New shipping trends, market factors and evolving consumer demand are all influencing the supply chain. Here are five key factors shaping the future of supply chain throughout 2022.
Cross-Border Shipping Will Increase
As borders and markets re-open after COVID, there will be increases in international shipping. The pandemic accelerated domestic online shopping and increased shoppers’ willingness to make international purchases. Fortunately, international shipping has become highly affordable within the e-commerce space, opening up new markets and opportunities. There are more than 7.5 billion people globally, and only 325 million of them are in the U.S.—global e-commerce presents unlimited possibilities. Retailers must create a seamless customer experience to attract and retain international customers. There are several tools to help address currency conversions and customs and track users’ countries, which helps ensure appropriate fees are assessed at the point of purchase.
Carriers Control the Market
Capacity constraints in the trucking sector across North America coupled with equipment shortages and the worsening driver shortage have placed local, regional and national carriers in a strong position for negotiating rates and choosing which loads they accept. Shippers need to dial in their supply chain process on the transportation side and focus on areas where they can be a shipper of choice. Manufacturers and retailers will likely stay with their existing carrier partners to help mitigate rate increases and add supplemental carriers and structure multicarrier shipping strategies to achieve greater flexibility, reduce risk and optimize costs without compromising their customers’ experiences.
Just-in-Case Replaces Just-in-Time
Global Supply chain difficulties and pandemic-related shortages have highlighted the downsides of just-in-time inventory and have made the practice less attractive. In the 2022 Annual Third-Party Logistics Study, more than half of shippers—62 percent-said they believe that supply chains have become too lean, taking out too much in an effort to reduce cost and on-hand inventory. Many companies are now holding more inventory and planning for longer fulfillment cycles. Similarly, many are investing in more warehousing space and distribution centers to help minimize the risk of supply chain delays or product outages. However, the shift to a just-in-case supply chain management requires increased visibility and analytics and improved inventory management which is also leading to increases in technology spend. Companies should utilize their e-commerce data, logistics and shipping data, and inventory performance data to identify optimal lead times and order patterns.
Emphasis on Sustainability Increases
Consumers, investors and employees are increasingly interested in sustainability initiatives, and improved supply chain management holds some of the greatest opportunities for breakthroughs and advancements, according to the 2022 Annual Third-Party Logistics Study. Manufacturers, retailers and logistics providers are looking for ways to reduce their carbon footprint. This can be done through route optimization, improved capacity utilization and backhauls. Additionally, original equipment manufacturers are focusing on improved fuel efficiency and reduced fuel emissions and advances in electric vehicle technology have more companies investing in electric forklifts, yard tractors and delivery vehicles to help improve sustainability.
…revenue from retail e-commerce in the United States was estimated at roughly $768 billion U.S. dollars in 2021, up from $644.4 billion in 2020 and $516.5 billion in 2019.
Last-Mile Innovation Continues
At-home package delivery increased dramatically in 2020 and 2021 as e-commerce sales grew, increasing the focus on last-mile deliveries. According to Statista, revenue from retail e-commerce in the United States was estimated at roughly $768 billion U.S. dollars in 2021, up from $644.4 billion in 2020 and $516.5 billion in 2019.
Consumers remain concerned about theft, which could drive an increase in secure parcel lockers, which allow consumers to decide when, where and how they receive their packages. At the same time, the use of local couriers will likely increase as retailers work to meet consumers’ demand for home delivery, often for same-day delivery or even within a few hours of the order being placed. Today’s gig economy couriers can help retailers increase order fulfillment options to meet peaks in demand without investing in and committing to full-time staff.
What does your future supply chain look like?
If you want to discuss how any of these trends might affect the supply chain process for your business or organization, contact us today!