While SMC³‘s Connections 2021 conference remains a virtual event this year, the changes happening across the industry as the COVID-19 pandemic subsides in the United States tell a very different story about the recovery taking place.
To kick things off, industry keynote speaker Darren Hawkins, CEO at Yellow, spoke glowingly of the immense progress the transportation industry has made in just 16 short months since the pandemic began.
“We are going through a national renewal right now,” Hawkins said. “Not only a renewal, but a revitalization and a recapitalization of America coming out of interesting times.”
“In the past, I’ve said that we typically overestimate what is going to be accomplished in the next year, and we overestimate what is going to happen in the next five years. I think we all underestimated at this time last year, just how much renewal we would be seeing.”
And Hawkins isn’t the only one who believes the economic response to the nearing end of the pandemic has been impressive. Both Keith Prather and Chris Kuehl, economists, strategists and analysts at Armada Corporate Intelligence, agree that the turnaround in transportation—and across many other connected industries—signals a strong economy moving forward.
On the demand side, consumer purchasing remains strong after months and months of unexpected savings during the pandemic. As a result, U.S. e-commerce activity is projected to grow 18-23 percent year-over-year in 2021—climbing to a record high $1.13 trillion in spending.
However, despite no end to the high demand in sight, many of the same challenges that led to supply shortages throughout the pandemic will also continue in the post-pandemic world. According to recent inventory-to-sales ratio metrics, retail inventory is currently sitting at 74 percent relative to pre-pandemic ratios. Prather says an extended period of 100 percent or better will be needed to restore a proper balance.
“The retail supply chain is still not back in cycle. It’s not anywhere close,” Prather said. “What we continue to see is a scramble environment of retailers trying to catch up and trying to get their supply chains back in cycle.”
As for why these challenges remain, many of the panelists who spoke during the event’s first day referred to the same well-known culprits: driver shortages, the e-commerce explosion, volatile pandemic activity in many emerging markets and even changing expectations from shippers as their final-mile delivery needs change.
To combat this evolving transportation environment, supply chains are responding with widespread and rapid digital transformations. In his conversation with Journal of Commerce senior editor of technology, Eric Johnson, Steve Blough, chief innovation officer at MercuryGate, highlighted how he is seeing a mindset change in how and why carriers and 3PLs are investing in new digital tools.
“It used to be all about what the shippers did. It was all about optimizing and saving money,” Blough said. “Now it is getting more spread out. The digitization is getting all the partners to start to be more effective and efficient.”
“We’re not just looking for, ‘Let’s optimize this and get the savings,’ but is this really the right carrier to do the move? And what information is the right information to pass back and forth between different partners?”
So, how can data and digital technology be used to answer these pressing questions? DDC FPO’s vice president of sales, Chad Crotty, capped off the first day of the event by walking through five categories of technological development where many industry leaders are focusing their attention—including big data solutions, artificial intelligence, warehouse technologies, autonomous vehicles and mobile app tools—to help improve business continuity moving forward.
“We have seen a lot of carriers take steps to build out more robust business continuity plans, and decentralization is a big part of that,” he said. “They want to have more people and more systems in place to handle the same thing in different areas. They realize that it is important to have a plan in advance of these types of things happening.”
Other objectives at the center of technological development include overcoming an ongoing labor shortage and adapting to tight capacity as the market evolves to accommodate new demand in e-commerce and elevated demand in other categories, said Crotty.
The three-day SMC3 Connections 2021 supply chain conference facilitates meaningful knowledge transfer and collaboration between logistics and transportation professionals from carrier, shipper, logistics service provider and technology verticals. You can still register and watch content on-demand! Visit www.smc3connections.com to learn more.