The freight forwarding and logistics industry experienced developments in 2019 that reflect the latest trends and challenges in the market. Consumer demands, aging truck drivers, higher demands on the trucking industry, developing technologies, a unique political climate and strained international relations have all shaped 2019’s logistics industry. Here are the Top 5 Logistics Stories that shaped 2019.
#5. IMO 2020 and the “Biggest Change to the Oil Market in History”
What is IMO 2020? Starting January 1, 2020, the International Maritime Organization (IMO) will start to enforce new standards in shipping fuels. These are designed to significantly reduce the sulfur content and in-turn reduce pollution. Currently, most shipping vessels use fuel with a 2.5% sulfur-content. These new regulations will reduce the allowable sulfur content to less than 0.5%. That is a dramatic decrease that will impact everyone in the market from shippers to oil-refineries. In 2019, shipping companies scrambled to become compliant with the new IMO standards by switching to low-sulfur fuel or by installing a “scrubber” that removes sulfur oxide from the ship’s engine and exhaust gases. While these new regulations will pose challenges to the industry, the real winners will be the human population and the environment.
#4. Drone and Autonomous Trucking
The use of drones, self-driving trucks and delivery robots are offering companies and consumers more methods to ship and receive goods faster than ever. Unlike human truck drivers, autonomous trucks are available 24/7. This includes festive seasons when demand is high and driver availability can be low. 2019 saw a number of partnerships emerge between LTL shippers and autonomous trucking companies, such as UPS and TuSimple, and LoadSmart and Starsky Robotics. Drone deliveries are also becoming a reality with Amazon Prime Air’s latest drones and the UPS partnership with Matternet both announced in 2019.
#3. Same-Day or Next-Day Delivery Is the New Normal
Thanks to Amazon, customer expectations for delivery times are higher than ever. This means that the industry has been scrambling to adapt and innovate to fill the gap. In 2019, technology allowing for faster fulfillment allowed companies to shorten delivery times. E-commerce companies have turned to third party logistics (3PL) providers to help them scale and stay competitive with internet giants. This allows them to offer 2-day, next day or even same day delivery like their Amazon and Walmart counterparts. The greatest challenge will be finding a way to move the parcel from the warehouse to the doorstep as quickly as possible. Amazon is already rolling out an “Uber-like” trucking solution and FedEx tested a last mile solution during the 2019 holiday season. Delivering goods by drone and autonomous vehicles or robots are also growing trends to meet this need. One thing is certain, long standing innovation is needed in the last mile space and the greatest disruptor will surely win.
#2. Truck Driver Shortage
The shortage of truckers was only slightly down to 59,500 in 2019 from the shortage reported in 2018 of 60,800 which alarmed the industry. As domestic shipping demands continue to increase and the supply of qualified drivers shrink, experts are concerned that the trucker shortage could reach as much as 160,000 by 2028. Therefore, 2019 saw a number of new developments to avoid this impending catastrophe, including;
- The Trump administration is aiming to relax some of the truck safety standards in order to make hours of service more flexible. This can allow drivers to break up their drive time according to how they and their company see fit. The 30-minute mandatory break time would be lifted. Drivers can take longer breaks to adequately rest or wait out traffic. They are also looking to remove barriers, expenses and delays for men and women seeking a commercial driver’s license (CDL).
- Women are being encouraged to fill the truck driver shortage. More companies are focused on recruiting female drivers by making the trucking environment safer, updating cabins to more comfortable and offering a more family-friendly workspace with passenger permits and video systems.
- Trucker salaries also increased in 2019 in an effort to attract more drivers to fill the shortage. Attractive salaries and signing bonuses are being used to lure drivers and retain them.
In 2019, the trade war raged between the US and China with the Trump administration imposing steep tariffs on billions of dollars on imports. This followed China retaliating with their own tariffs on American goods. The economic impact on both countries was substantial. Many American companies scrambled to make adjustments to their supply chain in order to avoid hefty tariffs that would cut into their bottom-line. Some companies shifted their production from China to other countries such as Mexico, Vietnam and the European Union. This cost China more than $35 billion in the first half of 2019 alone. It was a rollercoaster of a year that rattled the economy.
Luckily, it appears that the trade war is about to end. China and the U.S. have agreed on the first phase of an agreement that prevented tariff hikes scheduled for December 15th. In the first phase, China has agreed to increase imports from the U.S. specifically in agriculture, energy and manufactured goods. China agreed to purchase $200 billion more in U.S. products over the next two years. This means the international transportation industry will see an increase in business from China in 2020.
What is in store for the freight forwarding and logistics industry for 2020?
Overall, 2019 was a difficult year for the majority of players in the logistics industry. From trucking to shipping, each experienced its pain points in response to the global and political environment. With the trade war on the verge of a resolution and the growing demands of e-commerce, 2020 is poised to be a good year.
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Contact the experts at Mach 1 Global Services to help you with your logistics needs in 2020. With over 30 years of experience, Mach 1 Global is a freight forwarder that is an expert in providing fast, reliable and stress-free transportation and warehousing solutions. To discuss your business’s needs call (800) 553-7774 or get a quote by clicking HERE.
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