5 Logistics and Warehousing Trends We Predict for 2018
As we approach the end of 2017, business analysts for each industry have made their predictions for the oncoming 2018.
At On Time Logistics, we are continually keeping a sharp eye on the growing trends in the industry. Here are the five that we believe will be the primary forces shaping the future of logistics and warehousing business in 2018.
Turnaround times on last mile deliveries will become increasingly shorter
Expect to see companies finding ways to decrease their turnaround time from the time of ordering to delivery. The reason being that customers are wanting their products within 48 hours or same day and are willing to pay extra.
Studies have shown that a growing percentage of the population is willing to pay extra for same-day shipping. While the cost used to be high for the service, companies such as Amazon are making same-day or two-day delivery cheaper through their highly popular Amazon Prime service. Walmart is also developing ways to get items to your door faster and other, smaller retailers are following suit.
While this is good for the consumer, the delivery and logistics market will see higher stress in 2018 with companies having to work harder to compete. We’re already seeing in our own business that companies are utilizing local and regional last mile delivery services to decrease turnaround times. This is a primary reason why On Time Logistics has become a popular resource in Northwest Arkansas, Tulsa, and Little Rock.
More companies will attempt to ‘DIY’ their last mile deliveries
Retailers generally have two options when it comes to providing fulfillment for their orders: outsourcing to a last-mile delivery service or trying to do the deliveries themselves. Insourcing is used when companies see an opportunity to use their staff and trucks to deliver packages nearby. Outsourcing has businesses acquire the assistance of a third party to deliver the package.
Companies such as Walmart and Amazon have shown interest in insourcing their last mile deliveries in some areas. In June, Walmart announced that it would begin experimenting with the last mile delivery using current store associates who sign up to handle the service for additional pay.
As retailers of all sizes are faced with having to increase customer service, some will try to do their own last mile deliveries. Our position at OTL is that this is not a good idea for most companies. Companies do this to save costs on outsourcing to a last mile delivery service, but they often don’t take into enough account the costs associated with starting your own service.
These costs include fleet and high insurance costs both for the fleet, the employees, and the items being delivered. This also means that the companies have to incur more employment costs, which are high. Along with that, companies would need to train potential drivers and getting those running different supplies, TSA certifications, as well as medical courier training for medical companies.
Unconventional logistics experimentation will increase, as will associated problems
We’ve already seen quite a bit of experimentation with unconventional logistics and we predict this will increase in 2018. Unconventional logistics includes the use of drones, driverless vehicles, and robots in stores instead of employees.
The testing of these ideas will continue. Amazon is using drones in some places, some companies are trying driverless vehicles and some companies, including Walmart, are testing robots in some markets, including Northwest Arkansas.
Here’s the thing: We don’t see these ideas catching on as quickly in our target areas (Northwest Arkansas, Little Rock and Tulsa) because they aren’t tested and proven. We are in an area that loves innovation, but also values common sense and will want something that is better established before it’s embraced.
Our trend prediction is that while experimentation will rise, so will associated problems. For example, each state and municipality will have its own rules about drones and their airspace. Drones have limitations on what they can carry, too.
Driverless vehicles have already experienced wrecks, some as soon as the vehicle leaves the factory. Driverless vehicles are seen as more efficient and as a potential solution to the truck driver shortage problem, but our opinion is that it’s not the answer. While humans do cause error, taking away the human ability to correct potential technology glitches on the road presents a whole new host of problems.
Robots take away the customer service aspect and they potentially take away lower wage jobs and replace them with higher-end jobs for the technicians who work on the robots. While this may sound like a good idea, many people rely on the lower-end jobs for their survival.
Safety issues will increase
We’ve already touched on potential concerns with the first three trends, but the biggest of all three is the probable increase in safety lapses.
As we see companies striving to decrease their turnaround time, more accidents could potentially happen because of the increased pace. This includes on the road and in the warehouse. Having employees doing your last mile deliveries increases their chances of getting hurt or damaging property because they are not professional delivery drivers. All the unconventional logistics ventures have the potential for lots of safety issues.
The hurry-up factor, the untested automation factor and the untrained employees factor will all equal more safety issues. This will lead to more punitive regulations that will make logistics even more costly, not to mention the immediate cost of human life and loss of property. There should be immediate regulations instead of reactionary ones, which will involve the NTSB and the FAA in some cases.
There should also be better and immediate training before any of these programs are initiated. Another option is to simply not dive into some of these different trends unless you know what you’re doing (or can hire someone who can).
We also want to touch on another kind of safety issue we see becoming even more prevalent: Cybersecurity.
While companies are making the process to get products to consumers easier, cybersecurity will be of greater importance. In a recent survey, around 40% of companies were affected by cyber breaches in 2016. Breaches of cyber security can affect manufacturing, business information, and even compromise customer data. While companies will be upgrading cybersecurity, the possibility of a breach is always present.
Warehousing construction will become more regional
While companies continuously search for better methods to get packages to your front door, they also need a location to distribute packages to delivery drivers.
Warehouses are not cheap, costing enough that most companies will not build a warehouse until a contracted project is perceived to be 80% full.
The trend seen throughout the country is that companies such as Amazon will build regional warehouses and fewer major warehousing hubs. This trend, which is becoming a global phenomenon, brings the products closer to the consumer, making them easier to deliver in a timely manner. The smaller regional warehouses also take up a smaller footprint, making them easier to get approved and constructed.
How can we help?
On Time Logistics provides safe, efficient, regional, and professional warehousing and delivery services. Are you wanting to reduce your costs but maintain a safe and customer-friendly operation in 2018? Let us help! Contact us today to help with warehousing or logistics in Little Rock, Tulsa, Northwest Arkansas, and the surrounding areas.