NRF 2021 – Retail’s Big Show has gone virtual this year. We know we’re not alone in missing the opportunity to gather with our peers to catch up and strategize about the year ahead. There’s so much to consider, like how the industry will push forward in the aftermath of such an unprecedented disruption. One thing’s for sure – transportation is and will continue to be a challenge in the coming year, especially with regard to ecommerce. We’ve experienced yet another cycle of immense volatility which has left many retailers scrambling for reliable and affordable capacity. If you’re a retailer in that boat, here are few things to consider.
Ecommerce isn’t slowing down
Although ecommerce had been growing exponentially before the COVID-19 pandemic, we can all agree that 2020 acted as a catalyst in forcing retailers to expand their online offerings in order to stay afloat. As consumers become more and more accustomed to the convenience of online shopping, they also become more demanding: expecting free shipping, faster delivery times, and top-notch customer service.
Retailers need to take whatever steps necessary to ensure they’re staying ahead of their competition. In fact, many online retailers are facing increasing competition as a growing number of brick-and-mortar locations expand their online presence in order to remain relevant. According to Grand View Research, the global ecommerce market was valued at US$9.09 trillion last year and is estimated to grow at a compound annual growth rate (CAGR) of 14.7% from 2020 to 2027.
This growth in ecommerce is driving retailers to increase their number of fulfillment centers, placing them closer to cities and towns across the country in order to meet speed, convenience, and free delivery expectations of consumers. Interestingly enough, this trend towards increasing the number of fulfillment centers began before the pandemic. According to a CBRE report published in 2019, retailers started converting empty stores and shopping centers into warehouse and ecommerce distribution centers to bolster side businesses like packaging, logistics, and transportation. By growing the number of fulfillment centers and moving to local fulfillment approaches, retailers are able to adapt to the ever-changing expectations of shoppers. On the whole, these changes are making more and more retailers turn to automation to improve their offerings and increase productivity levels. This expansion is leading to more freight movement across an expansive network.
Demand, capacity, and volatility will continue to impact freight
According to data from the Census Bureau, ecommerce in the third quarter of 2020 increased 36.7 percent (±2.1%) from the third quarter of 2019 while total retail sales increased 7.0 percent (±0.4%) in that same period. Transportation demand is being driven by new peaks in ecommerce sales, while capacity is simultaneously shrinking. This capacity shortage is largely being affected by driver and truck shortages—an issue that has been plaguing the freight industry for years now. Back in 2019, 640 freight companies shut down, resulting in over 20,000 trucks being removed from the roads. This shortage continues to impact us today, and it’s impossible to predict when this issue will be resolved (if ever).
With all this volatility, retailers can turn to digital freight models to help alleviate the situation, but it’s important to note that not all digital platforms are created equally. Gartner has released guidance on the matter, publishing a list of the different digital freight models available and what they provide in their Market Guide for Digital Freight Models for Road Transportation. They include:
- Digital Brokers: Transactional
- Digitized Freight Networks: Transactional
- Digitized Freight Networks with Assets: Transactional
- Collaborative Transportation Platforms: Relational
- Technology Provider with a Digital Freight Platform: Transactional
- 3PL with a Digital Freight Platform: Transactional
Retailers who want to succeed in this new normal would do well to build long-term, collaborative relationships that can carry them into the future. Though adopting technology to help alleviate volatility is a must, it’s also important to do more than just simple automation—at this point, that isn’t enough to address capacity shortages, demand spikes, and sustainable shipping practices. We believe collaboration is the only way to forge ahead not only during these unpredictable times, but always.
Digital freight models need to be collaborative
We’re well aware that calls for collaboration failed in the past, but that was before the advent of revolutionary technology. SemiCab, the only Collaborative Transportation Platform in North America, was designed to optimize freight across shippers to create highly efficient capacity. With our proprietary algorithm, SemiCab:
- Brings shippers together to create net new efficiencies across their networks.
- Uses API-based technology to provide insight into demand and supply provided by the community.
- Employs machine learning to create predictive algorithms that help shippers get access to efficient capacity with a focus on reliability and cost savings.
The platform leverages the power of the network to allow parties to connect and convert traditional one-way moves into highly efficient capacity with fully loaded round-trips with lower freight costs.
To learn more about the different digital freight models and how they could potentially help you, download a copy of the Gartner Report, Market Guide for Digital Freight Models for Road Transportation from us today! And if you want to get collaborating, simply get in touch with us. Together, we can change the world of freight for the better.