5 Myths About Shipping and Freight Forwarding in 2021
Brian Hoey - June 09, 2020
This year more than ever, the global logistics chain has had to fly by the seat of its pants. Constant disruptions and global uncertainty have led most businesses to reconsider their fundamental assumptions about the supply chain of the future and how it will operate. This kind of soul-searching is critical in times like these, but it also leads to wild speculation as to what’s going to come next in relatively unpredictable moments.
The result of this kind of speculation is that, perhaps more so than in recent years, there are a lot of myths about shipping, freight forwarding, and other logistics operations that are beginning to gain traction. As with most myths, there’s usually some truth underlying them, but they might not accurately reflect the nature of the supply chain in 2020.
1. You Can Manage a Transport Network with a Spreadsheet
Okay, we’ll admit that this myth is much, much older than 2020. In fact, this is one of the oldest and most pervasive myths of the modern supply stream. In spite of the technological advances that have made things like advanced analytics and real-time planning possible, there are plenty of logistics planners who still think that every touch point on the supply chain can be tracked, analyzed, planned, and managed from the comfort of an Excel spreadsheet. While that might once have been true, the advent of digitization and Logistics 4.0 makes this kind of planning process riskier than ever. Why? Because there’s no way to integrate a spreadsheet with your suppliers’ ERP system; there’s no way to offer end-to-end visibility to other touchpoints on the chain; and there’s no way leverage advanced prescriptive and predictive analytics within a spreadsheet. Though this kind of planning has long been common practice, it’s really only effective when you can respond to the same situations the same way multiple times over—something that’s pretty much gone out the window in the past few months.
2. AI and Big Data Will Solve Every Supply Chain Problem
Without a doubt, the increasingly volatile and changeable nature of the supply chain in 2020 means that shippers and freight forwarders need to leverage technology to stay agile and maintain on-time deliveries. But some planners work from the faulty assumption that just by implementing the latest and greatest technology they can magically solve all of their issues and eliminate disruptions. If only it were that simple. In reality, the success of your technology or IT adoption will be determined in large part by your ability to:
- Select the right software or platform, i.e. something that actually aligns with your challenges and goals;
- Implement the software in such a way that it actually integrates with existing platforms and doesn’t create information or planning silos;
- Integrate your technology with that of your partners and clients in order to create true end-to-end visibility.
You might have the world’s most robust AI platform helping you to choose the right routes for all of your shipments, but if that platform is working with outdated information because it doesn't connect to the software used by the relevant ports, hubs, crossdocks, etc., you won’t be able to truly optimize.
3. Monolithic Technology Is the Future
You can think of this myth as something of a subset of the myth above. Some of the same people who believe that new technology can be a supply chain cure-all also believe that you can leverage one monolithic ERP solution to digitize and connect your entire operation in one fell swoop We’ve seen that play out in practical fact in any number of supply chains, and the result is almost always disastrous. Sure, the temptation to rely on one overarching solution for everything can be exacerbated by uncertainty, but the reality is that different functions within the logistics chain have different needs—in order to remain flexible, you need to give each team the tools it needs to keep things moving. From there, you can use a Postmodern ERP approach to connect and integrate these different solutions. The result is that you’re able to remain agile and flexible across touch points, and no one has to resort to using shadow IT to get their jobs done.
4. The “Amazon Effect” Will Start to Fade
In the past couple of months, Amazon’s promise of two-day (or even same-day) delivery for its Prime customers has taken a backseat to more pressing operational needs. But that doesn’t mean that the so-called Amazon effect (in which consumers and businesses alike expect quicker turnarounds than ever before—putting unprecedented strain and pressure on logistics providers) can be ignored. Even if Amazon itself struggles to meet its fulfillment promises in the short term, people’s expectations aren’t going to magically revert to their pre-Amazon levels. On the contrary, shippers will have to find new ways to ensure that goods get from Point A to Point B in a timely fashion, even when the traditional ways of doing so aren’t available. To do this, you’ll an IT infrastructure that empowers planners to visualize different constraints, parameters, and scenarios across the entire end-to-end supply chain, choose the optimal route for a particular shipment, and then monitor in real-time to facilitate necessary adjustments as you go.
5. There Will Be a “New Normal”
The IT environment we sketched out above isn’t just about speeding up cycle times. Rather, it’s about coping with the fact that there isn’t necessarily going to be a new normal any time soon. Or, at least, you’re not going to be able to go back to using the old, established shipping routes and the old ways of doing things. Instead, you’ll need to forge new connections and create a value chain that squares better with supply stream realities—even if that means that “set” routes and tours no longer exist. This might seem like an impossible high wire act, but with the right technology it really doesn’t have to be. If you can rely on an integrated supply chain replete with advanced analytics and other Logistics 4.0 technology, then you can visualize the right path for each shipment in real-time. Rather than using the same old routes and reacting as best as you can when disruptions crop up, you can become truly proactive—avoiding disruptions that haven’t even occurred yet, driving on-time shipments and improved profit margins in the process.