May 17, 2020

Global logistics spending set to soar to $10.6trn by 2020

logsitcs
Cloud
Big Data
AI
James Henderson
2 min
The CBRE believes the value of returns this holiday period could hit $32bn
Global logistics spending is expected to reach $10.6trn in 2020, with transportation accounting for the majority at 70%, according to a new report.

Res...

Global logistics spending is expected to reach $10.6trn in 2020, with transportation accounting for the majority at 70%, according to a new report.

Research by Frost & Sullivan predicts that technologies such as cloud computing, big data, and crowdsourcing, coupled with an influx of tech-savvy start-ups, are unbundling the value chain and transforming delivery models.

About two fifth of the overall logistics costs are associated with the last mile that are forcing providers to come up with newer innovative solutions to deliver packages within cities.

Frost & Sullivan predicts the market will rapidly move toward mobile freight brokerage-type, on-demand deliveries and autonomous technology, such as the use of drones and delivery bots which are set to solve the last mile delivery challenge by being more cost effective to end users with lesser regulatory mandates. 

The study highlights the trends, drivers, new business models, technology scenarios, opportunities and innovations within e-commerce, omnichannel, retail, courier, and post that are set to disrupt the last-mile delivery market.

In addition, it reveals cleaner forms of deliveries and provides a regional perspective in terms of countries such as United Kingdom and Germany that are considering ultra-low economic zones to facilitate the objective of sustainable and green transportation by 2020.

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“Spiralling last-mile delivery costs and changing customer demands are causing retailers to rethink their strategies and look toward new business models such as click-and-collect, locker boxes, on-demand, and autonomous solutions,” said Vijay Narayanan Natarajan, Visionary Innovation Senior Research Analyst at Frost & Sullivan.

“Moreover, the influx of start-ups in logistics has enabled innovative solutions that not only provide value-creation customized solutions for the consumer, but also tackle the inefficiencies currently witnessed.”

Further trends and developments driving growth include:

  • Digital freight brokering platforms reducing empty miles by 8% to 10%;
  • Shift toward low-emission and zero-emission solutions, such as use of low-carbon vehicles or bicycles;
  • Fleet operators expanding their strategies by developing urban distribution centres for effective logistics management; and
  • Retailers focusing on compact stores to reduce capital expenditure and bring products closer to a growing urban customer base.

“Rapid proliferation of connected technologies and solutions, and further advancements in autonomous applications could well usher in new innovations in logistics with delivery bots and drone solutions all set to be the future of urban deliveries,” said Archana Devi Vidyasekar, Visionary Innovation Global Research Manager.

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Jun 19, 2021

Driver shortages: Why the industry needs to be worried

Logistics
SCALA
supplychain
Brexit
Rob Wright, Executive Director...
4 min
Logistics professionals need urgent solutions to a shortage in drivers caused by a perfect storm of Brexit, COVID-19 and compounding economic factors

While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks. 

A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so. 

What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.

"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"


That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.

But where has this skills shortage stemmed from? 

Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.

COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.

It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing. 

So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done? 

Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change. 

Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.

Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line. 

On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains. 

Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months. 
 

Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector

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