Why Transportation Companies Must Evolve To Survive

May 31, 2016

supply chain transportation

Written by Martin Palmer, Founder of Supply Chain Compliance Ltd. Youredi would like to thank Mr Martin Palmer for his contribution.

Customers expect a near instantaneous fulfilment of any order placed through an ecommerce platform. Such expectations have changed the face of the service industry, particular transportation, almost beyond recognition.

In the 1970’s we were introduced to the first express delivery companies offering a fully integrated service, door to door, with timed deliveries. The 80’s introduced the 'Just in Time' (JIT) concept with time deliveries exactly when you needed them, reducing the need for large inventories of stock to be held by manufacturing companies at their sites. The express delivery companies and the JIT concept dominated the transportation arena for most of the 80’s, 90’s and early noughties. Then, along came something completely different, driven by a so far unforeseen force. This unforeseen force, is the customer and the 'I want it now' generation in the form of ecommerce.

Many of the traditional transport companies had been stuck in their ways for many years. Driven by the never-ending push for cheaper transport rates, they continue to focus on efficiency rather than the ecommerce explosion that is happening around them.

This has resulted in a plethora of new and dynamic transport companies, with exciting and unusual names, appearing almost overnight. They offer unheard of services such as evening and weekend (even Sunday!) deliveries, timed deliveries, collection points and shipment vending machines.

The traditional transport companies are struggling to change their approach from services provided based upon historic infrastructure. The substantial investment in networks and infrastructure to support the JIT demands has actually removed some of the infrastructure required to facilitate the needs of the e-commerce world. With less than 1% of world cargo travelling by air, there is now a mad scramble to create 'in country' facilities to store and process the commodities that the customer needs to receive today or at the latest tomorrow.

Within this dynamic and evolving ecommerce explosion, the need for accurate and timely data has never been so important. Data is really what drives the transport service provider. It allows them to plan, allocate resources, and accurately comply with legal requirements enforced by the many regulatory authorities involved in the supply chain including, but not limited to customs, export controls, licencing and fiscal controls. This same data is what allows the innovative transport company to identify trends and what the customer’s next expectations will be.    

The transportation company that has enough vision, capability and willingness to evolve and remodel their networks and operations to meet these current requirements, is a transport company that has a great future. On the other hand, those that do not recognise and adapt to the changing e-commerce world and customer power, will be swallowed by other transport companies or e-commerce giants such as Amazon or Alibaba. Some will even face the fate of the dinosaurs.     

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