Nearly 83% of businesses are willing to pay more for better and value-added services as long as they provide a measurable return on their investment, according to a research report released by DHL, Westerville, Ohio. The report reveals that the fast-paced evolution underway in the sector is changing the way that shippers think when purchasing a transportation solution.
The report, “The logistics transport evolution: the road ahead,” uses data from research by Lieberman Research Worldwide, LLC (LRW), Los Angeles, to identify factors impacting ground transportation logistics and how the industry is adapting to the new frontier of solutions. The report found that across sectors and regions, companies are increasingly viewing ground transportation as being more than a tactical commodity, with 71% now considering it to be a strategic component of their businesses. Companies agree there is a direct correlation between ground transportation and business performance with three-quarters (75%) believing investing time and resources in ground transportation will directly help their company sales.
“Customer expectations for almost instantaneous delivery born of e-commerce are helping to position ground transportation as an important service differentiator,” says Jim Monkmeyer, president of transportation, DHL Supply Chain. “This is compounded by the increase in urbanization, or major population influxes to urban areas, as we’re seeing here in North America, congesting traditional transportation models and causing executives to rethink their approach to distribution in this modern era. For all these reasons, transportation conversations are happening now at the C-suite table.”
According to the report, the exponential growth of e-commerce and its implications on service was identified by 65% of companies as having a significant impact on their supply chain in the next 1-2 years. To manage this evolution, executives are turning to technology to empower their strategic decision making.
“As we learned in our digitalization research earlier this year, these studies emphasize the need for visibility tools and technology to not only manage goods, but also ensure a positive experience for the end-customer. Platforms that enable end-to-end supply chain monitoring and risk management, such as DHL’s MySupplyChain and Resilience 360, are now essential components of successful and strategic business operations,” Monkmeyer adds.
Although these changing dynamics are being witnessed across regions, variations can also be identified depending on the maturity of the market and the demands placed on shippers from their consumer base. In Latin America, for instance, the priority consideration in selecting a ground transportation provider is on-time delivery, while in Europe, where the market is more mature, optimization of networks is the key focus for shippers.
Broader societal factors were also highlighted as presenting associated challenges, with 61% of companies referencing the increase in urbanization as a factor that will significantly impact their future business. Technology and its ability to help manage this complex environment is increasingly seen as a standard requirement of 3PLs. That’s because more than two-thirds (67%) of companies believe that big data analytics and artificial intelligence (AI) are services that are essential for 3PLs.