Top Canadian Transport and Logistics Industry Challenges to Watch Out for in 2019 – A Comprehensive Guide for Entrepreneurs
Today, global economics and logistics play a very crucial role in catalyzing trade and by, extension, ensuring the success of the logistics industry. The logistics industry’s landscape is huge and is made of many companies with a variety of services. The shifting preferences of the consumers, the growing demands of clients, and complex business models are a few factors that pose a serious challenge to companies in the logistics industry. Similarly, it can be said that personalizing a conventionally standard service is a humongous task and a significant challenge for companies operating in the logistics industry. In this article, we have listed out some of the major challenges in the logistics industry. Also, we have suggested a few measures to help logistics managers to derive optimum results.
Logistics Industry Challenges
Trimming costs of transportation
With the increasing prices of fuel and peaking inflation indexes, the cost of transportation is increasing daily. Trimming a few corners here and there does not always help in meeting the cost-cutting goals of transportation. So, there is a need to adopt a strategic approach to reduce or eliminate bottlenecks. This can prove to be pivotal in revitalizing network designs and can help cut down transportation costs. The use of a visibility software can help in simplifying these challenges in the logistics industry.
Managing the enormous amount of information
There are a lot of figures and data flowing in on a daily basis in the logistics industry. Such data helps in ensuring the safety of the staff and fleet, cross-checking route maps, fleet loading, sanctioning fuel bills, and so on. This can be a time-consuming and tedious process, if done manually, and can take your focus off from attention to details. This challenge can be overcome by investing in an automated solution or application for fuel bills, data entries, loading and unloading ledgers. Consequently, it can help in streamlining operations in the logistics industry by offering the luxury of time to logistics managers to look at the finer nuances of operations.
Offering customized and segmented services
In the age of globalization, logistics management has become a multi-layered job where managers are expected to track multiple supply chains simultaneously. Apart from punctuality in the delivery of goods, offering customized services to customers and suppliers in terms of pricing and packaging is also very important. Here flexibility becomes the keyword to success. Using a software system to automate the process of projecting different services to different customers can save time as well as efforts. Additionally, it can bring added accuracy to data compliance and compilation processes.
Due to factors like growing competitive pressure and rising fuel cost challenges, companies in the logistics industry are forced to consistently walk the tightrope of balancing price competitiveness and delivering a consistent brand experience. This has made it necessary for aspiring logistics companies to leverage market intelligence for developing effective strategies for growth. Infiniti Research, with its expertise in offering actionable market intelligence solutions, helps businesses to understand the local competition and gain actionable insights into formulating effective growth strategies. Our flexible deliverable formats include online platforms with relevant infographics that help understand and assess the logistics market, globally.
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Today, logistics plays a very crucial role in smoothening trade facilitation and finally the business operations of other companies. There are several factors such as the growing demands of the client, changing needs of consumers, and complicated business models, which pose challenges for logistics companies. This gives rise to a very important question, which is how can a conventionally standard service be personalized according to preferences? This is probably the most ruling challenge that the logistics industry is facing since years. In the attempt to optimize the output, here are top four challenges that the logistics companies face:
4 Challenges Facing Logistics Companies
An increase in the prices of fuel leads to an increase in wages, which, in turn, elevates the transportation costs every day. So, the logistics companies will have to come up with a planned and strategic approach to get away with or at least cut down the costs for transportation. For the implementation of such strategies, logistics companies require information is reliable based on current and future orders. Visibility software is a very good option to simplify such challenges. Third party transportation agency which is cost-effective can be a very helpful option for small businesses who are looking to cut transportation costs. This can help small logistics companies to get away with the expenditure on maintaining vehicles for delivery. A small amount paid to the third party can take care of the rest.
According to the market intelligence experts at Infiniti Research, ‘cutting transportation costs’ makes the top of the list as far as challenges for transportation and logistics services providers go.
Improving customer service
For customers, transparency and punctuality in the delivery are the most important things to consider. Using technology and tracking systems, customers can track their parcel status and upload the same on social media platforms. Customers’ expectations have manifolded today and that is why they don’t mind paying a little bit extra for single day delivery. Therefore, to fulfill such expectations, logistics companies will have to come up with something unique and easy to provide the best customer service and retain their loyal customers.
Management is a task that is full of responsibilities and it becomes more challenging when it comes to manpower management. The humane approach is one of the most important requirements that should be adopted for managing manpower. When it comes to logistics companies, manpower management becomes even more challenging as the staff and drivers generally stay in different locations and a proper coordination between the two is highly needed for the swift and easy supply of orders. Here comes the role of decentralization of power into play. Logistics companies can appoint logistics managers in major locations and provide the solutions efficiently by time and team schedule.
Providing customized services
Management of logistics is something which cannot be done single-handedly. Rather it has several layers that need to be managed separately. Logistics companies not only have on-time deliveries as their core job deliverable, but they also need to provide customized services, such as packaging and pricing, which takes a lot of time. So, providing a personalized experience to each customer becomes a great challenge. Here flexibility plays a very important role.
To know more about the challenges faced by logistics companies
The increasing demand for frozen cooked and the semi-cooked food is expected to fuel the growth of cold chain logistics market in the coming years.
The cold chain logistics space is witnessing considerable growth, driven mostly by the rising demand for temperature-sensitive health products. The industry, at large, involves the transportation of temperature-sensitive products under controlled conditions. The products with limited shelf life such as dairy products, frozen food, pharmaceutical products, and meat products are transported and distributed using cold chain logistics. The relentless growth of the industry can be attributed to factors such as growth in the organized retail and rising export demand for processed and frozen foods. Apart from such factors, the rising adoption of multi-temperature refrigerator vehicles and growing preference for third-party logistics services may further influence the growth of the industry.
Here are some of the factors that may curtail the growth of cold chain logistics space:
- Rising infrastructure costs: To establish an efficient supply chain process, extensive investments in specialist warehouses with temperature-controlled zones becomes a primary Moreover, to cater to the rising demands of the customers, it becomes essential for businesses to streamline their supply chain operations right from the source to the final delivery of products.
- Traceability: In the cold chain logistics space, it becomes critical for the businesses to keep track of their product offerings and ultimately reduce the time-to-market for the products offered. The products involved in transportation can also include drugs that have to be properly administered. Consequently, businesses have to ensure consistency in their product offerings to meet the growing needs of the target audience.
To address such challenges and profile the most suitable suppliers, organizations are utilizing supplier selection solutions. Implementing an effective supplier selection process helps business identify and evaluate the most suitable suppliers and streamline their financial resources to meet the business requirements. Moreover, with the help of supplier selection solutions, businesses can drive customer demand and build a strong brand reputation for quality products.
The Business Challenge
- The client- A renowned cold chain logistics provider
The client, a renowned cold chain logistics provider, wanted to select the right suppliers and meet the regulatory standards to build a strong reputation for quality products. With the help of our supplier selection solution, the client wanted to ensure quality and safety in their product offerings and consequently meet the shelf-life expectations of the products. Moreover, the cold chain logistics provider wanted to seek ways to identify performance gaps and improve their overall business performance.
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To monitor the supplier performance, the supplier selection experts at Infiniti carried out extensive research comprising interviews and discussions with prominent stakeholders in the cold chain logistics space. In addition, to identify the performance gaps, the experts also compiled information from a wide array of reliable sources such as trade shows, industry forums, and company presentations in the logistics industry.
The Solution Benefits and the Business Impact
The supplier selection solution offered by Infiniti helped the cold chain logistics provider to select the right suppliers from a pool of suppliers. The engagement also assisted the cold chain logistics provider in assessing capabilities and comparing pricing points. Moreover, the solution offered also allowed the client to establish KPIs to analyze suppliers’ strengths and weaknesses.
A must-read case study for strategy specialists and decision makers looking to develop an understanding of the cold chain logistics industry
In 2015, the return delivery costs amounted to around 246 billion U.S. dollars in North America alone and global return costs of over 600 billion U.S. dollars.
Reverse logistics is the process including the return movement of goods away from their final destination to capture value or proper disposal.
Over the past few years, the reverse logistics industry is witnessing robust challenges in terms of low margins, high operation costs, and a shortage of talent. As a result, firms in the reverse logistics industry are planning to streamline their service capabilities to enhance delivery performance and increase customer satisfaction levels. Additionally, with the rising demand for one-stop solutions, firms are entering mergers and acquisitions to tap potential markets and enhance their functional capabilities. Furthermore, the growth of reversed logistics industry can be attributed to factors such as globalization, robust GDP growth, and increasing foreign direct investments.
However, a few factors are expected to influence the growth of the reverse logistics industry in the coming years. These factors include:
- Improving efficiency: It is essential for the businesses in the reverse logistics space to leverage the use of innovative technological capabilities to streamline their work and deliver efficiency. This is because the industry is witnessing competition with the presence of several competitors. With the help of advanced software, firms can become much more productive and offer reliable services to the customers.
- Tracking warranty: Today, companies in the reverse logistics space are facing challenges in tracking the warranty of the products as reverse logistics involves the process of replacing commodities directly from the customers. Additionally, in case of third party repair by an OEM, it is essential for companies to track secondary warranties and generate appropriate claims for the warranty services offered.
Many such factors are compelling reverse logistics industry players to leverage the use of competitive intelligence solutions. Competitive intelligence solutions help firms identify and profile the major competitors across the industry and generate meaningful insights to enable informed decision-making.
The Business Challenge
- The client: A renowned reverse logistics provider
The client, a leading reverse logistics provider with business units spread across the globe, wanted to profile the key competitors and benchmark their pricing plans. Additionally, the client wanted to understand the prevailing competition to benchmark their products, accordingly allocate resources to meet the business requirements, and enhance their competitiveness across the market.
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The competitive intelligence experts at Infiniti carried out extensive research comprising interviews and discussions with prominent stakeholders in reverse logistics space to help the client enhance their competitiveness across the market. The experts also compiled information across a wide array of reliable sources such as trade shows, paid industry databases, and company presentations to help the client formulate effective business strategies.
The Solution Benefit and the Business Impact
With the help of Infiniti’s competitive intelligence solution, the reverse logistics client gained actionable insights into the strengths and weaknesses of the competitors and identified their unique selling propositions. Additionally, the client identified the gaps in terms of their capabilities and performance and ranked their business against the major competitors. This helped the client successfully launch and market new services across the industry.
Firstly, for reverse logistics, the use of self-driving trucks is going to revolutionize the transportation of materials from distribution center to retail outlet in the near future. Secondly, there will soon be a technology revolution with regards to the processing of returns. Both these developments are going to change how large companies are going to conduct their logistics and reverse logistics.
A must-read case study for strategy specialists and decision makers looking to develop an understanding of the reverse logistics industry
Transportation is one of the world’s largest industries. The services offered by the companies in this sector range from taxis to trucks, airplanes, trains, courier services, ships, barges, warehouses, and logistics. The transportation sector is now increasingly relying on artificial intelligence and robotics in the form of self-driving cars, trucks, and delivery vehicles. The growth of the global logistics services industry is directly related to the development of international trade flow and the current economic environment. North America and the Asia Pacific are known to be the most attractive markets for logistics services, especially when it comes to contract services such as third-party logistics. Additionally, intra-regional trade in developing markets is becoming important, especially in the Asia Pacific, and this, combined with high GDP rates, is expected to boost the growth of the logistics services industry.
Some of the other key factors influencing the growth of the transportation industry includes :
- Improved Customer Service: Today, customers want full transparency into where their delivery is at all times. Moreover, customer expectations have increased, and their willingness to pay for fast shipping has decreased.
- Technology Strategy and Implementation: While the logistics services industry supports and understands the benefits of the latest technologies, some questions persist as to how they will pay for it and who will help devise the improvements.
As a result, logistics services firms are leveraging the use of marketing strategy solutions to improve their position in the market. Marketing strategy solutions help firms within the logistics services space to address the requirements of the customer and accordingly devise new strategies to market the offerings and improve customer service.
The Business Challenge
- The Client: Logistics services company
The client, a leading logistics services provider with business operations spread across the globe, wanted to ensure that the services offered to meet the demands of the customers and gain insights into ways to develop profitable long-term relationships with them. Additionally, the client wanted to refine their marketing activities and devise an effective marketing strategy to attract new customers.
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To help the client improve their marketing campaigns, the market strategy experts at Infiniti carried out extensive interviews and discussions with leading stakeholders within the logistics services space. The experts also compiled information from a wide array of secondary sources such as paid industry databases, trade shows, company presentations, and industry forums.
The Solution Benefits and the Business Impact
The marketing strategy solution provided by Infiniti helped the client develop a robust marketing campaign that resonated with the target audience. The client also gained insights into ways to position the product in the marketplace and generate a better ROI. The engagement also helped the client devise a marketing mix to differentiate the offerings with that of the competitors within the logistics services space.
The Internet of Things allows devices to communicate with each other within an existing internet infrastructure without human intervention. Its application in the future of logistics services is expected to decrease waste, increase speed, and reduce overall costs.
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The client, a renowned 3PL company with business functions spread across the globe, wanted to understand the challenges and opportunities and develop effective marketing initiatives to reach out to the target audience effectively. With Infiniti’s market assessment solution, the client also wanted to comprehend the market potential and devise effective ways to evaluate the needs, expectations, and standards of the target customers.
Solutions Offered and Value Delivered
The market assessment experts at Infiniti followed a comprehensive research methodology comprising of interviews and discussions with prominent stakeholders in the 3PL industry to help the client implement new marketing initiatives. The experts also compiled information across a wide array of reliable sources such as trade shows, paid industry databases, and company presentations to help the 3PL client evaluate the potential risks across the industry.
With the help of Infiniti’s market assessment solution, the client identified the potential market opportunities and expanded their product and service offerings to niche target regions. Additionally, with market assessment solution, the client was able to evaluate the perceptions of the customers toward the products and services and accordingly fine-tune their marketing resources to enhance capabilities. Infiniti’s market assessment solution further helped them meet the needs, expectations, and standards of their customers.
Future of Third Party Logistics
Third-party logistics, also known as 3PL, is an outsourcing system wherein storage and transportation services are outsourced to a specialist company. Delivery, packaging, inventory management, and cross-docking services are usually bundled with 3PL services. The rise of the e-commerce industry has been a significant driver for the global 3PL market in the past few years. E-commerce companies focus on selling the products through an online platform, and not all have their own logistics services. Also, startups, which are becoming increasingly frequent in today’s business environment, may not be able to afford their own logistics services, necessitating the use of third-party logistics. Additionally, the availability of industry-specific logistics services and the emergence of Big Data are expected to be the major drivers augmenting the growth of the industry.
Why Leverage Infiniti’s Market Assessment Strategies?
Established in 2003, Infiniti Research is a leading market intelligence company providing smart market assessment solutions to address your business challenges. Infiniti Research studies markets in more than 100 countries to help analyze competitive activity, see beyond market disruptions, and develop intelligent business strategies.
With 15+ years of experience and offices across three continents, Infiniti Research has been instrumental in providing a complete range of competitive intelligence, market assessment strategy, and research services for over 550 companies across the globe.
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Last-mile delivery has always been a burning problem for players in the logistics industry. Added to that, rising consumer expectation hasn’t helped the cause. Consumers demand one-day or same-day shipping which can be logistically impossible or economically unviable. Even major logistics companies only offer few items to be shipped within a day. Furthermore, delivering goods via road poses many uncertainties including the unavailability of drivers and uncertain traffic and road conditions. So how can logistics companies effectively tackle such problems? One area such logistics companies are exploring is the viability of drone delivery. Drone delivery can efficiently solve the everlasting last-mile delivery problem. Additionally, the ability to operate autonomously saves companies personnel costs along with fuel costs. Although such companies are currently bound because of regulatory hurdles, governments are looking at provisional measures to make drone delivery a reality.
Amazon Prime Air
Amazon CEO Jeff Bezos revealed plans for Amazon Prime Air in the year 2013 and completed drone delivery after three years in 2016 by delivering a parcel to Cambridge, England. To implement full-scale delivery, the company plans to use miniature UAVs which will be able to carry loads of less than five pounds and deliver within 30 minutes to locations that are within the 16km radius of an Amazon fulfillment center. The company is planning to roll-out the service on a small-scale depending on country’s regulatory rules. Currently, the most significant challenge facing Amazon Prime Air is its ability to successfully navigate more tricky urban environment to successfully deliver the package. Once they figure out a solution using AI and get regulatory approvals, drone delivery would become a reality.
Domino’s Pizza is testing the possibility of delivering a pizza by drone. They successfully performed a drone pizza delivery in New Zealand by partnering with drone delivery service startup Flirtey. Such delivery option will allow the food giant to reach more rural customers and improve delivery times in congested environments. Domino’s Group CEO advocated for drone delivery system stating that it doesn’t make economic sense to deliver a two-kilogram order on a two-ton machine. With the advancements in artificial intelligence systems, drone delivery can be the perfect option for delivering food to the consumers quickly and efficiently. Their current drones can deliver pizzas within 10 minutes to any location within a 1.5km radius of a Domino’s Pizza chain.
Ukrainian Postal Service
In 2016, Ukrainian Postal Service teamed up with Flytrex Aviation to begin testing drone delivery service in Ukranian cities. The drone, named Mule, is capable of carrying loads of up to 3kg to a distance of 23km. The drone can travel at a maximum speed of 70km/h, reducing the delivery time to a mere 30 minutes. The logistics company has deployed a unique release mechanism in the drone to avoid parcels being stolen or tampered. The drone uses a battery instead of fuel and saves a lot of cost in terms of maintenance and fleet management.
Mercedes-Benz recently unveiled the Vision Van, which employs two drones capable of delivering packages of up to five pounds within a radius of six miles. The company partnered with drone startup company Matternet to develop the Vision Van. The Vision Van would enable the company to increase its productivity up to 50% in last-mile delivery service. The mini aircraft has already successfully delivered more than 100 packages within Zurich, Switzerland. The company has invested about $597 million in an effort to speed delivery times for online orders.
Workhorse is an American electric mobility solution provider that developed Horsefly, an autonomous drone delivery system. The device is able to carry a 10-pound package for about 30 minutes flying at a speed of up to 50mph. It can deliver packages at a meager cost of $0.01 per mile in electricity costs. The company claims the drone to work even in rain and snow, but wouldn’t handle high winds particularly well. The company is looking for an ingenious solution to overcome US regulatory rules that demand drones to stay within line-of-sight by mating the technology with its electric delivery trucks.
For more information on companies into drone delivery, logistics companies, delivery service: