Navigating Tomorrow's Freight Transportation

Logistics Transportation Review | Thursday, October 05, 2023

From automation and sustainable practices to digitalisation and supply chain resilience, these significant trends are shaping the transformations occurring in freight transportation.

FREMONT, CA: The transportation industry is currently at a pivotal point with several revolutionary factors at play. Industries are embracing nearshoring to improve supply chains, which is fueling growth in other countries for transportation-related businesses. This significant transformation is accompanied by advancements in data science, materials, and engineering, which are drawing the interest of newcomers such as startups, major retailers, and large-scale technology companies, all aiming to capitalise on substantial market opportunities.

Nearshoring

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Analysts have been forecasting the trend of nearshoring for some time, but substantial shifts have only recently materialised. These shifts have been driven by factors such as supply chain disruptions, favourable economic conditions, and the increasing prevalence of automation. The freight business will be impacted as freight from Asia shifts onshore or nearshore, with 20 per cent expected by 2025 and growing to 40 per cent by 2030.

Agriculture, fashion, and electronics are leading industries in transition. In order to adapt to how transportation will alter in the future, reshaped supply chains force transportation companies to reevaluate operations, infrastructure, and alliances. Established networks are undergoing a transition from complex Asian supply chains to resilient, decentralised approaches.

The Unlock of Great Data

The transportation industry has accumulated enormous amounts of data over many years, but up until now, only a small portion of this data has been successfully accessed. Modern transportation companies can do near-real-time analytics using modern data science techniques and access to data that is significantly higher in resolution, which is changing the way that commodities are transported. Every step of package delivery in the context of a contemporary, completely digitalised parcel company absorbs and generates data. For a firm that sends an astonishing 17 million parcels each day to 200 countries, these data points add up quickly and provide significant predictive potential for those who can harness and contextualise them.

A noteworthy 78 per cent of respondents are resolute in their determination to leverage data as an added-value service or capability with the support of their in-house data scientists. Survey participants have expressed their belief that the most significant value of data lies in improving visibility across end-to-end logistics, customer relationship management, demand forecasting, and workforce management. Proficiency in data management is swiftly becoming a prerequisite for achieving success in the transportation industry.

New Era of Collaboration

However, the impending transportation environment may usher in a new era of collaboration, influencing how goods will be transported in the future. The majority of transportation businesses traditionally create the required competencies to compete. This change may drive businesses to evaluate their core competencies and determine which areas benefit more from collaboration with organisations with specific domain expertise.

Only 29 per cent of the transportation professionals questioned believe that traditional legacy logistics companies are best positioned to advance data optimisation by 2030. On the other hand, almost 60 per cent believe that market leaders will be newcomers, massive retailers, and cloud service providers. This situation presents a large opportunity for quick-thinking, technologically advanced companies to carve out niches in the industry and alter the face of transportation in the future.

Restructuring to Better Align Capabilities

Historically, efficient freight movement capabilities encompassed various functions, but the evolving landscape of freight patterns and technological advancements could reshape how they are supported and executed. Companies might find it necessary to reevaluate support function methods, with back-office operations susceptible to transformation through software-as-a-service and platform-as-a-service models, impacting how transportation of goods will be like in the future.

Transportation leaders are divesting from lower-value activities and intend to outsource noncore functions and incorporate new capabilities through acquisitions to align their operations and service offerings with the evolving environment.

Fleet Transportation

The transformation of fleets coincides with broader changes, which have an impact on the future of the trucking sector. The emergence of new technologies and changes in governmental policies drive these changes. With the integration of onboard technologies like IoT sensors for freight monitoring and automation inside drayage, electric vehicles (EVs) and autonomous vehicles (AVs) are advancing.

By 2030, respondents predict 45 per cent automation and 35 per cent electrification. The majority of respondents anticipate EV and AV producers entering the logistics and transportation industry. Future transportation plans are influenced by the viability of EVs for long-distance shipments and the ability of AVs to alleviate driver shortages.

The freight transportation industry is poised for remarkable transformations driven by innovations in automation, sustainability, digitalisation, and supply chain resilience. These trends and technologies are shaping the way goods are moved and redefining the essence of freight transportation itself. In embracing these changes, it can anticipate a more efficient, sustainable, and interconnected future for the world of logistics and trade.

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