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consumer demands

Top 3 Factors To Consider In 2021 For The Trucking Industry

With the effects of 2020 reverberating into the new year, business carries on in some unusual new ways. Most notably, COVID-19 disrupted the global supply chain and profoundly altered the flow of goods. E-commerce has shaken the retail industry’s logistics approach, as Amazon’s model dramatically altered consumer expectations in a phenomenon now known as the “Amazon Effect”. Under orders to stay home, much of the world turned to online retailers like Amazon for shopping that was previously done locally and in person. Between hard to predict consumer behavior and the erratic flow of goods, outlooks on capacity continue to vary and become more heavily influenced by urgency. 

Impacts Of COVID-19

COVID-19, which required government response worldwide, presented many barriers to the existing standards of freight. Many workers considered non-essential by governments, happened to be essential in producing, packaging and transporting goods. Borders were closed to stop the spread, further bottle-necking the flow of supply chains. The threats that COVID-19 presented to supply chain security, continuity and resilience exacerbated traditional risks faced every year and also created new vulnerabilities and risks that experts will need to tackle in the year ahead. 

“The Amazon Effect” and E-Commerce

As slowdowns became prevalent in other major carriers such as FedEx and UPS, Amazon remained comparatively unphased.  Obsessed with customer satisfaction, Amazon was well seated to thrive during what was for most others, a crisis. With COVID-19 creating changes in best-fit practices, Amazon contributed to the plight of its competitors by raising the bar.

Consumers had come to expect options like free shipping, free return shipping, same-day delivery, and high visibility. As Forbes states, “last-mile delivery is one of the most challenging problems in fulfillment,” and “The Amazon Effect” has had its heaviest influence here. Amazon has the same logistics focus as it’s competitors, inventory and freight. However, it has shifted the weight of this focus largely on controlling its freight costs. Since last-mile delivery is almost exclusively by road, shifting investment towards freight allows delivery models to expedite delivery with smaller fleets.

For freight shippers to keep pace, they will need to make logistics-minded investments that allow them to evolve with the pervasive influence of Amazon’s near-instant gratification. 

Due to the high influence of this phenomenon over last-mile delivery, the trucking industry will continue to be affected in 2021. For freight shippers to keep pace, they will need to make logistics-minded investments that allow them to evolve with the pervasive influence of Amazon’s near-instant gratification. 

Ideal Capacity for Profitability 

2020 came with many uncertainties, but there is one thing the trucking sector knows about shares: they tend to outperform as the industry emerges from capacity-related stress or economic pressure. Inventory to sales ratios are at record lows. Businesses that responded to The National Federation of Independent Business (NFIB) Optimism Index showed that increasing their inventories was a chief priority in their developing plans for 2021.    

Given the industrial exposure of LTLs, the most optimistic of analysts are preparing for a bull market.  

The end of 2020 sees all-time highs in LTL stock trading. Many analysts are projecting that the COVID-19 vaccine will increase not only consumer economies but provide a catalyst to company inventories-related-spending. Of course, the implication of this outlook is positive strides in the industrial sector. Given the industrial exposure of LTLs, the most optimistic of analysts are preparing for a bull market.  

FTL shipping has many benefits over LTL in expedition, and is favored for it’s lower spot rates. However, as factors like the Amazon Effect come into play, it is important to think critically about best-rate decisions.

FTL shipping has many benefits over LTL in expedition, and is favored for it’s lower spot rates. However, as factors like the Amazon Effect come into play, it is important to think critically about best-rate decisions. 

Trucking stands to see plenty of action in 2021. If freight companies can accurately forecast capacity-related needs, they will remain insulated from the chaos 2020 brought with it’s unprecedented factors as they continue to hit the open road into 2021.  

Strengthening Capacity Foresight

BlueGrace offers end to end support by assessing and integrating your needs into projections from our data analytics team. Partnering with an extensive list of carriers, BlueGrace can help ease the significance of the dreaded capacity crunch. If you would like more information on how BlueGrace can help you meet tightening deadlines and reduce transportation costs, contact us at 800.MY.SHIPPING or fill out the form below to speak to one of our experts today!

Shifts in Consumer Trends and the Future of Retailers

Consumer behavior during the global pandemic of 2020 is proving difficult to absorb for many businesses. Fraught with the risk of infection, restricted business hours, and massive unemployment, the average shopper has reallocated their purchasing power online. The virus has impacted traditional brick-and-mortar retailers in the United States particularly hard and bankruptcies are on the rise as a result. 

How Will 2020 Impact Trends in 2021?

A popular theory has been that the retail world was already experiencing an overhaul based on demographics.  More people reside alone.  This leaves less time for shopping in person. With increasing connectivity and on-the-go attitudes, it is natural for shopping to gravitate towards handheld apps and home deliveries.

Consumers have become savvier about how they go about shopping.

Additionally, consumers have become savvier about how they go about shopping. Prices and online reviews are easily compared in a matter of minutes. This creates an opportunity for disruptors to undercut competitors in a range of categories, such as price, customer service, and speedy delivery.

According to a recent interview done by Harvard Business Review with Marc-Andre Kamel, a partner who heads the global retail practice at Bain & Co, these retail trends existed before the momentous events of 2020.  Rather than creating new trends, it is reasonable to conclude that recent events merely accelerated existing trajectories. 

Which Retailers Were Set Up for Success in 2020? 

Naturally, online retail giants like Alibaba or Amazon entered the tumultuous year with enough resources to weather the storm. But what about smaller retailers? Many haven’t fared so well, but what about the ones that have?  There are four prototypes necessary to maintain a sustainable position.

Regional Gems: These companies find their strength where their larger competitors are not prevalent.  Protected by their ties to the regional consumer base and culture, their business model is thriving.  Due to the relative novelty of online shopping in these areas, it is difficult to project how these companies may fare against emergent business models.  

Hitchhikers: With a flair for creativity, these companies rely heavily on branding status to appeal to consumers. While these retailers could not hold their own against a company like Amazon, they can profit by riding those coattails.  

Value Players: It seems simple, but keeping prices low ensures stability during a widespread financial crisis. Aldi, TJ Maxx, and Burlington are a few examples.

Scale Fighters: The final possible precursor to success in 2020 is size. Retailers like Walmart have the heft and established consumer base to fight other ecosystems. 

Which Retailers Lacked Positioning?

With cash flow reduced for most shoppers and a focus on buying online, many retailers found themselves at a disadvantage while simultaneously needing to change their business model to survive. Shifting shrinking resources is a challenge for any business. Trying to do that while restructuring a business during a global crisis borders on the impossible.

Legacy Laggers: Aptly named because they are often some of the more visible household names (and they’re falling behind). Facing immense pressure from both the market and shareholders when profits plummet, many of these companies choose to consolidate. Many doomed department stores could survive as something reinvented by re-imagining ambitions and joining forces. 

Unsustainable Innovators: These exciting new entities face a dead-end when it comes to profitability. They either perish during growth or gain the attention of a previously mentioned Scale Fighter who wishes to absorb their knowledge.

Is It Reasonable to Expect a Retail Rebound Post-Vaccine?

The trend from older to younger generations is a reduced emphasis on showy consumption and a shift towards sustainability and personal meaning. Data shows that COVID accelerated this trend and a percentage of older generations have adopted their children’s shopping habits. This is a sign that a retail rebound is not likely.  

These profits have exceeded any business lost during the quarantine.

Meanwhile, consumer data from the East suggests that shoppers are eager to buy. China, which had a more comprehensive response to the pandemic than the United States, has emerged from lockdowns and enjoyed a surge in retail activity. While this was seen mostly online, those who browsed were more likely to take their carts to checkout. These profits have exceeded any business lost during the quarantine. China did previously outpace the US in luxury purchasing, however, so this trend may not translate to an accurate projection for the Western market.  

Can the Ecosystems Fail?

According to Harvard Business Review, Amazon will invest $100 billion more than any other top 10 retailers globally. Add to that their history of successful innovation, and they’re more likely to drive consolidation than a stall in growth.

While Amazon has a robust consumer base relying on them for online purchasing, part of what made them so successful in the 2020 pandemic is the nearly doubling number of Hitchhikers that sell their products on its platform. In fact, one of the only major obstacles Amazon faces right now is keeping deliveries timely amidst such prolific demand.  

For smaller retailers, keeping pace with e-commerce giants will be a difficult task, but it is possible through innovation, creativity, and a weather eye on consumer trends. 

Retailers are not the only ones struggling with the new economy. If you are a shipper trying to overcome the impending obstacles of COVID-19, our team of experts are available and ready to help. Contact us today!

Evolving Consumer Demands Prompt Continued Changes in Logistics

Twenty years ago, no one would have imagined for a second that they could order a product online in the morning and have it on their porch before they got home from work. Today, it’s all but expected that delivery occur within very small timeframes, even the same day.

The battle amongst large players in the e-commerce segment like Amazon and WalMart for fastest delivery times appears to only be escalating, meaning consumers are becoming more and more used to getting their packages within a couple days. This means changes in logistics operations must continue to evolve in order to support these demands. Note: Download our whitepaper, Walmart: The Retail-Supplier Relationship for even more details.

In order to keep up with consumer demand, logistics must evolve.

Today’s consumer demand means that buyers expect more from suppliers. They need the right merchandise delivered at the right time in precisely the way they need it delivered. When these expectations aren’t meant, suppliers may be faced with penalties that can be crippling. The drive for on-time delivery can also lead to unexpected accessorial fees. In order to keep up with consumer demand, logistics must evolve.

Logistics Technology Evolves to Meet Demands

Many logistics divisions are turning to technology to help meet evolving demands. Without the technology, keeping up is a pipe dream for many operations. Here are some of the technologies logistics operations are falling back on in order to serve their customers better:

  • Demand Planning– It’s critical to stay ahead of the game when delivery timeframes are so short. Demand planning software is changing to make sure suppliers are ready to meet demands.
  • Smarter Analytics– Top notch analytics are being implemented across logistics operations, from warehouses to transportation, to give logistics providers a leg up. Analytics are used to support many arms of the logistics operation, as well as keeping stakeholders informed.
  • TMS– Comprehensive transportation management systems are critical to getting loads out the door and ensuring on-time delivery. Improved routing, load tracking, cost control, and reporting are critical to helping companies meet consumer demands while working within their operational budget.
  • IoT– The Internet of Things has major potential to help suppliers meet stringent demands. Load tracking (i.e., real-time GPS tracking) and monitoring (i.e., atmospheric conditions, handling sensors to detect impact to parcels) are two major IoT applications being implemented by cutting-edge suppliers to improve delivery.
  • Blockchain– Blockchain is a technology being implemented to improve traceability and accountability in supply chains by recording data in a way it can’t be tampered with or changed. 

Demands for Faster Delivery Mean Demand for Better Visibility

A transparent supply chain is one of the most important factors in meeting deadlines. Consumers and retailers alike insist on knowing where their merchandise is, when they’ll get it, and how they’ll get it. 

Supply chain visibility is a top priority at most companies, but only 6% of companies say they’ve achieved full visibility. While supply chain visibility ranks behind OTIF and delivery issues in a 2017 Geodis survey, it may hold the key to solving those problems.

Staying one step ahead is critical to supplier success, and stagnation simply won’t do in the current logistics

Consumer and retailer demand will inevitably continue to evolve and put more pressure on the logistics industry. Staying one step ahead is critical to supplier success, and stagnation simply won’t do in the current logistics market. Wondering how your logistics operations can keep up with ever-hastening delivery expectations? Contact one of our representatives at 800.MY.SHIPPING or fill out the form below to get a free supply chain analysis from one of our experts!