Contact  |  Login  |

[language-switcher]   |

Logistics Trends & The State of Freight: A Freighter’s World – Moving Cargo in 2018

Logistics and transportation of Container Cargo ship and Cargo plane with working crane bridge in shipyard at sunrise, logistic import export and transport industry background

The quality of work in effective management logistics and freight forwarding is more critical than ever. Shippers must ensure timely communications, accurate financing, and preferred procurement programs. Such actions must coincide too. Freight never sleeps in the global world of e-commerce.

Shippers must meet growing customer expectations. They must ease risks. They must meet stringent cybersecurity initiatives. They must avoid the snags of trade war woes. It’s nearly impossible to ensure success through the rest of 2018.

Also, shippers must even understand a few things about this year’s logistics trends. They need to know how rates will change. They should consider the challenges, innovations and possible outcomes as the significant supply chain trends take hold.

A 20-Second Logistics Industry Overview

The global logistics industry is in a state of turmoil. Growth across air, ground and sea transport is pushing shippers’ budgets to their limits. Available capacity is barely making a dent in capacity woes in ground transport. Policy changes in global trade will determine the future success or failure of freight forwarders and shippers.

As explained by Bruce Barnard of the Journal of Commerce, trucking rates are growing. European trucking rates fell 14.7% in 2017. 2018 has already seen sharp increases in prices compared to the beginning of 2017:

  • Average rates were 7.1% higher this year.
  • Capacity continues to shrink.
  • Global air freight rates rose 4%.
  • Average ocean container rates have risen too.

The Influencers of Freight Change and Management in 2018

Primary influencers of change in the industry boil down to two key areas. These include policies and demand.

This year has been chaotic. Trade policies are evolving in light of enacted and threatened tariffs under the Trump Administration. Such changes create weighty logistics challenges.

According to John D. Schulz of Logistics Management, international shippers may feel the brunt of change with major foreign parties fearing how the global transport industry will react if tariffs rise again. Such changes could result in higher taxes on aluminum, steel, and commodities.

For instance, Union Pacific Group (UP) estimates it total international trade volume at 40%. Any change in tariffs will increase freight rates. Freight forwarders will be forced to charge higher prices. Overall cost-effectiveness in global transport will fall. The state rests on the verge of a trade war. That’s not the only problem.

European ocean container shipping lines have affected international shipping costs. According to Patrick Burnson of Logistics Management, the European Shippers’ Council (ESC) noted “deteriorating shipping lines” to be a big problem. A general sense of “problematic” service exists.

Customer service has been cut. Shippers didn’t know where freight was. They lacked process standardization. This also made shipment tracking difficult. Customers grew angry. Companies lost more revenue.

Therefore freight forwarders have grown in popularity. Shippers turn to freight forwarders to overcome issues. Freight forwarders can handle service, ensure on-time shipping, and keep ocean rates in check.

For example, FreightHub gives shippers access to instant freight rate quotes, reliability, transparency and efficiency. Using a digital platform, shippers can access real-time data, compile reports and schedule shipments. This capacity translates into more effective use of available shipping options and mitigates risk deriving from higher rates and market upset.

Freight Rate and Use Changes for This Year.

Ocean Freight Rates

Ocean freight costs have also changed. The uncertainty of shipping rates has increased use of freight forwarding use. Ocean container lines charge higher spot rates to make up for revenue lost.

This is according to Greg Knowler of the Journal of Commerce. It makes predicting ocean rates almost impossible. Average rates today have risen more than 37% compared to a year ago.

Air Freight Rates

Air freight rates have risen in general too, assets Air Cargo News. European air cargo rates have continued to decline over July. Growth is still occurring as a whole. However, growth rates have slowed.

Original predictions called for 4% growth. That was cut short. The German airline, Lufthansa, experienced a year-to-date increase of 2%.

Finnair saw cargo traffic rise 2.8%. The company put multiple larger planes into service too. It increased capacity 7%.

Overall air cargo demand grew as well. More demand results in less available capacity. This caused air freight rates to increase. It also created a decrease in available air cargo shipping options.

Moving freight means having the right price, location, and service. A misstep could increase freight costs. Failures in these areas caused the poor use of available capacity.

It further restricts capacity too. This only makes the problem worse.

Ground Freight Rates

Global ground freight rates increased too. Posted loads rose 27%. Available trucks only increased 14%. Contracted rates remained similar, reports Zipline Logistics.

Todd C. Fowler of KeyBank Capital Markets, Inc estimates a 25-30% increases in spot freight rates due to this problem.

Exact statistics for volume increases in 2018 over 2017 are unavailable. However, most carriers are turning their attention to dimensional pricing models. They’re abandoning traditional freight classification methods.

Consider how dimensional pricing (DIM pricing) works; DIM pricing effectively moves projected volume for ground freight from a given weight to an actual volume. This is key to space utilization, which increases the cost-effectiveness of shipping.

Ocean lines also impact ground rate. It involves the implications of fuel costs, says Knowler.

Steady ground volume will now face the risk of added bunker surcharges. Mediterranean Shipping Company (MSC) has now announced an immediate surcharge on all ocean and land freight.

This means average transport costs will rise. Higher rates could threaten profitability in the industry throughout 2018. Actual statistics will not be available until the dawn of logistic trend of 2019.

Read more: Modes of Transportation explained: Which type of cargo and freight transportation is the best?

What About New Technology in Logistic Applications and Its Impact on Global Freight Management?

As explained by Supply Chain Brain, Gartner notes the use of technology to improve logistics. Some of these improvements include:

Democratized Artificial Intelligence (AI)

Democratization of technologies describes the movement of technology management to the people in freight management. This means freight forwarders, not governments. It moves technology to shippers’ hands too.

Blockchain is one of these. It will be a leading logistics trend for 2018 and 2019. Blockchain will reach maturity by 2020. As a ledger, it can help customers too. It will give them peace of mind and real-time shipment status.

Digital Ecosystems

Computing power and data will connect humans and technology. This includes the use of drones, small robots, driverless vehicles and more.

A 140-foot drone with a 200,000-pound cargo capacity could be flying routes to China by 2020, reports NBC News. The opportunities are endless.

Digitalized ecosystems also include software-as-a-service (SaaS) platforms. These level the playing field for shippers.

Digital systems open doors to contracted rates. They will enable greater use of intermodal transport too.

For freight forwarders, digital systems automate processes. This is its basic function. Logistic technology trends reduce the amount of “work” necessary to offer lower rates. It creates a win-win for everyone involved.

Transparent Experiences

This refers to the use of technology to bring transparency to work environments. Transparency in the supply chain includes the use of intuitive interfaces. Connected systems and intelligent workspaces mean getting more accomplished. Other technologies move manufacturing and design closer to end users. For manufacturers, taking advantage of local and regional factories is critical. It also allows for the use of intermodal shipping options.

They can move more freight from ocean containers to ground and air transport.

Learn more: The Importance of Transparency. The Difference Digitalization Makes In Freight Forwarding

How Shippers Can Succeed Through the End of the Year

The resolve to overcome the challenges of 2018 is strong. As noted by Burnson, Amazon is ramping up service levels and is expected to keep pushing for lower costs in shipping, procurement and inventory management. However, the most significant plans by Amazon and the other e-commerce giant, Alibaba, will force freight forwarders to adapt quickly. Shippers will begin to use freight forwarders for strategic value, and new technologies will become strategic bases. Fortunately, shippers that follow a few tips can overcome the challenges.

Upgrade Existing Systems

Shippers that continue to handle freight management in-house and with manual systems will face setbacks. Freight forwarders can manage the process of moving freight and securing the best rates possible through digital, advanced platforms. For instance, the Freight Hub platform can calculate freight quotes based on quantity, weight, and volume as total volume or specific dimensions. Therefore, shippers can get the best quote for each shipment.

As demand for newer systems increases, the digital freight forwarder will become essential to shippers’ success.

Enact Flexible Shipping Schedules

Working Monday through Friday with regular business houses is unacceptable. Freight volume is tight, and shippers need to start taking advantage of night-time pickup and delivery, as well as Saturday pickup and delivery too.

Outsource Freight Management

This is the most crucial step in surviving the freight and logistics challenge of 2018. With uncertainty under the Trump Administration, international shipping is unsteady. Working with a freight forwarder, such as Freight Hub, places the burden of compliance, classification, and verification of shipment details in the hands of another party. The use of a third-party partner allows shippers to keep focused on manufacturing and preparing product orders, not distracted by logistics industry trends.

The Big Picture

Understanding the latest trends in logistics and supply chain technology is key to shippers’ success. Challenges are increasing. Volume is rising. Demand is growing. Also, pressure for savings in logistics spend at an all-time high.

Shippers need to rethink their international shipping strategies. They must consider the use of a freight forwarder to handle the process. Freight forwarders can help move freight through ocean carriers, ground transport, and air. This will enable growth when the most significant logistics trends become a reality.