2016 brought major changes to the logistics industry
As we prepare to usher in a new year, it’s only fitting to look at what happened in 2016. We witnessed many evolutions in the logistics and warehousing industry as well as the ripple effect those changes had on the rest of the world.
Here are some of the most noticeable industry trends that affected us and our clients:
We say this every year for the last couple of years, but in 2016 e-commerce’s growth was even more significant. This is the first time that it appeared that e-commerce would become more popular for Black Friday than going to a store location. E-commerce has forced retailers to re-evaluate how they operate, which is an issue we’ll discuss more in a few minutes!
According to the Census Bureau of the Department of Commerce, the estimate of U.S. retail e-commerce sales for the third quarter of 2016 was $101.3 billion, an increase of 4.0 percent from the second quarter of 2016. Total retail sales for the third quarter of 2016 were estimated at $1,212.5 billion, an increase of 0.9 percent from the second quarter of 2016.
The year-to-year comparison is even more astounding, however. The third quarter 2016 e-commerce estimate increased 15.7 percent from the third quarter of 2015 while total retail sales increased 2.2 percent in the same period. E-commerce sales in the third quarter of 2016 accounted for 8.4 percent of total sales.
At On Time Logistics we’ve seen first-hand how e-commerce has become more prevalent as we became last mile delivery providers in Northwest Arkansas for both Amazon.com and Wayfair.com. We even added our own “e-commerce” option when we added online ordering for same-day delivery in Northwest Arkansas.
Warehouse automation and expansion
The concepts of automation and expansion may seem like two separate issues but they go hand-in-hand. With the drastic increase in e-commerce, retailers are finding the need for more warehouse space and less store space. Warehouse space is at a premium across the world, to be sure. Countries like China are especially seeing the crunch. As warehouses become more full, the need for automation has intensified. Some warehouse companies have even started using drones to help with inventory control.
Another aspect of growth we’ve seen in warehousing is how warehouses are used. Long gone are the days where warehouses are simply used for storage and fulfillment. We now have customers who use our warehouse as a delivery center for furniture and other goods. In other words, their client’s products come into our warehouse and we store them until we are asked to deliver those goods. We’ve also seen an increase in seasonal warehousing, including customers only needing a warehouse for certain months out of the year.
Supply chain control shifts
As more retailers delve into offering e-commerce options, small business owners are finding themselves being active in more aspects of the supply chain than ever before. In recent years, a push for more local and regionally made goods as made retailers search for new suppliers. The rise of e-commerce has increased their involvement on the other side of the supply chain. It used to be that when a customer purchased an item in the store, that was the end of the retailer’s responsibility. With e-commerce, the retailer is now often responsible for ensuring a safe and affordable delivery to the customer.
Job growth and related need for more drivers
In the last year, warehousing and logistics have both seen a drastic increase in jobs. According to the U.S. Bureau of Labor Statistics, couriers added 26,000 jobs, while warehousing added 47,000 jobs over the past 12 months.
As e-commerce grows, so will the need for courier and warehousing jobs. As the economy grows, so will consumer confidence, which translates to more sales. That means e-commerce will grow even more, requiring more people to work in those positions. This is a great problem to have but it is still a conundrum. Unemployment has gotten so low that it’s hard to find the number of drivers necessary to fulfill orders.
At On Time Logistics, we’ve nearly doubled our driving staff in the last year just at our Northwest Arkansas office. We also opened an office in Tulsa, which has required more hiring. We are constantly in search of qualified, reliable drivers to fulfill client needs.
Uber and other on-demand logistics
It used to be that pretty much the only food you could get delivered in Northwest Arkansas was pizza. Not so much anymore! Food delivery services and other express delivery services are on the rise in our region and across the country. In larger cities, companies are experimenting with various forms of two-hour service operated by bike couriers. Other companies like Uber, which offers taxi-like rides on demand through contract drivers, are also becoming wildly popular.
Whew! A lot happened in 2016 and we look forward to 2017. Want to start the new year with a strong partner for your logistics and warehousing needs? Give us a call.