Logistics in 2020: Road Freight
Road freight represents a major part of most LSPs’ strategies. Regardless of the importance of other modalities to global logistics, it is almost impossible for the supply chain to keep moving, either domestically or internationally, without using the road network. Yet LSPs are facing a number of key challenges in keeping the supply chain moving via our increasingly congested roads:
Fuel prices have kept on rising and rising. By now, the price per barrel of oil will be on average about $150, with much higher peaks possible (source: International Energy Agency Oil Market Outlook 2011). Energy savings are a major focus for LSPs worldwide, with activities that maximise haulage efficiency, such as groupage/consolidation and participation in logistics networks, more important than ever before. LSPs continue to experiment with ‘green’ fuels and vehicle innovations, such as longer length trailers and better aerodynamics, with the overall aim of making vehicles more fuel efficient and driving down fuel consumption. Solar panels on the roofs of truck cabs and containers are by now a relatively common sight.
Many regions are by now beginning to see road freight shift to rail over long cross-country
routes to minimise fuel costs with the added benefit of reducing CO2 emissions.
Green logistics; traffic congestion has certainly not been resigned to history. The mileage tax
or ecotax has been implemented in many regions (starting with France in 2013). Trucks incur a
surcharge based on average fuel economies, with better than average incurring a lower surcharge/tax.
Carriers are now measured on their CO2-emissions and can use this to differentiate, next to price, quality and speed, with listed companies (both shippers and LSPs) ever mindful of compliance with increasing corporate social responsibility reporting requirements.
Road may increasingly be used for the last mile, while sea and rail are used for long distance
haulage. The 2011 publication of a Whitepaper from the European Commission concluded 30%
of road freight transport over 300 km should shift to other modes such as rail or waterborne
transport by 2030, and more than 50% by 2050 (European Commission, 2011).
Logistics Directors are feeling pressure from the Board to stay ahead of innovations that make
vehicles more cost-effective, and to continue exploring alternative fuels/modalities.
Labor shortages; the shortage of drivers and warehouse workers will present a very real challenge
to the logistics industry. The international spread of the origin of drivers will grow, increasing
complexity in terms of health and safety compliance. Of greatest concern is the forecast increase
in share of cost of labor for road transport, which is set to rise by up to 50% by 2025, according to
Reduced inventories; retailers and manufacturers are increasingly looking to reduce their
inventories, minimising their own costs by carrying less stock. LSPs are under pressure to service
DCs and stores with smaller, more frequent deliveries. This is driving them to fill loads across
business sectors and they are increasingly seeking to enter into collaborative agreements with
customers and competitors to maintain margins. Achieving flexibility and agility efficiently has
become even more critical.
Parcel shipping; the rapid growth of Internet, shop and collect and catalogue shopping is placing
pressure on logistics service providers to not only manage full load and pallet deliveries, but to
also manage parcel shipping on behalf of their customers.
Traffic congestion; increasing traffic congestion results in trucks being stuck in traffics jams and
losing valuable transport time. In the future, we may see increasing use of live traffic conditions to
optimize routes or reroute shipments, and vehicles will be connected to the internet as standard
and able to access updates.
4PL; movement towards 4th party logistics providers that do not own any assets but manage themovement of goods through the supply chain on behalf of their customers (single or multimodal).