With the continuing rise of e-commerce demand despite lackluster economic growth, supply chain professionals are most concerned about lack of capacity and rising costs in e-commerce, according to research firm EyeForTransport (EFT), which released its “Supply Chain Hot Trends 2019” report this week.
Based on a global survey of 765 supply chain professionals, including retailers, manufacturers, and logistics service providers (LSPs), the EFT report found that only about a quarter of respondents believe that 2019 will be a year of good GDP growth globally, compared to 45.9%, who expect it to be a weak global environment for economic growth; 26.6% said they expect to see “some sort of recession” by the end of the year.
“2018 was a year of much change and disruption to the supply chain industry,” said Alex Hadwick, head of research at EFT. “The trends that dominated 2018 are set to continue and evolve in 2019. The speed of organizational and technological changes have been so stark that it has been hard to keep up, even for the most diligent of supply chain employee.”
Supply chain capacity shortage will likely persist, the report said, due to rising e-commerce demand. More than 60% of all survey respondents expect capacity to increase over 2019, while three-quarters of LSPs said capacity will remain roughly the same. Just under 10% of respondents said there will be some capacity contraction.
Nearly 62% of LSPs responded that their customers’ most important challenge for 2019 is cost reduction, which far outpaced the next-largest challenge – visibility – which was noted by 46.8% of their customers.
Global e-commerce sales, the EFT study concluded, are expected to rise from 25%, year-over-year, in 2018 to 40%, y-o-y, by 2023. LSPs also reported that their two most serious last-mile e-commerce challenges include adapting to customer demands (26.6%) and overall cost levels (21.6%).
According to most respondents, automation technology will be a major growth area in the coming yers, as an increasing shortage of warehouse workers will add more cost pressures at e-commerce hubs. While the supply chain industry has lagged many other industries in terms of automation, 55.3% of respondents said they expect a turnaround as warehouse tech is now the top investment priority.
Other investment priority areas for retailers, manufacturers and LSPs are predictive analytics (47%) and the “internet of things” (41%). Fulfillment robotics, however, have a lot more room for growth, as only 10.6% of EFT respondents – and just 13.2% of retailers, brands and manufacturers – reported that they used automated picking machines.
The concept of blockchain has lately become a “buzzword” that has not resulted in much practical success in the airfreight industry, but EFT said the topic “came up time and again” as a key trend to watch among respondents.
Today, more than 31% of LSP respondents said they were working on either testing or implementing blockchain technology, compared to 18.4% of retailers, brands and manufacturers. Pharmaceutical transport is expected to be the industry vertical that has the greatest chance to be disrupted by blockchain adoption, with 42.1% of respondents naming it as a top concern.
“Blockchain is a specified data structure that allows for decentralized consensus, a means to attain one version of data truth,” said Phil Coughlin, chief strategy officer for Seattle-based Expeditors, in the study. “However, it is unlikely that a single unifying blockchain will emerge that all players in the supply chain will use,” adding that the technology is “too cumbersome, complex and expensive” for most companies.
As result, Coughlin added, the supply chain industry will likely see “private or permission-based blockchains” being used, “which creates the next technological hurdle and data integrity challenge – the interoperability between blockchains.”Like This Post