Transportation and Logistics Are Increasingly Being Driven by Analytics

The transportation and logistics vendor landscape is highly fragmented, due largely to the numerous moving parts it takes to get a manufacturer’s product from concept design through production and all the way to the end-user’s hands.

Brett Cayot, principal and partner, global logistics and distribution lead at PriceWaterhouseCoopers LLC in New York City, says the logistics market is evolving due to:
• INCREASING NUMBERS of third-party logistics providers with transportation management software solutions and outsourcing services
• ONGOING CONSOLIDATION among vendors to better link their transportation/logistics offerings to their offerings for enterprise resource planning, warehouse management systems and order management systems; and
•  THE EMERGENCE of new niche players to solve specific distribution problems.

However, a major gap yet to be resolved for manufacturers is the challenge of end-to-end visibility across functions, he adds. “For example, if a customer has an order that is being delivered late to a cross dock, how does the customer notify outbound transportation planners or alert them so they can take corrective action? We typically still see a separate WMS, TMS, global trade management and fleet/routing system with clients. And while integration can provide some of this visibility with a status message, the main value is having it streamlined in one system. As distribution applications continue to mature, the demand for a one-stop-shop technology for all needs will likely continue to increase.”

“The challenge of end-to-end visibility across functions is a major gap yet to be resolved for manufacturers.”

Then there’s the freight-forwarding landscape. These are the middlemen between transportation providers, who are akin to freight brokers, but with the ability to warehouse goods when there are delays, such as when they are unloaded off ships and waiting for rail or truck transport. The freight-forwarding market is highly fragmented, with the top 10 forwarders controlling 9 percent and 26 percent of the ocean and air freight markets, respectively. Thousands of independent forwarders service the remainder.

“In an increasingly data-driven world, manufacturing clients are demanding logistics solutions based on analytics rather than kickbacks,” says Ryan Petersen, founder of Flexport, a San Francisco-based customs brokerage and global freight forwarder built around an automated online dashboard. “There’s an ever-pressing need to reduce inefficiencies and human error, while providing high integrity service.”

Likewise, the road transportation market has thousands of providers, spurring vendors to offer value-added services, such as end-to-end supply chain management, to differentiate from their competition, says Anshu Prasad, a lead partner in A.T. Kearney’s Analytics Service Practice in New York City.

Manufacturers can get better service and negotiate better deals with carriers if they run their own operations more efficiently, Prasad says. “By having a load ready for pickup minimizes idle, uncompensated time for the carrier, and often translates to more reliable service and cost for the shipper,” he explains. “Compare that to manufacturers who ask drivers to drop trailers in their yard, but don’t have shipments ready for hours or maybe days after the scheduled pickup time, and it’s easy to understand why carriers provide advantaged capacity and rates to their better shipper partners.”


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