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E-commerce Continues to Change the Transportation Landscape

By Jason Ringgenberg, CIO, YRC Worldwide Inc. [NASDAQ:YRCW]

Jason Ringgenberg, CIO, YRC Worldwide Inc. [NASDAQ:YRCW]

E-commerce is on a rapid ascent and while it is certainly not a new technology it is impacting the logistics industry as well as other industries at a rapid pace. The Less-than-Truckload (LTL) industry is certainly one of those being impacted. It’s not just the scale of Amazon or the growing preferences to shop online and take deliveries at home or the ever-increasing expectations on the speed and cost of deliveries that impact all those in the supply chain, it is these and more. Within LTL, the impact of eCommerce is being felt in many areas, three of which I will touch on in this article.

"In addition to new handhelds, companies are investing in sophisticated planning and dispatching systems to manage the daily operations"

First, e-Commerce is causing manufacturers and retailers to reconsider and often change transportation mode preferences. It is no longer enough to have a great supply chain in one mode; success requires expertise in multiple modes. To meet these challenges, many transportation providers, including the YRC Worldwide (YRCW) operating companies, are offering a variety of services that encompass multiple modes. These different modes of transportation allow supply chains to be fine-tuned based on the amount of freight, the distance travelled and the required speed to meet ever-increasing consumer expectations. Providing shippers “one stop” access to the different modes required to optimize their supply chains requires partnerships to meet the challenges and to provide access to the right types of equipment. Each company needs to service the market with core strengths and then supplement with other strengths to meet shipping needs being driven by eCommerce.

In addition to handling mode challenges, eCommerce places even more emphasis on first/last mile capabilities. Being able to successfully and cost effectively manage first- and last-mile transportation is key to being cost competitive and to minimizing service disruptions. Several carriers have invested heavily in technology to address the challenges presented by city operations. Within LTL, YRCW and others have invested in new handheld devices which improve usability for drivers, help reduce required paper and allow information about the freight to move faster than the freight itself. In addition to new handhelds, companies are investing in sophisticated planning and dispatching systems to manage the daily operations. These new systems use detailed maps, geocoded addresses and algorithms to help improve service and minimize shipment failures. The systems also help companies maintain or reduce costs by decreasing miles per stop and increasing stops per day. We often say that we only get paid when a driver is picking up or delivering freight and not when the driver is looking out the windshield.

These planning and dispatching systems also help to improve safety for our employees and for those with which we share the road. The systems give advanced notice of routes that extend beyond hours of service limits so alternatives can be planned. Driver hours of service logs can now be managed on the same handhelds the drivers use to interface with customers, providing a seamless customer experience and improved safety at the same time. Combine all this with new on-board safety technologies and it is clear YRCW as well as other companies in our industry are very focused on bringing employees home safely each evening.

The last impact I will cover is the need for solutions to manage the network and not simply a series of individual nodes (terminals). Once again, these solutions require significant technology investments. Technology is being used to forecast freight volumes to allow for better multi-day planning. Technology enables companies to determine where and when “pinch points” will arise in the network given the specific characteristics and volumes of freight. Knowing in advance where issues are likely to arise allows companies to re-route freight, use third-party providers for surplus freight, plan for additional staffing or additional work hours to keep the network in cycle and meet the needs of eCommerce shippers. Over time this operational data is gathered and analyzed to make better pricing decisions, help determine where to add or decrease terminal capacity and help determine when and where to adjust available labor capacity and f lex equipment pools.

These are just three of the many ways eCommerce is currently impacting transportation in general and LTL specifically. I believe the impact of eCommerce will increase in many more ways over time and that carriers will need to continually adjust to capitalize on new opportunities. A common thread that weaves through all the opportunities that lie ahead with the promise eCommerce holds is the need for a tech savvy, qualified workforce to design, implement and manage digital solutions and complete the integration of these solutions with operational systems. The LTL industry has always sought out the best drivers and dock workers and likewise will seek out the best technology talent to manage the digital supply chain because our digital network runs parallel in importance to our physical network. In fact, YRCW’s CEO James Welch has said, “We have now evolved to the point that the information traveling with the shipment is as important as the shipment itself.” Much like the need to partner with other carriers to provide access to different modes of transportation, LTL companies will need to partner with outside firms to gain and maintain access to a tech savvy and digital ready workforce.

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