In 2023, companies will take a closer look at how delivery affects customer satisfaction, profits, and corporate social responsibility, tech firm says.
More companies are focusing on the importance of last-mile delivery to their overall business, giving logistics a seat at the table in the C-suite and the boardroom, according to data from software-as-a-service (SaaS) company DispatchTrack, which recently released its list of six trends that will redefine last-mile delivery in 2023.
“Post-pandemic economic realities and pressing issues, like climate change, are driving forces in business today and pushing accountability to the highest levels of leadership,” Satish Natarajan, DispatchTrack co-founder and CEO, said in a press release. “As a result, the C-suite is taking a much closer look at all aspects of their operations, with a new focus on how delivery directly impacts customer satisfaction, profits, and corporate social responsibility. With that in mind, there are some significant shifts on the horizon that will impact the logistics market, particularly the last mile, as we look to 2023 and beyond.”
Those shifts include a laser focus on last-mile accuracy, increased IT spending, and accelerated sustainability initiatives. According to DispatchTrack, the six last-mile trends to watch in 2023 are:
The C-suite and boardroom are taking a keen, and direct, interest in last mile delivery. Heads of logistics will increasingly report to the CEO as fulfillment joins sales and marketing among the most critical aspects of running a successful business. Not only will they report to the top, logistics professionals will also have a seat at the table and more involvement in the business strategy from the start. Consumers today expect next-day, or even same-day, delivery with total visibility, which makes ensuring a superior customer experience a priority and integral to building loyalty, gaining a competitive advantage, and growing market share.
Companies will re-evaluate their delivery tech stacks with an eye toward optimization and sustainability. As economic headwinds accelerate, supply chain organizations are facing growing pressure to do more with less, especially those grappling with staff reductions. Companies will re-evaluate their current delivery stacks and look toward best-in-class software that can both optimize all aspects of last mile operations to maximize cost-efficiency and scale dynamically as demand grows. Optimization is also key to a superior delivery experience, which will become even more integral to customer loyalty and market growth.
B2B customers will expect a more B2C-like experience. Businesses, much like consumers, are looking for greater certainty and transparency when it comes to delivery. Whether it's regular stock or perishables needed in restaurants and grocery stores, businesses are moving toward just-in-time ordering to control inventory and contain expenses as they contend with inflation, increasing costs, and labor shortages. Organizations serving the B2B market must be prepared to meet precise delivery time demands and guarantee that products will arrive exactly when their customers expect them.
Sustainability actions are stronger than words. There’s been a lot of buzz around sustainability and companies are taking it seriously. But many companies have gotten by with greenwashing rather than making true, actionable commitments to environmental change. It's unrealistic for businesses to be 100% sustainable from day one. What's important is making progressive improvements year over year in a way that is attainable through strategic business plans, such as reducing miles driven, decreasing trucks on the road, or adding electric or semi-electric vehicles to the fleet.
There will be a focus on perfecting the last mile with an emphasis on accuracy. Delivering orders within a promised two-hour window doesn't happen by accident or good luck. To ensure that deliveries make it to the right place at the right time, logistics leaders will employ more sophisticated routing engines that leverage artificial intelligence and predictive analytics to drive greater accuracy, making delivery promises a reality.
Optimization becomes mission critical. PwC's Digital Trends in Supply Chain Survey 2022 found that increased efficiency (63%) and managing or reducing costs (59%) ranked as the top two priorities for supply chain professionals over the next 12 to 18 months. In the current volatile market, successful businesses will find solutions that help delivery operations run more efficiently—despite the size of the fleet or number of drivers—while reducing costs and providing the best possible customer service. We’ll see an emphasis on trimming waste and finding new efficiencies across the board.
Businesses were preparing to deal with the effects of the latest major storm of the 2024 hurricane season as Francine barreled toward the Gulf Coast Wednesday.
Louisiana was experiencing heavy rain and wind gusts at midday as the storm moved northeast through the Gulf and was expected to pick up speed. The state will bear the brunt of Francine’s wind, rain, and storm damage, according to forecasters at weather service provider AccuWeather.
“AccuWeather meteorologists are projecting a storm surge of 6-10 feet along much of the Louisiana coast with a pocket of 10-15 feet on some of the inland bays in south-central Louisiana,” the company reported in an afternoon update Wednesday.
Businesses and supply chains were prepping for delays and disruptions from the storm earlier this week. Supply chain mapping and monitoring firm Resilinc said the storm will have a “significant impact” on a wide range of industries along the Gulf Coast, including aerospace, life sciences, manufacturing, oil and gas, and high-tech, among others. In a statement, Resilinc said energy companies had evacuated personnel and suspended operations on oil platforms as of Tuesday. In addition, the firm said its proprietary data showed the storm could affect nearly 11,000 manufacturing, warehousing, distribution, fabrication, and testing sites across the region, putting at risk more than 57,000 parts used in everyday items and the manufacture of more than 4,000 products.
Francine, which was expected to make landfall as a category 2 hurricane, according to AccuWeather, follows the devastating effects of two storms earlier this summer: Hurricane Beryl, which hit the Texas coast in July, and Hurricane Debby, which caused $28 billion in damage and economic loss after hitting the Southeast on August 5.
Economic activity in the logistics industry expanded in August, though growth slowed slightly from July, according to the most recent Logistics Manager’s Index report (LMI), released this week.
The August LMI registered 56.4, down from July’s reading of 56.6 but consistent with readings over the past four months. The August reading represents nine straight months of growth across the logistics industry.
The LMI is a monthly gauge of economic activity across warehousing, transportation, and logistics markets. An LMI above 50 indicates expansion, and a reading below 50 indicates contraction.
Inventory levels saw a marked change in August, increasing more than six points compared to July and breaking a three-month streak of contraction. The LMI researchers said this suggests that after running inventories down, companies are now building them back up in anticipation of fourth-quarter demand. It also represents a return to more typical growth patterns following the accelerated demand for logistics services during the Covid-19 pandemic and the lows of the recent freight recession.
“This suggests a return to traditional patterns of seasonality that we have not seen since pre-COVID,” the researchers wrote in the monthly LMI report, published Tuesday, adding that the buildup is somewhat tempered by increases in warehousing capacity and transportation capacity.
The LMI report is based on a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
That hiring surge marks a significant jump in relation to the company’s nearly 17,000 current employees across North America, adding 21% more workers.
That increase is necessary because U.S. holiday sales in 2023 increased 3.9% year-over-year as consumer spending grew even amidst uncertain economic times and trends like inflation and consumer price sensitivity. Looking at the coming peak, a similar pattern is projected for this year, with shoppers forecasted to drive a 4.8% increase in holiday retail sales for 2024, Geodis said, citing data from Emarketer.
To attract the extra workforce, Geodis says it will offer competitive wages, peak premium pay incentives, peak and referral bonuses, an expedited payment option, and flexible schedules. And it’s using an AI-powered chatbot named Sophie to serve as a virtual recruiting assistant.
“We acknowledge the immense responsibility we have to our customers to deliver exceptional service every day, and this is especially true during peak season,” Anthony Jordan, GEODIS in Americas Executive Vice President and Chief Operating Officer, said in a release. “Because peak season is the most business-critical sales period of the year for many of our retail clients, expanding our workforce is vital to ensure we have a flexible, dynamic team that can handle anticipated surges in demand.”
With the economy slowing but still growing, and inflation down as the Federal Reserve prepares to lower interest rates, the United States appears to have dodged a recession, according to the National Retail Federation (NRF).
“The U.S. economy is clearly not in a recession nor is it likely to head into a recession in the home stretch of 2024,” NRF Chief Economist Jack Kleinhenz said in a release. “Instead, it appears that the economy is on the cusp of nailing a long-awaited soft landing with a simultaneous cooling of growth and inflation.”
Despite an “eventful August” with initial reports of rising unemployment and a slowdown in manufacturing, more recent data has “calmed fears of a deteriorating U.S. economy,” Kleinhenz said. “Concerns are now focused on the direction of the labor market and the possibility of a job market slowdown, but a recession is far less likely.”
That analysis is based on data in the NRF’s Monthly Economic Review, which said annualized gross domestic product growth for the second quarter has been revised upward to 3% from the original report of 2.8%. And consumer spending, the largest component of GDP, was revised up to 2.9% growth for the quarter from 2.3%.
Compared to its recent high point of 9.1% in July of 2022, inflation is nearly back to normal. Year-over-year growth in the Personal Consumption Expenditures Price Index – the Fed’s preferred measure of inflation – was at 2.5% in July, unchanged from June and only half a percentage point above the Fed’s target of 2%.
The labor market “is not terribly weak” but “is showing signs of tottering,” Kleinhenz said. Only 114,000 jobs were added in July, lower than expected, and the unemployment rate rose to 4.3% from 4.1% in June. Despite the increase, the unemployment rate is still within the normal range, Kleinhenz said.
“Now the guessing game begins on the magnitude and frequency of rate cuts and how far the federal funds rate will be reduced,” Kleinhenz said. “While lowering interest rates would be good news, it takes time for rate reductions to work their way through the various credit channels and the economy as a whole. Consequently, a reduction is not expected to provide an immediate uplift to the economy but would stabilize current conditions.”
Going forward, Kleinhenz said lower rates should benefit households under pressure from loans used to meet daily needs. Lower rates will also make it more affordable to borrow through mortgages, home improvement loans, car loans, and credit cards, encouraging spending and increasing demand for goods and services. Small businesses would also benefit, since lower intertest rates could lower their financing costs on existing loans or allow them to take out new loans to invest in equipment and plants or to hire more workers.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.