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Nearly every shipper has been impacted in 2020 in one way or another. Some, like those dealing in essential goods, have seen business boom. Others have been forced to sit idly by hoping the economy turns around and their goods are suddenly in demand again.

Whichever end of the spectrum you sit on, there is one thing that defines 2020: unpredictability.

The COVID-19 pandemic has brought great uncertainty to the freight markets, with some companies thriving and others struggling. An IBM Institute for Business Value (IBV) study, “COVID-19 and the Future of Business,” found that 62% of C-suite respondents expect to focus on supply chain resiliency and digitization moving forward.

“Leaders are expecting more from their transformation initiatives,” the report noted. “They identify competitiveness and workforce resilience as the benefits they most want from ongoing digital transformation. Transformation is also accelerating among a majority of organizations. But strikingly, a greater focus on transformation seems to be at the expense of customer relationships and partnering opportunities.”

By 2022, 94% of executives surveyed plan to participate in a platform-based business model with increased participation in ecosystems and partner networks.

As the freight markets head into peak season, shippers are quickly learning they lack the visibility and technological prowess necessary to ensure a smooth supply chain.

Unpredictability rules
When COVID-19 shut down wide swaths of the U.S. economy earlier this year, few could have predicted the resulting rate uncertainty ahead. Many predicted collapsing rates as businesses shut down and volumes dried up – but that didn’t happen. Instead, rates – both spot and contract – have been on a steady rise, along with volumes.

As the fourth quarter kicked off on Oct. 1, rates were up 28% year-over-year, according to FreightWaves’ SONAR data. SONAR’s Outbound Tender Volume Index (SONAR: OTVI.USA) was at 15,691.73 as of Oct. 1, up from 10,553 on Oct. 1, 2019. Accepted freight tender volumes were up 16.5% year-over-year while retail inventories are down 12% year-over-year. Retail sales have climbed 11%.

Andrew Cox, a market analyst for FreightWaves, recently wrote that carriers maintain a decided edge in negotiating rates with shippers, with the three-month DHL Supply Chain Pricing Power Index showing a reading of 85. Any reading above 50 indicates carriers have pricing leverage. The index uses analytics and data within FreightWaves’ SONAR platform to determine whether shippers or carriers have negotiating power.

And all of this is before a potential second round of stimulus payments, which could further juice the economic recovery.

“Our expectations have not changed in recent weeks, and we still believe the rest of the year is bright for the freight market. …. While consumer confidence has faltered, spending is remaining strong given the economic backdrop. These factors lead us to believe that freight volumes could end with a massive bang,” Cox wrote.

Backing up Cox’s thoughts is a recent report from investment bank Jeffries.

“We are just at the beginning of what is likely to be one of the biggest restocking cycles — if not the biggest inventory restocking cycle — in U.S. history,” Jefferies Chief Economist Aneta Markowska said. “What’s behind this is one of the biggest post-recession recoveries in the goods economy, including consumer goods as well as housing.”

Markowska added that the goods economy has performed so well that many retailers and suppliers were caught off guard.

“Nobody anticipated demand to be this strong this quickly. As a result, we have inventory-to-sales ratios today that are at absolute record lows,” she said.

The right technology needs to be in place
While few could have foreseen what has happened in 2020, the reality is many shippers are just trying to survive. The reason? They lack the necessary visibility into their logistics operations to quickly adapt.

With all the uncertainty moving forward, shippers are increasingly looking for solutions that can help. That means deploying the right technology that can provide near real-time insights and context around what is occurring in the supply chain.

Some transportation management system (TMS) providers are quite capable of deploying technology that can help shippers. A modern TMS has a great deal of functionality, but how useful it is depends on which functionality shippers turn on — and how it is used. Without understanding what functionality is available, and most importantly what is needed for their unique business, shippers are left with a technology solution that can disappoint.

In the current marketplace, the wrong solution leads to a lack of supply chain insight that leaves shippers unable to respond quickly enough to the changes taking place. Earlier this year, Andy Schmahl, partner and managing director of the Boston Consulting Group, said shippers need to consider how they will use the tools they have at their disposal.

“Do we want to use [these] as a strategic weapon? That may lead you to a company that understands the transportation market really well,” he said. “Or do you want to use [these] as a cost weapon? You have to start with some of these more basic questions.”

The right technology partner is important
Equally as important as the technology is the right technology partner. nVision Global offers its Impact TMS for those looking for a TMS solution, but the company provides much more than just basic technology.

The Impact TMS offers shippers an end-to-end option that can handle everything from inbound purchase orders to outbound shipment execution and self-invoicing. It can handle vendor compliance through the order book, contractual term compliance and benchmarking, auto rating, tendering, exception management, tender rejections, spot auctioning, and freight approval.

Within the business intelligence tool, the system confirms the load was picked up and analyzes the load cost by lane to ensure shippers are paying the lowest possible rate. nVision is also able to assist shippers to negotiate lower rates by using its scale and connections with thousands of less-than-truckload and truckload providers to find alternative solutions. nVision also has access to thousands of rate-related data points that allow it to benchmark one shipper’s rates against industry averages, highlighting wasted transportation spend.

Freight bill auditing and payment, claims management, rate negotiations, benchmarking and procurement are other services the right technology partner can provide that go beyond simply supplying a TMS. Not all shippers need this level of service, of course, but not all technology providers can offer it. In volatile times such as these, and with a high level of uncertainty moving forward, it pays to partner with a company that has the insights and technology solutions necessary to achieve the desired results.

Originally posted at : Freight Waves

Overall supply chain and logistics tech spending will rise to $87.8 billion over the next three years. That’s according to new research from Logistics Trends & Insights, LLC and American Global Logistics (AGL). The study shows that U.S. companies will spend more than $2.5 billion in disruptive logistics and supply chain technologies by 2022. The report, “Supply Chain Technology Investment Outlook,” explores the rapid growth in supply chain IT investment and which technologies are likely to take the lead in the next five years.

In transportation and logistics it can be hard to predict what’s coming up. We saw a peak in market volumes and extremely tight capacity in July 2018, and then unpredictable softening in September, which few would have predicted. When SONAR data is studied it verifies current industry thinking regarding volumes and tech trends. Will things be soft or not? There are trends and seasonality but who knows about interest rates and tariffs for instance?

Bending the corner into 2019, there is a wide variety of interesting technology coming out. But it’s really only interesting if you can get people to play (and pay!). There’s so much fragmentation on the capacity side of the equation. It’s impossible to get all those companies to adopt a single technology, and if you can’t get to that tipping point a broker’s always going to be able to find a better price. It’s hard to get distribution and change the way a lot of companies do things. There are tens of thousands of truckers that actually value the relationship, and if someone’s getting them down the road and making things connect, then they’re going to value that. If a driver wants to use his TMS, he or she can do that. If someone wants to go online and automate, that can be done. The industry is extremely diverse, and you have to deploy to many levels. A slick tech solution might solve issues for one small niche of the market, but will it ever be widely adopted?

Predictive analytics can play their part, but sometimes the buzzwords get overused. Everyone wants to talk about artificial intelligence (AI) and blockchain and there are uses for both, but neither (or anything else) is a cure-all, end-all. If a company is really scaling you have to use analytics to improve service, processes, price discovery, and margins. It’s all about applying mathematics to the situation. According to Ginni Rometty, chief executive officer of IBM, “One of the reasons why some people say they haven’t gotten as much value from AI is that the workflow didn’t change. You have to reimagine the kind of work and how it should be done for this to work the best.”

Off-the-shelf solutions will work for a small company getting started, but the complexity of processes increases as a company grows. If a company’s workflow has to be adapted to someone else’s tech, you’re out of luck. Will small brokers be able to reap the benefits of the tech and get to the critical mass to use the technology? Probably not. You need a large marketplace, high ratings for service, and the ability to automate.

Massively configurable technology is what you want. Those who have built to scale and have processes and automated it are likely more competitive and successful. You have to be fairly clever with how you develop it on the back-end and make it configurable on the front-end to do what the customer wants to do.

We recently discovered one such company with nVision Global. Their Impact TMS provides the visibility and management of global shipments from creation through delivery. A company can now, in effect, integrate all the features one demands in a TMS solution with nVision Global’s other technologies, such as Freight Audit and Payment, Freight Claims, and Business Analytics. They are one of the few providers we have found that can offer these solutions in a single package and still offer a configurable TMS solution that meets a user’s exact needs and specifications.

While some get swept away by the hype, success will mean being able to build tech and relationships. Yes, relationships still matter. Whether amongst each other or your customers. That’s what life revolves around. That being said, tech makes people and companies more efficient, and that’s the differentiator.

Originally posted at: Freight Waves