Current Freight Industry Trends that Affect Freight Brokers
The freight transportation industry is rapidly evolving. With the introduction of new technologies, the influence of an ever shifting economy, and expanding shipping regions, we are nearing a crossroads that can yield some potentially favorable, and some potentially challenging outcomes. Here are some trends that all Freight Brokers should pay heed to this year.
Make no mistake – more and more consumers are buying online these days. So much so that direct to consumer shipping demands will increase three or four-fold this year. Freight brokers will have to rise to the challenge to accommodate both shippers and carriers having to coordinate this growth, which is quickly overtaking traditional B2B deliveries. And this is not just about deliveries – it also includes returns.
North American Expansion
While Canada is not an expansive market, the favorable exchange rate and lower manufacturing costs there, coupled with current low fuel costs, are making Canadian goods more attractive. Canadian exports will increase, and American companies will continue to open operations in their next door neighbor. For American trucking companies and freight brokers, this presents ample opportunities for expansion on both sides of the border.
Low Fuel Prices
Throughout 2014, and now well into 2015, we have seen favorable oil prices that have aided the bottom line for the freight transport industry. In the short term, this will most likely not change. But in the long term, fuel costs will always be an issue, and it remains important for companies to continue to forecast oil prices, explore alternate energy sources, as well as adopt new fuel economy technologies.
Manufacturing Potential in the U.S.
While China has enjoyed its day in the sun as a leader in the manufacturing industry, rising labor costs are pushing many companies to consider moving their operations back to stateside. Other factors, such as quicker time to market and fuel economy, as well as protecting intellectual property, seem to also be influencing this decision.
Freight Brokers are ramping up their services to provide more effective services for both shippers and carriers. There are now many highly reputable, cost-effective providers that offer comprehensive software solutions that are streamlining the supply chain management process. But also keep a close eye on online Freight Exchanges, which are creating a new market for shippers and carriers to find mutually advantages deals.
Dimensional Packing and Pricing
Dimensioning machines are now filling up trailer space like the game ‘Tetris’. This new approach provides precise size measurements of shipments in order to price them more accurately. This has been transformative for many companies, especially in the LTL (less-than-truckload) carrier industry, which was losing out on millions of dollars over the years due to antiquated measurement formulas. High profile companies like FedEx and UPS have long adopted this, so it’s only a matter of time before the rest of the industry also heads in this direction.
While some consider this to still be in its nascent stage, 3D printing is a real game changer. As such printing technologies continue to improve, there will be less of a need to ship certain products over long distances, as they soon will be ‘printed’ or fabricated locally. Freight Brokers may need to think of strategies to prepare for the challenges that may arise from 3D printing, and perhaps come up with innovative ways to take advantage of this new trend by offering new, applicable services.
More pervasive than 3D printing is the localization that has already begun. Companies like Amazon are leading the way to open up distribution centers in cities and utilizing their own trucks for shipments. While this initially may seem like a slight against the established freight industry, this is another perfect opportunity for those with initiative to develop services to companies seeking to supplement such delivery and transportation services.
The biggest shakeup in the industry is coming from the push to use Big Data analytics. Although early adopters are already enjoying its benefits, such as more accurate assessments of supply chain issues, its full potential may not become fully apparent for some time. But many freight industry executives are fully confident that Big Data will continue to mature and improve both predictive analysis and profitability. New software systems, such as those offered by GlobalTranz, are also completely changing how freight brokers approach decision-making and supply chain management.
When it comes to changing trends in the freight industry, the wildcard is always the new company that brings along a completely unprecedented ideas and services to the table. They might have a completely new take on how freight management should be handled, and introduce strategies and systems that change how freight brokers work forever. Whether this happens in the latter half of 2015 still remains to be seen.
What Else Do Freight Brokers Need to Pay Attention to?