COVID-19 plus ill-timed shipping accidents — Suez Canal, for one — and several major weather/flooding/climate events have broken global supply chains at virtually every link. Manufacturers, warehouses, shippers, shipping lanes, freight-forwarding hubs, and ports are all feeling the effects. Beyond goods simply not moving as they should, logistics and transportation industries are also experiencing the following issues:
Costs — containers, fuel, labor — are soaring
Capacity is tight at multiple points — containers, trucks, warehouses (due to soaring e-commerce orders)
Qualified labor supply is exceedingly tight and expected to remain so for the foreseeable future
Significant rate disparities among major shipping lanes have engendered unexpected behaviors — stranding empty containers/vessels in lower-profit lanes and shipping empty containers rather than waiting to fill backhaul loads
With so many connected and cascading problems, logistics and transportation firms will face serious challenges in growing revenues, sustaining profitability, and retaining existing customers.
The pandemic, accidents, and weather-related distortions will eventually sort themselves out, but some of the forces underpinning today’s logistics and supply chain disarray will stick around for a much longer term.
In the U.S. alone, e-commerce sales jumped 44% between Q2-2019 and Q2-2020 and +32% between Q1-2020 and Q2-2020, bringing the e-commerce share of total retail sales to a record high of 15.7%. Even after the U.S. began reopening its economy, e-commerce sales remained elevated at a 13.6% share of total retail sales in Q1 2021, leading economic observers to conclude that at least part of the pandemic shift to e-commerce is permanent. Soaring investments in high-tech warehousing and distribution capacity suggest industry leaders agree.
Upshot for transportation & logistics (T&L) sales: This dramatic shift is increasing overall demand burdens on warehousing, transportation, and logistics companies at a time when capacity is already constrained. Serving existing large accounts is going to be difficult enough, let alone focusing on adding new ones.
Remote work, which was massively enabled during the pandemic, seems here to stay. With Google, Twitter, Facebook, and other tech behemoths leading the way, companies are deciding that they can save substantial sums on corporate real estate and recoup big investments in WFH enablement with no sacrifices to productivity or work quality.
Upshot for T&L sales: Early takes suggest that the trend toward hybrid WFH is fueling out-migration from cities. That’s a big problem for precise logistics and transportation models, which service providers have fine-tuned over many years to meet the demands of dense urban populations.
On the B2B side, plenty of manufacturers are rethinking globalization, outsourcing, offshoring, and Just-in-Time (JIT) supply strategies. They are also investing heavily in 3D printing capabilities, which often pushes manufacturing closer to consumer end-points (the last mile).
Upshot for T&L sales: Manufacturers are essentially shortening supply chains, buying more regionally and locally, and upending transportation networks that were built to serve longer distances and globally focused models. And, while logistics service providers (LSPs) are responding to these changes — with elastic, reverse logistics, TMS/WMS automation systems — fundamental retooling will take time to complete.
Long-term demographic trends — aging populations, rising college enrollments, eroding average lifespans in certain countries, impacts from COVID-19 deaths, and long-term pandemic disabilities all suggest that the struggle for labor capacity will persist.
Labor unrest is also, predictably, on the rise, especially in the realm of B2C e-tailing and warehousing. The sheer level of organizing activity and progress such efforts are achieving should continue to fuel labor cost inflation across most industries.
And, while there is plenty of investment in R&D for autonomous vehicles — mass commercialization and scaling of driverless technology remains several years in the future. So LSPs can expect to compete, not only among themselves — but with manufacturers, distributors, and retailers to hire skilled workers to meet demand.
Upshot for T&L sales: Expect continued wage inflation (atop fuel, container, and other upward cost trends), adding pressure on transportation and logistics leaders to pass higher costs — via rate hikes or surcharges— to customers.
If all that is not challenging enough, transportation and logistics companies also face continued disruption related to:
Politics — shifting trade blocs, import/export patterns
Risk related to climate-related catastrophes
Rising pressures to operate in more climate-friendly ways
Small and mid-sized firms that have, so far, resisted digitalization and process automation will find themselves needing to invest in sales efficiency, front-line, and last-mile productivity for competitiveness and survival.
On the business-to-business (B2B) side of the market, complex and ever-shifting supply-chain ecosystems will require seamless collaboration, precision, and integration of information flows within and among business enterprises along with third-party vendors and partners.
New and niche market entrants — for example, “green” freight service providers, tech-powered / low-cost aggregators, 4- and 5PLs — will also continue to challenge traditional providers while competing for physical capacity (ships, trucks, containers), costs, and labor. On the business-to-consumer (B2C) side, innovation will be key as brands seek to differentiate and compete through exceptional consumer experiences, including:
Rapid delivery times
Precise tracking of shipments
Easy, frictionless returns
Creative approaches to last-mile delivery (using drones, robots, autonomous vehicles, secure delivery/pickup locations, and so forth)
For people tasked with sales, the near future will involve significant firefighting. And, while global, regional, and local business networks slowly restore supply-chain flows to pre-pandemic health, present indicators suggest that this industry will remain capacity-constrained for a while.
As a result, prospecting for new business and new segments will likely take a backseat to focus on customer retention, deep customer care, and collaborative innovation that can overcome systemic challenges and retooling of logistics networks for the “new normal.” Here are four short-term challenges with potential solutions for sales leaders through investments in an engaging logistics software:
With capacity shortages in trucks, drivers, shipping containers, warehouse space plus ongoing pandemic-related unpredictability (such as drivers or other key personnel falling ill under already-stretched circumstances), it’s a safe bet that your service teams are going to be dealing with heavy call, query, and complaint volumes.
Customers who don’t like what they hear from customer service will typically fall back on their primary reps for support. That’s a brand-related problem if your sales reps don’t have visibility into account histories and responses that service and support teams have offered. It’s also a productivity issue for reps who would rather cultivate new business, respond to complex RFx/quote requests, prepare large-scale custom documentation for customers, and so forth.
Solution: A customer engagement logistics software, such as a CRM that integrates easily with order processing, warehouse management and other systems — improves forecast accuracy, enables tighter collaboration and real-time visibility empowering sales and support teams to respond proactively, and consistently in areas of shipment status, pricing, and other customer inquiries.
If customers are going to be competing for limited capacity — labor/drivers; container space; space on trucks, ships, trains, air-cargo; and processing capacity in warehouses, DCs, ports, and freight-forwarding hubs — their sales reps will be competing among themselves for opportunities to sell that capacity. Sales leaders will need logical, data-driven, and transparent means via a logistics software for:
Collaborating with demand planners to decide how the limited capacity gets allocated among existing customers (ensuring fairness to customers and reps)
Formulating a plan to chart how new business opportunities are allocated and addressed
Adjusting reps’ goals and incentives on-the-fly as circumstances evolve
Solution: There is a growing need to capture 360-degree customer views, including all support, disputes, refunds, and other activities that influence costs of doing business and those that erode overall account profitability. Making this information visible to sales reps, leaders, and demand planners can help to enable fair and transparent allocation of capacity and sales opportunities.
A logistics CRM that uses AI to increase sales and forecasting accuracy would also improve visibility for planning and service delivery. The CRM can then use feedback mechanisms along with built-in visual dashboards to understand which customers are the most important and profitable, enabling optimization of sales efforts, precision application of shipping rate increases or waivers, and transparency around capacity allocations.
No customer ever wants to hear their prices are going up, and rate surcharges are rarely uniform for all customers. That raises challenges for communicating hikes without inadvertently revealing internal decisions around who may be shouldering more or less of the burden.
Solution: To do this efficiently, sales teams might want improved capabilities for easily segmenting audiences, targeting communications, receiving and processing responses/feedback from their clients. A logistics CRM automates the process to easily inform specific subsets of customers about trends affecting service delivery performance, capacity allocation, rate increases, fuel surcharges, and so forth.
Imagine being a far-inland manufacturer in a geographically vast nation. You need empty shipping containers to get your finished goods to port for export, but container capacity is so tight (and offshore demand so strong), that shipping companies have decided it’s more cost effective to simply send empty containers back from port rather than waiting, with potential delays due to trucking capacity constraints. Pretty quickly, you’re going to start calling around with an SOS for help.
Solution: LSPs with dynamic demand forecasting capabilities that integrate seamlessly with a last-mile delivery logistics software or a TMS (transportation management system) can accurately position assets and optimize routes, increase cargo capacity utilization, and help to identify unwanted trips and hauls that gives an edge in meeting at least some of those urgent requests, picking up some new long-term accounts in the process.
Re-evaluate market and client segments served: If you are not already specialized or dominating a niche — be it geographical, industry vertical, cargo type, company size — now is an excellent time to reconsider your overall go-to-market strategy. Specialization enables more efficient use of resources and helps with optimal allocation of capacity to serve accounts that generate the greatest profitability.
Update all training material — last mile delivery standards, common service requests, sales decks, complex pricing sheets, etc., — are up to date, easy to locate, and readily available. Offer virtual learning for partners, suppliers, last-mile agents, and employees to improve both sales skills and general T&L domain knowledge.
Estimate demand with the right forecasting logistics software to stay ahead and plan resources that minimize the likelihood of delays.
Choose a single unified automation platform like a logistics CRM for sales, marketing, and customer success to improve overall productivity.
Replace cumbersome documentation with digital records on CRM.
Consider automating quoting processes; choose a logistics CRM with an extension of CPQ to generate and approve complex quotes that are difficult to price and discount.
Branded partner portals can be used to extend CRM functionality to network partners, facilitate onboarding of suppliers and partners, distribute marketing collateral, and improve overall communication with valuable information.
An example of an account history in Freshsales
Optimize critical logistics processes for stronger growth:
Create real-time visual dashboards containing data: points of loading, shipment durations, sizes, and value estimations.
Optimize route planning techniques; enable dispatchers to create jobs in the logistics CRM, and assign resources with optimized routes and auto-raise cases.
Consider bundling complementary logistics services to generate auxiliary lines of revenue. Or work with 3PLs, 4PLs, warehousing partners on key accounts by extending the use of your logistics CRM (via branded partner portals).
For last-mile staff, build a real-time dashboard of tasks, deliveries, etc., that integrates with your logistics CRM to help dispatchers track account/order status, open delivery/return jobs and email / SMS scheduling. Optimize insights into key metrics, such as average response times to client inquiries, average shipping times, on-time delivery rates, damages, average delivery times across regions, lanes, percentages of failed deliveries.
As government and public health policy officials struggle to bring COVID-19 under control, transportation and logistics industry sales leaders will continue to face difficult end-market conditions. Serving and retaining existing customers will likely take short-term precedence over adding new customers in hopes of maintaining revenues. Investing in logistics software — through a state-of-the-art CRM— can certainly help, but only if done thoughtfully with an eye for:
Re-engineering go-to-market strategies, sales, and other operational processes for the “new normal”
Creating unified views of complete customer journeys
Improving data quality, visibility, transparency, and precision as well as forecast accuracy
Obtaining strong adoption and consistent use of advanced CRM capabilities throughout the sales organization
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