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Transforming supply chain performance and security – the SI opportunity

Supply chain disruption is predicted to cost organisations around the world an average of US$184 million per year and demand is surging for better end to end visibility to improve resilience and response to disruption. While IoT has transformed supply chain visibility over the past decade, only 15% of the world is covered by terrestrial networks which means vital insight about freight location and status remains uncaptured. With innovative Systems Integrators (SIs) adding Satellite IoT to extend asset tracking across the globe, the industry can now achieve timely interventions to improve security, reduce wastage and carbon footprint and manage customer expectations. Eric Ménard, Vice President Strategy and Business, Astrocast, explains why the shipping industry is on the cusp of a Satellite IoT enabled revolution…

Systems Integrator Opportunity

For all businesses involved in transportation, from shipping to trains and road hauliers, accurate information about the location and working status of trailers and containers has become ever more vital. The accessibility of cost-effective Satellite IoT (SatIoT) solutions is opening the door for SIs to provide solutions to meet an array of operational demands across the supply chain.

Shipping lines can track containers not only at sea but on land, especially at ports. This helps to improve fleet management and optimise supply chains in the face of on-going disruption and unloading backlogs. Up to date information can support proactive maintenance, minimise asset downtime and improve supply chain resilience. Adding IoT temperature sensors is particularly valuable, especially for containers (Dry and Reefers), to improve control throughout the supply chain. If a power outage occurs that affects temperature within a reefer container, for example, the problem can be flagged to a control centre. If possible, an onboard engineer can then remediate the problem; if not, the cargo owner is immediately aware of the need to provide replacement goods to fulfil their obligations.

For high value cargo, including pharmaceuticals, adding satellite connectivity to operational IoT deployments is providing the ability to control the logistics chain from production through to end customer. It is minimising wastage, improving integrity and, as a result, reducing insurance costs.

Design Requirements

For SIs, the supply chain provides a compelling market opportunity. But how easy is it to add SatIoT to existing IoT solutions – and does the business case stand up? Certainly, the arrival of a satellite connection designed specifically for widescale IoT deployment is a vital component in creating Return on Investment (ROI). These Operational IoT applications, such as location tracking, do not necessarily require the continuous or real-time communication associated with high-cost, power hungry traditional satellite links. Reliable interim communication provided by modern cost-effective satellite services is good enough.

These solutions are also designed to use minimal power, a key consideration when attaching an IoT sensor to a shipping container which can cross the globe many times a year. Every part of the solution, from antenna design to robustness of equipment and battery life, must be optimised to ensure deployment is a one-off event. Ensuring battery life extends to 10 years can transform the ROI.

SIs can also explore the value of two-way communication, such as remotely changing the temperature set point of a reefer container, changing the frequency of temperature recording or confirming data transfer has been achieved through an acknowledgement mechanism. Ensuring the data is actioned in the field is also key to the ROI. A single, fast intervention to repair power failure to a Reefer container at sea could repay the entire investment for the entire fleet immediately. 

Added Value Innovation

There are a number of additional areas of potential innovation to consider. Theft and piracy, for example, where thieves use technology to ‘block’ cellular networks and compromise existing IoT based alerts and alarms. Adding SatIoT – which works on a different network – to the solution provides another layer of asset security and tracking to minimise loss.

In addition, the ability to identify whether a container has been entered or tampered with in some way during the voyage, would support the war on piracy and drugs. Adding smoke detectors would raise the alarm when fire breaks out on board – an increasing concern if owners fail to inform the shipping company that the container holds self-combusting cargo such as Lithium-Ion batteries.

Indeed, the next step will be to extend the use of IoT from containers to individual loads, using tiny devices to track high value items all the way through the end warehouse or distribution centre destination. SIs can add even more value to this data, using Artificial Intelligence (AI) tools to offer customers more insight.

Conclusion

The shipping industry has a massive demand for better information to mitigate the impact of global disruption. But this is just the start for a market that has an array of complex operational challenges in its management of 50 million containers across the globe. The opportunity is compelling: SIs need to build a solid foundation and business case today.

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Data, data everywhere: The future of AI in logistics transportation

Most shippers, carriers and logistics service providers understand the importance of data collection and data-driven decision-making. Data collected over time provides intelligence, enabling companies to enhance long-term decision-making. Meanwhile, real-time data can be used to make smart split-second decisions – like how to correct or replan when problems occur. 

Artificial intelligence is a potent tool that helps companies get the most from their data. This takes several forms. “Statistical AI” enables users to analyse huge quantities of information to find hidden patterns and make smart decisions. Meanwhile, companies can use past data to programme “symbolic AI” models, which can be used for “purpose-seeking” applications, such as process optimisation. Jonah Mcintire (pictured, above), Chief Network Officer at Transporeon, A Trimble Company, explores further…

Automation vs. AI – understanding the difference

Automation and AI are often spoken about in the same breath, as if they are synonymous. However, though they’re interlinked, there’s an important distinction between the two. Automation involves delegating mundane, often administrative, tasks to software. It’s clerical. On the other hand, true AI involves handing over decision-making power. Software is given set parameters, but it will use them to draw unexpected conclusions. Users can give AI varying degrees of freedom. A more cautious approach is to allow software to calculate options and make recommendations for a human to approve. However, it’s also possible for it to reach conclusions and make decisions autonomously, without even informing a human.

So, where can AI in logistics transportation have the most impact? The short answer is “everywhere”. In fact, forward-thinking shippers, carriers and logistics service providers are already integrating AI into their tech stacks.

There are a few considerations to keep in mind. AI is best used for decisions with concrete financial values that are easy to score and have discrete, well-known variables. Fast decision-making cycles are also important. Like humans, AI learns from experimentation. So, if a decision is only made annually, it will take decades for the software to gather enough data to get feedback. Realistically, you want AI models to analyse thousands of decisions per day. Ideally, players would use models trained not just with their own data, but with data gathered from across the industry. This collaborative (also known as “platform”) approach enables everyone to get ahead.

So, how AI can transform how companies utilise their data through autonomous procurement, real-time ETA tools and decarbonisation?

Real-time ETA tools 

The disconnect between shippers and carriers has long been a challenge in the logistics transportation industry. To enhance visibility, transparency and efficiency, we need to connect load receivers and load givers.

For example, predicting arrival times for loads has traditionally been a pain point for both shippers and carriers. Common causes of delay – like strikes, traffic jams and mechanical difficulties – can seem completely random to the human eye. But when an AI model analyses years’ worth of this data, hidden patterns do emerge. Typically – unless circumstances are truly unprecedented – AI is much better at predicting ETAs and with the help of an AI-assisted real-time ETA tool, companies can ensure they’re prepared to receive loads whenever they arrive.

Automating procurement and quotation

Spot buying is a perfect use case for symbolic AI, as companies have a set budget and clear constraints around lead times and carrier types. Beyond this, the structure of negotiations is relatively simple – participants can make an offer, wait for a response, make a counteroffer, accept an offer, or end a negotiation. This makes it easy for software to pursue its goals independently, saving thousands of manual administrative hours.

This is just one example. In the procurement space, statistical AI can also revolutionise tendering by using huge quantities of data to predict pricing. For example, instead of asking carriers to bid on a load tender, AI can present said tender – and a pricing offer – to a select number of carriers. If no carrier accepts the tendered load at the offered price, the AI can initiate additional tendering rounds as needed.

AI can also have a transformative effect for sellers of logistics services, enabling them to automatically serve customers with instant, accurate pricing for spot transports based on predicted market rates. With this ability, load takers can increase the volume of opportunities they quote for and ultimately win more new business.

Decarbonisation

The logistics transportation sector is under pressure to slash its carbon emissions. End-user customers are leaning on shippers to decarbonise. Meanwhile, shippers are putting the same pressure on carriers by contracting them based on their sustainability practices, offering longer freight contracts to environmentally responsible carriers, and even paying a premium for lower carbon transport.

With sustainability now affecting the bottom line, it’s no surprise that decarbonisation is rising to the top of the agenda for both shippers and carriers. So, how can AI help with all this?

The first thing to emphasise is that – unlike procurement – there’s often no single “right” answer when it comes to sustainability. Companies may have differing ideas of the optimum strategy, carefully balancing “cost vs. emissions” or “certainty vs. emissions”. However, once shippers, carriers and logistics service providers have decided on their risk appetite, AI can play a crucial role in helping them stick to their goals.

Companies typically adopt one of two mentalities. The first is a cap-and-trade strategy, where the company decides that it won’t tolerate more than X emissions. The second is a carbon tax, where a company decides to offset its emissions. For both of these strategies, shippers and carriers can factor “price per ton of emissions” into procurement events. Statistical AI can be a helpful decision-making tool. For example, when deciding which mode of transportation should be used for each shipment.

The future of AI in logistics transportation is collaborative

We’re at an important inflection point in the use of AI in logistics transportation. It’s poised to slash administrative work and help companies become more efficient and sustainable. But achieving this depends on effective data gathering and sharing. This is where cooperation between industry players comes in. To maximise positive outcomes for everyone, shippers, carriers and logistics service providers need collaborative digital platforms to share data to feed AI models. Looking ahead with this approach, we can significantly accelerate our progress towards reaching the industry’s digitalisation and decarbonisation goals.

Where are brands applying innovation to supply chain and logistics operations?

The turbulence of the past two years has shown senior management the importance of supply chains and logistics. Within this business landscape, the need for retailers to innovate to adapt their supply chain and logistics operations to meet the challenging market conditions has never been more important.

While every company’s challenges and opportunities are unique, it has also become important to establish whether there are any common technology innovation themes across organisations.

With that in mind, Descartes, in conjunction with SAPIO Research, surveyed 1,000 supply chain and logistics executives’ opinions in the UK, Europe and North America to determine where organisations are placing their innovation emphasis and technology deployment focus. Some of the results will be surprising, while others show how market hype distorts innovation realities – further, what can retailers learn from these findings?  Chris Jones, EVP, Descartes reveals all and shares some of the key findings and insights from this study…

Digitisation Initiatives

Digitisation efforts are closely aligned with supply chain and logistics innovation, because they’re about transforming company performance in ways that allow customers to see the positive difference. Supply chain and logistics operations are very extensive, so it’s highly unlikely that companies would have digitisation programs that address the entirety of their operations. The study identified the top digitisation initiatives companies have focused on as order fulfilment (47%), customer experience (45%) and transportation processes (44%). Notice that these initiatives are largely “customer facing” as opposed to back-office operations.

Supply Chain and Logistics Applications

The answers to three questions paint a picture of where companies believe they’re most innovative in their supply chain and logistics operations, where they have the greatest need for innovation and where they will focus innovation for the next two years. In general, no one application area dominated the results for the state of innovation today and future focus.

The degree of application innovation in a given area is also a function of its importance to the organisation and past innovation focus. In some cases, supplychain and logistics applications, such as warehouse management systems (WMS), simultaneously topped the list for most innovative part of the business and the list of those applications having the greatest need for innovation.

Application Innovation Requirements Explained

This is further elaborated on by considering application innovation according to three categories: most innovative; most in need of innovation; and the innovation focus over the next two years.

Most innovative

Over a quarter of respondents feel their companies are most innovative with their WMS (28%) and transportation tracking (26%). Transportation management systems (TMS) were third (25%); however, this figure rose to 28% for those who said senior management believe supply chain and logistics innovation is very important and declined to 18% for those who said senior management believe it less important.

Most in need of innovation

WMS (24%) was also cited as the top area with the greatest need for innovation, followed closely by inventory management (22%). While inventory management is second, it’s fairly low, which is surprising given how many problems companies have experienced either with having excess inventory or not enough of the products that customers want.

Innovation focus next two years

The top focus areas for innovation for the next two years are customer experience (25%), TMS (24%) and WMS (23%). Customer experience was the highest priority for manufacturers, retailers and distributors, but the fourth highest priority for carriers and logistics services providers. TMS was the highest priority for carriers and logistics services providers, but the fourth highest priority for manufacturers, retailers and distributors.

Advanced Computing Technologies

Advanced computing technology has been touted as the next wave of supply chainand logistics innovation, but it’s still early stage for most companies, including retailers. When looking at full deployments, with the exception of data analytics (40%), most advanced computing technologies such as machine learning (20%), artificial intelligence – non machine learning (17%) and robotic process automation (16%) are still in the early stages of full production use. For pilots or partial deployments, however, there is a lot of advanced computing technology activity in supply chain and logistics operations: robotic process automation (52%), machine learning (52%), data analytics (50%) and artificial intelligence – non machine learning (47%).

Conclusion: Momentum Exists, But There’s Work To Do in Retail

The last several years have been an accelerator of supply chain and logistics innovation with almost two-thirds (65%) of the study’s respondents indicating they’re increasing IT innovation funding. Given the scale and scope of supply chain and logistics, companies are focusing on transforming customer-facing processes and operations. No single supply chain or logistics application stands out as the dominant way to innovate, which speaks to the diversity of challenges and opportunities companies – such as retailers – face, and the need for a wide array of solutions.

For many companies, they’re early in their advanced computing technology journeys, but the next two years could prove interesting as pilots and partial deployments come to fruition. What technologies will your retail organisation use to innovate its supply chain and logistics operations?  

How to unlock the value of data-driven logistics

The ability to tap into data is critical to business success – from predicting sales trends to improving operations and customer service. This gives companies the insights they need to outperform the competition, and today’s business leaders clearly recognise the value of data.

However, these game-changing insights are elusive for many companies, with 58% of organisations basing at least half of their regular business decisions on gut feel rather than on data and information. ‘Laggard’ companies base 70% of their decisions on gut feel, while ‘best-in-class’ companies base 60% of their decisions on relevant information.

In the logistics industry specifically, the ripple effects of the last few years – and the ongoing recovery – across supply chain processes have clearly revealed the urgent need for organisations to embrace a data-driven culture. It’s not enough to just have access to data. Data must become a central component of logistics operations, built into the fabric of the business.

Stephan Sieber (pictured, above) , CEO at Transporeon explores this further…

The journey to being data driven

Aside from the cultural shift required, one of the biggest industry challenges associated with data-based decision making has been aggregating data from many disparate systems. Logistics practitioners highlight this as the biggest factor inhibiting their ability to convert data into actionable insights, followed by a lack of trained analysts and poor data quality .

The good news is that supply chain businesses recognise the need to leverage real-time data across their operations. And as a result, having accurate ETAs on transports is essential to managing supply chains and operations more efficiently. However, there’s a significant difference between just seeing what’s happening and being able to instantaneously use that information in an impactful way.

This is where  a modern transportation management platform comes into play. Integrating different elements of the supply chain into an intelligent platform will serve as the backbone for data-driven decision making in large transportation networks. This approach can also connect shippers, carriers, logistics service providers and other stakeholders, enabling them to communicate, share data, and make smarter decisions based on a larger pool of data.

The more stakeholders that participate in the network, the more data that can be generated and analysed to deliver business value – from optimising loading and unloading through smart slot management, to scaling operations and cutting emissions. So, in 2023 and beyond, how do businesses get the most out of their transportation management data and transform their operations like never before?

Unlocking data value

The power of bringing key services and tools together in one comprehensive platform is that it delivers insights along the 360-degree lifecycle of a freight transaction. Having access to this data can provide several benefits, such as the ability to analyse market performance. With multiple stakeholders connected to a single platform, processing millions of real-time transactions annually, a network-based transportation management platform can help businesses benchmark their performance against the market.

Businesses must contextualise the data being collected by aligning it with clearly defined Key Performance Indicators (KPIs) linked to desired outcomes and business objectives. In the transportation realm, common KPIs include on-time delivery, on-time arrival, transportation spend by mode, lead times, and tender acceptance rate. These KPIs can then be compared to external network-wide benchmarks to help organisations see how they are performing relative to the market.

But the true value of being data-driven comes when businesses layer artificial intelligence, machine learning and visualisation tools on top of the data. This unlocks new insights about the businesses’ operations and generates recommendations on how to strive forward smarter. This could include: monitoring industry-wide freight spend and tender rates to optimise their freight procurement process; using AI-powered smart tendering to enable autonomous tendering; or analysing network-wide capacity information to reduce empty miles.

By choosing a modern, intelligent transportation management platform as the foundation of a connected network that prioritises real-time data, companies can unlock the insights that help them reduce costs and carbon emissions while improving service, mitigating risks, and much more. They can finally make smarter decisions based on actual data, not gut feeling.

WHITE PAPER: Real-time Transportation Visibility Platforms must do more. What’s next?

By Shippeo

There have never been more supply chain management solutions available to organisations. Yet a recent PWC survey of executives shows that only 17% believe their supply chain technology investments have yielded expected benefits.

For supply chains to thrive and be resilient in the complex, volatile and uncertain world we live in, transportation management needs to be more agile than ever. Venture capitalists and others have invested hundreds of millions of dollars into various real-time transportation visibility (RTTV) platform companies.

But how should the RTTV platform evolve? What place should it have in the overall supply chain management (SCM) application architecture? What do customers want? And what role should RTTV platforms play in enabling the new paradigm of agility and adaptability that is necessary to thrive in a world that requires increasing precision in the face of increasing variability and volatility?

Today, Shippeo, a global leader in real-time multimodal transportation visibility, has brought these strategic questions into the spotlight through a discussion of a strategy in which they conceived, drove, and recently launched this year. Shippeo calls this strategy “Transportation Process Automation™ (TPA™).”

Shippeo’s TPA™ strategy provides a novel approach to collapsing and automating connections between processes to reduce latency and accelerate decision making. Imagine a world where manual and repetitive tasks, such as order processing, load planning, and carrier selection, are a thing of the past. With TPA™, supply chain and transportation leaders can automate these critical functions, freeing up valuable time and resources to focus on more strategic initiatives.

With TPA™, Shippeo closes the gap on visibility being only a necessary but insufficient condition to drive transformation. But instead, it’s about making visibility actionable, to enable resilient supply chains and provide the foundation needed for true supply chain convergence.

Learn why TPA™ is the future of supply chain management by accessing Shippeo’s new white Paper “Closing the gap between visibility and intelligent action to achieve supply chain convergence.”

Download Your Copy

Building the business case for Satellite IoT 

The Operational IoT market continues to expand as organisations across the world imagine an extraordinary range of opportunities to leverage sensor technology. Weather monitoring stations are transforming the efficiency and environmental performance of remote copper mines and helping farmers to safeguard crops and livestock in a changing climate. The shipping industry is improving cargo traceability to mitigate on-going disruption. Charities are monitoring water quality across Africa to ensure remote communities have reliable access to safe drinking water.

With the arrival of robust, proven, cost-effective satellite connection, the true potential of these IoT applications can be realised. With estimates suggesting there will be tens of millions of satellite IoT devices in use by 2030, access to reliable, global coverage is now enabling new opportunities for systems integrators (SIs) across the world.

It is now time for SIs to build a business case for Satellite IoT, says Eric Ménard, Vice President Strategy and Business, Astrocast…

Market Expectation

Satellite connectivity may have been available for years, but the market has been waiting for a satellite connection designed specifically for widescale IoT deployment. Many of the key target applications – from agriculture to supply chain – do not require the continuous or real-time communication associated with high-cost legacy satellite connectivity. These solutions  play a critical role but they are too expensive and power hungry to support a compelling business case for most Operational IoT deployments.

A farmer requires only daily or twice daily updates of cattle location to track herd health. A copper mine uses intermittent updates on the water table level to provide operational visibility and meet environmental regulation. A shipping line does not require real-time updates of the temperature of its containers . Transmitting data either once or twice a day – or taking multiple recordings which can be buffered and uploaded every 12 hours – is perfectly adequate.

The value of this data is significant – especially in areas such as shipping. The use of IoT sensors can ensure high value cargo, including pharmaceuticals, are kept at the right temperature and left untampered. Any deviation will prompt an alarm and allow remediation where possible, resulting in less wastage and better integrity.

Building Confidence

However, while the business case is compelling, such IoT operations are incredibly cost sensitive. When a deployment may extend to tens of thousands, even hundreds of thousands of devices, small differences in performance and lifetime will fundamentally change the return on investment (ROI). The business case becomes even more sensitive when extended to remote areas without terrestrial network coverage and require satellite connectivity. How can the sensors be deployed to remote locations cost effectively? What is the cost of satellite transmission? How long must the battery last on a sensor to ensure the ROI is not compromised? Plus, how can the data be collected and used to drive tangible commercial benefits?

Even before exploring the technology, SIs need robust due diligence to ensure confidence in the business credibility and model of the satellite provider. Ensuring excellent satellite coverage, including across international water, is essential. Business longevity is also fundamental for deployments that could be in the field for a decade.

In addition to verifying strong financial credentials, it is also important to assess the billing model, contractual arrangements, warranties and support structure. Is the company committed to supporting its SIs not only in the prototyping and field-testing phase, but also through industrialisation, production and taking the solution to the market? Each stage of this process will raise new challenges. Having a partner in place with both the knowledge and commitment to overcome problems will transform the likelihood of commercial success.

Proof of Concept

Only once the foundations of a business case have been confirmed should an SI make the investment in a technology assessment. For many SIs looking to expand existing IoT solutions, speed of integration is an important consideration. From the quality of documentation to availability of training, the way a satellite company works with its SIs to ease the integration of SatIoT in to the existing IoT solution set can make a significant difference in time to market.

For the past few years, a number of innovative SIs have been testing the latest generation of cost- effective SatIoT connectivity to determine the viability and requirements of an industrial scale deployment. They have built prototypes and invested in field testing. The process has highlighted the importance of ultra-low battery consumption to minimise the need for replacements in situ. Typically, a business case may only stand up if the battery lasts five to ten years. In some locations, the Satellite IoT solution can be integrated with a solar panel, overcoming the need for a dedicated battery.

SIs have also worked closely with SatIoT providers to optimise antenna design and ensure the antenna is both reliable and easy to integrate. A small, flat antenna may be essential but additional questions will arise specific to an area of deployment. For example, lightweight but robust enclosures are now used to securely attach an antenna to livestock to track their movement across remote farmland and identify any that leave the herd, indicating ill-health or injury. Or a simple addition of a Bluetooth connection between the device and the SatIoT antenna provides an excellent solution to achieve indoor satellite IoT deployments in rural locations with no terrestrial networks.

The availability of bidirectional connectivity also provides SIs with a future proofed solution. Updates can be downloaded remotely to the sensors as required – for example, if a customer wants to change the frequency of data recording.

Conclusion

These innovators have led the way, discovering how to optimise SatIoT solutions and antenna design to deliver a robust, viable and cost-effective deployment. Critically, these companies have proved the business case for Satellite IoT. While the demand was never in question, the technology is now in place to enable it. Whether it is shipping containers or agriculture or environmental monitoring or animal tracking, SatIoT developments are now moving into the next phase of industrial scale deployment.

And this is just the start. The shipping industry, for example, has an array of complex operational challenges in its management of 50 million containers across the globe. Tracking location and temperature monitoring are delivering financial benefits. Adding the ability to identify whether a container has been entered or tampered with during the voyage, will support the war on piracy and drugs. Adding smoke detectors will raise the alarm when fire breaks out on board – an increasing concern if owners fail to inform the shipping company that the container holds self-combusting cargo, such as Lithium-Ion batteries.

The door is open for SIs across the world to build on the knowledge gained over the last few years, explore the global reach of cost-effective satellite connections and build a compelling business case for Satellite IoT solutions that will transform operational efficiency for organisations of every size across the world.

American online consumers have a craving for UK products

The US e-commerce market is the second largest in the world. Surpassed only by the Chinese, which underwent an almost improbable development in the last ten years. The Americans are keen and experienced online shoppers. According to the IPC* Cross-border E-commerce Shopper survey 2022, more than 50 percent of the US online audience shopped online at least once a week. That is considerably more than the total average in the 39 countries covered by the study, which was 34 percent.

This enthusiasm is also reflected in how online spending in the US has developed in recent years. In 2017, the retail e-commerce revenue was 416 billion U.S. dollars. In 2022, it had increased to 850 billion U.S. dollars, and is forecasted to reach 1 357 billion U.S. dollars by 2025.

26 percent of American cross border consumers made purchases from the United Kingdom in 2022, making it the number two foreign destination after China. For those UK e-tailers who are not yet offering their products to the US market that number should be of interest. The top three product categories that US online consumers are buying from abroad are Clothing, footwear and apparel, consumer electronics and accessories, and personal care and beauty products.

So, UK products are in demand in the US and have a strong reputation for quality. The US is the UK’s largest export market for both goods and services. In general terms, it’s quite unadventurous to export to the US, with low regulatory barriers and minimal language barriers.

However, the US is not a single national market. It’s a federal system which means that you as an exporter need to do your homework and treat each state as a separate entity with its own procedures and regulations.

Contact Direct Link UK department to see how they can help you with your e-commerce deliveries from the UK to US!

*International Post Corporation

Retail logistics: The year that was, and preparing for the retail year ahead…

2022 continued to present an array of challenges for retail, logistics and supply chain professionals. Although Covid19-related restrictions were lifted, its challenges were replaced by the war in Ukraine and the subsequent knock-on-effects relating to it; including energy cost increases, a rise in inflation and cost-of-living, and sustainability concerns. Meaning, for many retailers agility has remained key to business resilience, and growth.   

Andrew Tavener, Head of Fleet Marketing EMEA, Descartes Systems Group, reflects on the energy cost challenge businesses and consumers face. He explains the key role that route planning and optimisation plays in enabling retailers to tackle 2023 with optimism.

UK fuel and energy costs are a cause for concern for many in 2023

Since the war in Ukraine, inflation peaked in the UK at 11% in October 2022 – related to this is the cost of fuel and energy, which is presenting significant challenges for consumers and businesses. In the case of consumers, it has caused them to evaluate their spend on non-essential purchases.  For instance, UK homes have cancelled 2m streaming services as the cost of living has soared.

In comparison, the spike in energy and fuel costs has consequences for retailers that are operating buildings, outlets/stores, or delivering goods;  with diesel costing £2 per litre last autumn. Thankfully, though, in January, falling petrol and diesel prices have caused some relief; with petrol averaging around £1.50 a litre, and diesel on its way to below £1.70 (source: Parkers and RAC Fuel Watch). This cost decrease has to be viewed with pragmatic foresight. A predicted rise in fuel duty is expected in March 2023, with The Office for Budget Responsibility (OBR) forecasting fuel costs will rise by 23%. As you can imagine, this will impact retail deliveries across the board.

Alongside this, the cost of electricity continues to increase. This naturally has consequences for the entire retail value chain. Buildings will cost more to operate and electric vehicle fleets will likely cost more to run too. It begs the question – how can retailers minimise the impact on their costs and prices to the consumer?

Keeping vehicle fuel costs down with effective route planning and optimisation

Clearly, many macro-economic factors are challenging the retail outlook. So, what can retailers improve and control as they take on 2023? Digitisation continues to offer a powerful answer; but what technology in particular can help make a significant difference to retailers’ cost base as they seek to operate as efficiently as possible?

In the case of many bricks n’ mortar and ecommerce retailers, products will need to either be transported to a respective retail outlet and sold directly to the consumer; or stored within an ecommerce fulfilment centre and eventually delivered to a consumer. In either case, fleets of vehicles are used to transport goods. So, as fuel costs spike, this needs to be factored into the total cost of sale. With diesel and electricity costs set to increase, fleet managers need to consider the vital role their fleets can play in keeping the total cost of sale (and returns) down.

This is where specialised route optimisation and delivery scheduling tools enables retailers to minimise the miles driven and increase the delivery density; to reduce fuel consumption and CO2 emissions, to  offer a more sustainable delivery to consumers. Therefore, using less fuel and fewer vehicles to deliver more in fewer miles also equates to lower vehicle maintenance. Further, as many organisations face increasing global, governmental and consumer pressure to reduce carbon footprints, this technology has a crucial role to play. Used effectively it will cut costs and carbon emissions; which can hopefully be passed to the consumer in a way that enables the retailer to profit, while supporting consumer needs.

Topps Tiles, the leading U.K. tile retailer, for instance, is optimising its fleet delivery capabilities with Descartes’ cloud-based route planning and optimisation solution. It is decreasing the average kilometres driven per delivery route by two percent, and gaining a better understanding of the potential impact of changes to its delivery strategies.

Conclusion

As we come out of the pandemic, many retailers have had a rough 2022. Although the market is fraught with inflationary, cost of living, cost of energy and recessional pressures, consumers are still purchasing goods – their expectations and hopes are, however, somewhat skewed towards locating the best deals and delivery experiences  for their spend. So if retailers can get more out of their  transport operation they don’t need to pass excessive cost spikes to their shoppers. In addition to maintaining proof that their efforts are having a net positive effect on sustainability initiatives, this will all help provide a competitive edge and have a positive impact on their brands, as they look to make it through 2023 and onto growth.

Planning a Nordic Market entry or already have established Nordic e-commerce customers?

Buying products online is a long-established habit of most of the population in the Nordic countries. All of them, Sweden, Denmark, Finland and Norway were out early when it came to building an internet infrastructure, also in thinly populated areas.

So, Nordic consumers have been relatively mature in their behavior when it comes to e-commerce for quite some time. Though the development has been amazing here in the last few years too. If we look at the proportion of residents in the Nordic countries who shopped online once a quarter in year 2015, it was 23 percent. In 2022, the proportion who shopped online three times a month was 25 percent.

Let Direct Link help you with your e-commerce deliveries!

As part of PostNord, the largest provider of logistics solutions and geographical coverage in the Nordic countries, Direct Link are specialists in customer specific delivery solutions and the distribution of e-commerce goods to anywhere in the world. Operating internationally since 1986, they know the people, the systems, and the ways between. Their delivery solutions for the Nordic countries are best in class with 100% coverage of the market. No one beats them on their home turf.

Direct Link have the services you need for your e-commerce deliveries!

Two of the most preferred services for e-commerce deliveries to the Nordics are MyPack and Merchandise Mail Plus:

MyPack

Direct Link delivers your parcels up to 2 kg directly to the customers mailbox. Easy for you and convenient for your customer. With MyPack Home you can send items up to 35 kg with flexible and consumer-friendly delivery to the recipient´s doorstep. This is a straightforward, door-to-door delivery option for e-commerce companies wanting to reach consumers in the Nordics. For those who prefer to pick up their shipment at a service point, MyPack Collect is available for parcels up to 20 kg.

Merchandise Mail Plus

Your item is conveniently delivered in the recipients’ mailbox. Items too large for the mailbox are notified for pick up at a local service point. With the fully tracked service option you get even more features. You have full end-to-end tracking and, if required, delivery confirmation.

Contact Direct Link to see how they can help you with your e-commerce deliveries and fulfilment!