2023 brings unpredictable and countless disruptions for supply chains and logistics, like geopolitical problems, extreme weather, an unstable economy, and several similar ones. As organisations prepare for what the new year will bring, here’s what shippers and carriers should expect from.
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Acquisition and merger activities will continue
The pandemic powered growth in the logistics sector, and businesses grew in size and revenue, reaching new highs. The growth also triggered increased attention from private equity firms searching for investment opportunities. Some logistics business owners decided to exit the sector when valuations were at the highest point to make a profit. However, these weren’t the only conditions that triggered intense acquisition and merger activity; factors like the state of the economy also had an essential role.
Research reveals that the transportation and logistics industry registered the highest level of activity in the merger and acquisition domains in 2022, as a number of companies identified them as the ideal ways to address challenges. Uncertainty related to new coronavirus variants, equipment and material shortages, and the war in Europe provided new opportunities for logistics companies looking for ways to gain more control over the supply chain.
While over the end of 2022 merger and acquisition activity has started to slow down, numerous logistics organisations are still looking to acquire or be acquired. Industry experts state that they are seeing several private equity companies that didn’t invest in logistics so far, become interested in the sector and planning strategic acquisitions. The sector witnesses a new trend of larger firms buying smaller ones to provide the public with new service offerings and footprints.
Acquisition and merger activity triggers workforce optimisation.
Visibility, data, and digitisation
Supply chains still rely on paper, but companies are looking for ways to replace it with digital tools, and the trend is expected to continue in 2023 and beyond. Digitisation enables logistics businesses to mine data to accelerate smart decision-making and gain valuable insight into the market and their clients. Data intelligence and analytics boost their visibility among their audience, which is a challenge most shippers experience nowadays. When a logistics company works with multiple merchants, getting the latest shipment updates is challenging without calling each supplier and putting together the legal documentation for good transportation. The process takes plenty of time, increases the risk of error, and deters operational efficiency. By welcoming digitisation into their supply chain processes and using digital data, companies gain increased visibility of their shipments, save energy and time, and make themselves more resourceful. 2023 will bring a rise in visibility, data, and digitisation in the logistics industry that improves old processes’ accuracy and leave the paper in the past.
Logistics businesses invest in smart implementations
Logistics businesses are expanding their offer and range of services to provide more value to clients and gain a competitive edge. Investing in smart implementations allows them to achieve this goal. Research states that evolving customer expectations are the main driver of change in the logistics sector. It seems that logistics organisations believe that their clients expect them to offer a broader range of services, so they expand their offer to include solutions like LTL freight or expand their existing services to more means of transport, industries, or areas.
The sector witnesses an increasing number of organisations looking to expand their services to meet their clients’ needs and use new avenues to grow. This is the perfect time for companies to consider creative or alternative business models like outsourcing services.
From the implementation point of view, freight providers are becoming more mature and becoming smarter. They are allocating more funds to technology purchasing or moving roles offshore to boost ROI. Logistics companies no longer overlook the benefits of investing in technology.
Environmental regulation and sustainable shipping
The logistics sector already has minimum fuel efficiency and maximum emissions standards for diesel and gasoline vehicles. The latest environmental regulations and public pressure to reduce greenhouse emissions and pollution motivate trucking companies to welcome innovation and switch to electric vehicles and green infrastructure. The Securities and Exchange Commission on ESG recently introduced a regulation that requires public organisations to add climate-related disclosures in their 10-k. Regulations also ask businesses to report risks associated with climate change, suppose their processes would have an impact on it. The optimisation of the logistics industry and shipping goods at reasonable prices and without harming the environment is achievable if businesses make an effort to reduce their carbon footprint and boost their efficiency. Further initiatives are expected to direct logistics companies on this path in the coming year.
Rise of Artificial Intelligence and Automation
Artificial Intelligence and Automation have been on the trend radar in the logistics sector for a while, and it seems that in 2023 they’ll be widely integrated into a variety of processes. Companies have used automation which implies a machine completing a series of tasks from several sectors for decades. It uses technology to reduce the need for human workers, but because it lacks a brain, it can complete only the jobs it has been specifically programmed for.
Artificial Intelligence aims to mimic characteristics of human intelligence and could learn how to assist humans in completing complex and difficult jobs. It requires some human input, but it can also function on its own, without supervision.
Artificial Intelligence and Automation are revolutionising the logistics industry and supply chain because it adds new sorting, picking, and warehouse functions. In a sector where the demand forecasts and flow of goods cannot be predicted, it’s paramount to benefit from increased flexibility and agility.
Companies are threatened by several factors, like the challenging situation in the labour market and aim to gain certainty to deal with changeable customer behaviour and unpredicted events. Artificial Intelligence and Automation improve several tasks and enable companies to deal with change in the sector. The trend will continue to gain ground in 2023 because it’s beneficial in optimising time and delivering superior service to clients.
The above trends show that 2023 will present businesses in the logistics sector with new challenges.
