rocketing. All these things are creating a "perfect storm" for the IoT. Simply put, IoT is the concept of basically connecting any device to the Internet. Devices can also be interconnected to communicate with each other via the internet. This includes everything from cell phones, coffee makers, washing machines, headphones, lamps, wearable devices and almost anything else you can think of. This also applies to components of machines, for example, a jet engine of an airplane or the drill of an oil rig. If it has an on and off switch, then chances are it can be a part of the IoT. The analyst firm Gartner says that by 2020 there will be over 26 billion connected devices, some even estimate this number to be much higher, over 100 billion. The IoT is a giant network of connected "things," things in this explanation include people. The relationship will be between people-people, people-things, and things-things. In the very near future, you will have to think of little more than setting your alarm clock. After that, all your devices will know to start the coffee, preheat the oven, turn on CNN for the morning financial news...whatever we used to do manually will all be done for us through IoT. The reality is that the IoT allows for virtually endless opportunities and connections to take place, many of which we can't even think of or fully understand the impact of today.

We've been talking a lot about emerging technologies like Blockchain, IOT, (The Internet of Things) and a worldwide digital supply chain. Change is coming, and it's best we prepare. So, in a several part series, we're going to delve deeper into these technologies to explain the technology and offer some real-world applications in logistics and supply chain management. We'll start the first part of our series by taking a close look at Blockchain Technology.

What Is a Blockchain

The blockchain is a breakthrough technology that is expected to alter most industries in the coming years. Whether you work in the financial world, healthcare or any other sector, you will probably face the consequences yourself soon enough. But what is this thing you’re going to face? The technology has been the driving force behind the Bitcoin craze. It is precisely the authenticity aspect of the technology that is most valuable and provided validity and auditable confirmation to the valid value of products like Bitcoin. It gives investors a comfort level, perhaps to a degree like never.

So, in layman's terms lets look at an international shipment as an example to demonstrate the blockchain application. The blockchain is a distributed database existing on multiple computers at the same time. By "distributed" it means that all parties have access to the shipment details of our example shipment. To understand what a block is, in our example, it may be the origination documentation, customs forms, bill of lading, etc. The "Blockchain" is constantly growing as new sets of recordings, or ‘blocks,’ are added to it. So, again using our example, the next block might contain details on the sailing date, cargo vessel, and container ID. Each block includes specific information, a timestamp and a link to the previous block, so they form a chain. So, you might imagine the next "block" would contain details of the destination port, offloading time and warehouse location. The next block would likely include information on the cartage agent, truck number, driver ID, etc. And finally, the last block would contain details on the final delivery including proof of delivery signatures and time stamps. The heightened level of security and impervious nature of the technology to fraud is what blockchain offers to transactional business like ours and just about every other industry. The database is not managed by anybody; instead, everyone in the network gets a copy of the whole database. Old blocks are preserved forever, and new blocks are added to the ledger irreversibly, making it impossible to manipulate by faking documents, transactions, and other information. So, blockchain is independent, transparent, and secure. The advantages of such a distributed ledger are apparent: being it cost and risk reduction, data security, or transactions transparency, companies from most industries can surely benefit from this new technology.

So now that we have a clear understanding of blockchain technology let's examine some Logistics and Supply Chain applications that are emerging today.

Shipping and Receiving Functions

Cargo companies across the world, especially those that support international delivery, recognize the benefits of the blockchain technology. The technology can allow the company to track each item while simplifying the existing logistics process. Maersk, the world’s biggest operator of shipping containers, has already experimented with blockchain. They along with Dutch Customs and US Department of Homeland Security used the technology to keep tabs on the movement of their cargo across international borders. Maersk has now teamed up with IBM to develop highly secure logistic systems that will alter the global trade landscape for good.

The system is expected to save billions of dollars for companies engaged in freight transportation by replacing existing logistic processes. It will help to reduce errors, improve delivery times and enable detection of fraud while lowering costs incurred.

Invoice Paperwork and Payments

A significant challenge in logistics is developing efficient and secure systems for invoicing and payments. For decades shippers have extended payment terms by insisting on receiving original proof of delivery receipts for example. Blockchain will eliminate the need for such documentation. Tallysticks has developed a platform, launching in September, based on blockchain that can handle invoicing and payments for logistic and other businesses. Based on smart contracts, it automatically sanctions a payment corresponding to an invoice. Visa has also jumped on the blockchain bandwagon and has launched its B2B Connect payment service. It aims to simplify payments across international borders while ensuring security and transparency. It also provides that a system that prevents frauds and minimizes errors is in place without involving a middleman.

Inventory Tracking

Blockchain technology can be used to build an efficient system that allows different companies to keep track of their products even at micro levels. Multiple food retailing companies have partnered with IBM to develop a system based on blockchain that allows tracking of food items. The alliance includes Walmart, Nestle, and Unilever to name a few. The technology will enable the company to backtrack individual food items back to the farm. Walmart has successfully experimented twice with the blockchain. It tracked pork in China and mangoes in Mexico to their origins. This accurate tracking ability is of importance in recall situations threatening public health.

How will tracking a fruit or meat product be useful? Roll back to the E. coli outbreak in the U.S. ten years ago wherein spinach infected with the microorganism spread the disease. If a similar incident occurs in the future, it will be easy to identify the infected batches of the commodity. There will be no need to destroy the whole stock, only the infected ones. Time is of the essence for managing such incidents and limiting the damage to both the public health and the corporations brand value.

To stay informed on the emerging technologies that are affecting our industry register to receive our weekly blog. For specific information on how your company can benefit from these emerging technologies contact one of our Logistics professionals today www.Land-Link.com.

The transportation industry is enjoying a strong year that has the potential to be even stronger than the previous one. DAT reports a particularly robust year in shipping in 2017, especially in the second half. Based on what we have seen in the industry during that time, here are a few trends to watch for in the freight transportation industry for the remainder of 2018 as we approach the busy holiday shipping season.

The Capacity Crunch Will Continue

There is little reason to expect any relief in the ongoing equipment availability issue. Particularly when approaching the 3rd and 4th quarter holiday shipping demands. A significant contributor to the capacity crunch continues to be the driver shortage. Interest in a truck driving career by the younger generation is just not keeping up with the retiring rate of older drivers. The work is difficult. It involves working long hours, driving long distances, being away from family for long periods of time and less-than-ideal pay. Fewer drivers mean fewer trucks on the road to haul this increase in freight, which, in turn, drives up the rates because of the premium placed on securing a truck.

Another major factor is government regulation. The ELD mandate went into effect December 18. It essentially requires all motor carriers to install electronic devices in their trucks that will automatically track drivers’ hours of service. By law, drivers are only allowed to drive for 11 hours with a mandatory, continuous rest period of 10 hours, daily. This regulation is expensive for carriers to implement, particularly on large fleets. Training drivers to use it can be extremely time consuming and compliance is slow to reach 100%. The reduced driver hours, cost of implementation and general driver acceptance all affect the cost of operation. Which, of course, will be absorbed in the carrier rate structure.

Rates Remain Strong

Given the good health of the economy, specifically the freight economy, it comes as no surprise to see the LTL market having a healthy 2018. Basking in what one trucking executive called a “robust, bright” market, LTL carriers are planning expansion in 2018, coupled with continuing increases in LTL trucking rates. Several publicly owned LTL carriers will add terminals, trucks, trailers, and employees to their operations this year, as industrial and e-commerce freight demand fills more pallets. Higher rates will certainly bolster bottom lines at trucking companies with historically tight profit margins. And as freight demand increases, LTL carriers have stuck to the pricing discipline that helped them improve those margins and begin to expand operations or reinvest in their businesses in 2018, adding new equipment and hiring employees.

Shippers and Carriers Need to Adjust to the New Normal

Both shippers and carriers will have to be flexible in this new shipping environment. Most individuals generally only change behaviors if they can no longer deal with less-than-ideal situations. With that, it will be interesting to see how shippers, especially the ones that have a reputation for not being driver friendly, change their behaviors. Carriers will be looking to do business with "Preferred Shippers." Read our previous post on how to become just that in the eyes of your carriers. On the carrier side, if supply and demand stay relatively status quo, you will see carriers act more selectively with the business they handle. Carriers are taking significant increases for a specific business or flat-out refusing to work with shippers that are no longer a strategic choice for them. The days of taking your carrier and their drivers for granted may be over for good.

Technology May Disrupt The Status Quo

The freight industry is in the middle of a storm, with technology giving conventional processes a makeover and making it more efficient and transparent to the players in the market. Cutting-edge technological ideas have been mushrooming in the freight hauling space, with major corporations and startups tussling for a share of the market.

The freight economy is one of the largest markets in the United States, with over $700 billion in revenue every year and employing 8.7 million people in the industry. This provides an incentive for companies to cash in and it was inevitable that technology would be adapted to fit the market needs. And here we stand at the crossroads of innovation, with the impact of technology looking to change the facade of freight hauling forever. With the current market growth and capacity issues, it’s highly probable that more shippers will become willing to embrace any new technology or app that provides them with a truck. And carriers will be more than willing to embrace it if they feel those platforms can offer them higher and faster paying the freight. Having the experience and industry expertise to disseminate the dependability of the new approach and the integrity of the service provider can spell the difference between a successful experience and utter disaster. 

So, as we approach some of the busiest shipping months of the year in a market that can be challenging during high demand, it is useful to do some proactive contingency planning. Perhaps a combination of several discipline changes may be in order. In markets like this one, the counsel of a qualified Logistics professional can be a wise investment. Contact one of our Logistics experts www.Land-Link.com today for a no-obligation review of your current supply chain protocols. Be prepared for what may be a tumultuous freight market ahead.

Department of Transportation will launch a pilot program to permit 18-to-20-year-olds who possess the U.S. military equivalent of a commercial driver’s license (CDL) to operate large trucks in interstate commerce. The Trucking industry has been struggling to meet driver demand for the last 20 years.

There seems to be no end to the demand for nearly instant delivery gratification of today's consumer. Interestingly, price doesn't seem to water down their desire to have what they ordered on their doorstep as soon as possible. In response, retailers are betting big on delivery services to drop off packages faster. Current delivery services are pretty much maxed out on capacity. Just last week Amazon announce it would form its own fleet of delivery vans, in addition to their existing fleet of trucks and planes, that would be operated by independent contractors to compliment, and eventually replace, current transportation providers.

We thought we might take a break from our usual industry topics to draw attention to a serious issue; driver safety, particularly, over the holiday weekend. Transportation analysts expect a record number of people in the U.S. to travel during the Independence Day weekend. The travel group AAA says almost 45 million Americans will take trips to destinations at least 50 miles from home during the holiday period. Unfortunately, reported road rage incidents are on the rise. The increase in holiday traffic can only add to driver frustration. Do what you must to keep your patience in check this holiday for the sake and safety of your family as well as other travelers. Be cognizant of the stopping distances required by a fully loaded semi-truck.  A fully loaded semi-truck has a gross vehicle weight, depending on its cargo, of up to 80,000 lbs. Compare this to the average loaded weight of a passenger vehicle of 4,000 lbs, and you can see the difference in energy produced by both vehicles.

The Trump administration on Friday escalated a trade war between the world’s two largest economies, moving ahead with tariffs on $50 billion of Chinese goods and provoking an immediate response from Beijing. Today Trump suggested possibly moving forward with additional tariffs which may exceed $200 million. The shipping community has been on edge about the impact the tariffs may have on the logistics market since the tariffs were proposed some 18 months ago. Before we examine the potential fallout lets outline precisely what industries will be affected.

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.