Series: Five Old Rules of Transportation That No Longer Apply - Rule #5

March 11, 2016 Ed Rusch

Is the freight transport market mature and slowly evolving or will technology topple the status quo?

Noël Perry, Founder and Principal of Transportation Economics gave a keynote presentation recently at the IGNITE Supply Chain Conference in Philadelphia. His presentation, “Transportation: A Year on the Edge,” focused on the underlying fundamentals of transport demand, operations and competition. In short, Noël listed five old rules of transportation that no longer apply while offering up the new rules replacing them. Supply chains will be dramatically impacted.

This blog series covers each rule change individually and offers up strategies to navigate a successful transition. Be sure to subscribe on the blog stream to receive real-time notifications of each new post.

Discussed in previous posts, rule change #1 proposes that we no longer live in an era of continuous improvement with transportation becoming slower, more fragile and less reliable. Rule change #2 proposes that it’s no longer all about volume but that it’s all about profitability. Rule change #3 proposes that it’s no longer about reducing spend but it’s about assuring capacity when bidding out freight. Rule change #4 proposes that your core carrier strategy will no longer handle your growth with “good” freight and “bad” freight needing to be thought of differently.

The Fifth Rule Change

Old - The freight transport market is mature and slowly evolving.

New - Changing rules and technology will topple the status quo.

With new transport technology growing exponentially, digital tools will revolutionize cost, capacity and supply chain design. Today it costs $2.20/mile to run a truck; in 20 years the cost will be halved.

In the past, shippers didn’t want to be bothered with new technology – they felt they could just hammer on their carriers to get capacity and lower prices. But this isn’t true today due to decreased capacity, the driver shortage and rising transport costs.

At Maturity Digital Tools Will Revolutionize Cost, Capacity and Supply Chain Design

New technology and changing rules are profoundly redesigning the supply chain and the way consumers make purchasing decisions. Online research and purchasing is steadily advancing and mobile adoption is at an all-time high. Consumers hold stores in their hands, comparing prices, “trying on” or testing items, processing payments and scheduling delivery. Companies that understand and embrace this evolution in the way we do business will be industry leaders.

Adapt to market events and increase supply chain efficiencies by collaborating across a supply chain operating network that provides visibility from end-to-end, fosters communication and collaboration and streamlines operations for a true competitive advantage.

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