Anyone who works in the transportation industry knows that supply chains have never really been “normal”, writes Stephan Sieber (pictured), CEO of transporeon. Yet any semblance of normality or regularity they possessed flew out the window in 2022. From the war in Ukraine to fuel and driver shortages to rising inflation, transport networks continued to be under pressure.
This has all resulted in supply chains entering the mainstream consciousness like never before. They have dominated global news cycles while elevating supply chain leadership to the C-suite and boardroom.
The big question for transport professionals heading into the new year is: What does 2023 hold in store? While it’s hard to say, here are three trends likely to shape the supply chain industry over the next 12 months.
1. From resilience to optionality
The need for supply chain resilience has become a common theme in the industry. Building resilience in their operations, either through new business strategies or new digital skills, is now a key priority for all shippers, carriers and logistics service providers.
In 2023, however, this will go one step further. The focus will be on creating optionality so companies have the flexibility and freedom to choose alternative strategies before being forced to change and recover. One example is multishoring. With the still-tense and unpredictable geopolitical situation and rapidly increasing costs in some formerly “low-cost” regions such as Asia, it is becoming increasingly difficult for many Western companies to justify a single-sourcing strategy. Therefore, many of them will gradually try to build capacities and alternatives in Europe or America to secure sources of income.
Creating this option requires deep, real-time insights into markets and processes, as well as interoperability between business partners and their digital systems. Ultimately, it comes down to adopting technologies that have proven effective. For example, 57% of carriers now use freight exchange platforms to find additional capacity when their own network is exhausted. By engaging digital platforms and industry networks, supply chain stakeholders will be better able to shape their own destiny – even as they face the various external factors that are likely to cause further disruption.
2. Collaboration is key
For many years, true cross-business collaboration has been a much-vaunted but rarely practiced exercise in transportation. But as the new year approaches, collaboration will no longer be optional. Addressing the challenges companies face more effectively will be crucial – a notion with which 71% of supply chain stakeholders “strongly agree”.
There is certainly room for improvement. Only 17% of supply chain stakeholders rate their collaboration with 3PLs and carriers as “very high” – with obstacles such as poorly integrated IT systems, misaligned metrics and a lack of data sharing topping the list.
But collaboration is what enables companies to bridge the gaps that exist between freight forwarders, freight forwarders and logistics service providers. The gaps that hide many of the industry’s greatest challenges and opportunities. Improved collaboration through data sharing, for example, can empower supply chain stakeholders to reduce dead miles, increase cost efficiencies and make smarter strategic decisions. Similarly, using neutral platforms can connect companies at different stages of the supply chain to ensure everyone is on the same page.
Rather than just focusing on the digital aspect, this requires a hybrid approach that brings technology and people together. As McKinsey explains, looking at digital through a human lens can help organizations create more trust, better communication, and improved collaboration — which is the biggest untapped and overlooked source of value in modern supply chains. For this reason, more and more transport companies will make collaboration a key priority over the next 12 months.
3. Environment vs. Economy
One positive takeaway from 2022 is that it has been a positive year for supply chain sustainability. Progress has been made towards decarbonisation, with 59% of carriers and 54% of shippers now able to calculate transport-related CO2 emissions (up from 45% and 37% respectively in 2021). However, despite the recent attention and investment, the market cannot ignore the current financial situation. Unfortunately, with inflation at the highest level in decades and a looming recession, we must expect some green initiatives to falter.
However, financial performance and sustainability should not be played off against each other. It doesn’t have to be either/or. Because of this, the most forward-thinking companies will continue to rely on sustainability initiatives, albeit with a slightly different mindset. The question will be how can we best combine our ecological standards with an economic goal?
This is where data comes into play. Only by leveraging data generated across their operations—augmented by insights from cross-industry networks—will organizations be able to reduce waste and operate more efficiently. The visionaries in the industry will recognize this and begin to look at their sustainability investments from a long-term perspective to ensure today’s pilots become tomorrow’s programs.
Ultimately, the year 2022 has shed a light on the structural inefficiencies that still exist within global supply chains. From fluctuating prices to cost pressures and the realization that there is no such thing as a digital silver bullet, it’s clearly been a challenging time. But there are opportunities on the horizon. For 2023, transportation leaders just need to make sure they are building the right relationships and solutions that will help them tackle whatever comes their way.