Weathering the Storm: Logistics
Freight carriers are expressing utilization over 95% compared to below 90% in prior busy years. The number of drivers across the country is down, and carriers are selecting routes based on productive times available (meaning they are de-prioritizing routes with excessive wait times to load and unload). Another challenge in the industry is the rising average costs of U.S. warehousing rentals that have risen 10% year over year to nearly $9 per square foot, while availability of space sank to a record low of 3.6%. Congestion at the ports have also slowed down the availability of materials to build new locations.
These trends are all estimated to continue into 2022.
Transportation and logistics providers are seeking increased wages for contracts in 2022, signaling that the inflationary pressure driven by strong demand and tight capacity in freight markets is likely to persist. To ease some of the challenges, shippers can be proactive by cultivating relationships with key partners and rewarding them as found appropriate, forecasting freight needs accurately to create trust, optimizing networks to help eliminate empty miles, and tendering loads as early as possible and be very efficient operationally when pick up occurs.
Because of the human capital challenges, automation within fulfillment and distribution centers must be a real consideration. Some technologies being considered in the industry include Automated Mobile Robots (AMRs), automated picking and sorting systems, modular conveyors, automated storage and retrieval systems (AS/RS), automated scanning technology, and Autonomous Guided Vehicles (AGVs). Tying such technology, along with Artificial Intelligence (AI) heads up displays used for standard tasks in the distribution center, while smart storage systems give you streamlined and efficient operations, improved inventory visibility and comprehensive view of flow.
Companies should start by reviewing carrier contracts, minimizing unload and load delays, and improving driver wait experiences. Be sure to have backup carriers as well as primary carriers.