Logistics Trends Outlook for 2016

Transports were impacted by the strong dollar, weak commodity prices, slow growth and weak volume. Transports had their worst year since 2008. Look for this to continue in 2016. We expect US economic growth between 2 and 2.5%. Cheap diesel fuel will allow goods to move via trucks instead of rail. Railroads will need to curb capital expenditures. Look for merger and acquisitions to continue in 2016 especially in rail. Railroads will continue to implement automated braking systems. Transports lead in a recovery and decline going into a recession.

 

Shipping rates are going up in 2016. UPS, FedEx, and DHL have all announced rate increases on average of 4.9% along with additional increases to accessorial charges. UPS also announced a 2.5% charge for 3rd Party Billing Services. However, the biggest rate increases will come from the USPS. USPS domestic priority mail rates will increase on average by 13.3%, Look for this to impact online retailers who offer free shipping.

 

Electronic Logging Devices are a requirement for trucking companies to capture hours of service or drivers logs. Carriers will have two years from December 11, 2017 to implement. A key component of the law is that the electronic logs will need to be integrally synchronized with the vehicles engine. We believe the electronic mandate will be the stimulus to drive the connected truck. Carriers will be able to collect driver and vehicle information (fault codes) and utilize data analytics to reduce costs and improve service. In addition, driver behavior can be tracked for speeding, aggressive driving and hard braking

 

Cloud Computing will continue to grow. Small to mid-size firms love the cloud model. Mid to Large size shippers and 3PL’s will opt for private cloud environments.  Many will opt for optional disaster recovery secondary sites. While smaller shippers and 3Pl’s will utilize shared environments, cloud computing offers tremendous value and a way to significantly reduce IT costs. Oracle has a very good TMS and will start offering attractive incentives to migrate legacy customers to the cloud. Oracle announced on December 22nd, that it will build a cloud campus in Austin, Texas.

 

Mobile commerce will continue to grow by double digits in 2016. Individuals are connected to their devices 90% of the time. Individuals check their devices at least 150 times a day. We are living in a post pc world. Also, look for significant growth in mobile coupons.

 

Data Analytics will continue to gain traction. Companies are figuring out how to use big data and leverage data mining tools. Supply Chain analytics will be an area of explosive growth. On the transportation side (fleet management) look for companies that embrace predictive analytics to gain a competitive advantage to manage their fleets and employees.

 

Weather Analytics will draw interest from carriers, shippers and logistics providers. The ability to analyze and look at climate risk management is relatively new. Major retailers will benefit from knowing the probable weather patterns.  If the weather is projected to be colder and wet in the Northeast, retailers may want to move winter clothing, snow blowers and generators well in advance to take advantage of inclement weather. Carriers will take the necessary steps to reroute or reschedule trips to avoid delays or bad weather.

 

Start ups will generate interest. Look for companies such as Deliv that provides same day delivery for retailers and Flexe that provides warehouse space via a cloud based platform to gain traction in the industry.

 

Check back with Logistics Trends Inc. for more insights into the transportation and logistics industry.  Our email address is jbisaha@logisticstrends.com and phone number is 770 639-2230.