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Key Factors Impacting Transportation Logistics in Supply Chain Management

The emergence of digital technology is redefining the world of transportation logistics in supply chain management. Due to increasing mobility demand, challenges like financing, dealing with emissions and volatile oil prices are accentuated. Decision-makers in the areas of policy and planning have to address these challenges and have try to develop a transportation system capable of meeting the future needs of society and the economy.

There is a need for conception of future system as guidelines for decisions. Besides developing new mobility solutions, there is also a need to adapt to a changed world of energy dependencies and to address social developments.

The three key factors that will impact the logistics of transportation are.

1. Going “green” (or Sustainability)
2. Transformation of Consumer Goods
3. Last-Mile Delivery (or LMD)

Going “Green” (Sustainability)

The transportation sector is a major energy consumer, heavily dependent on fossil fuels and their price development. Scarcity of energy would not only affect transportation significantly; the role of transportation in energy consumption makes the sector one of the main starting points for changes when it comes to a transformation of the energy system and source.

Demand for “greener” vehicles.
The demand for more fuel-efficient vehicles is creating innovation opportunities, but at a higher capital cost for transportation providers. Leading providers such as UPS and FedEx have been working with auto manufacturers for years to test delivery vehicles that use alternative fuels, including electric, liquefied natural gas (LNG) and bio diesel vehicles.

Lower volumes.
Lower value bulk commodities such as steel, coal and chemicals are particularly sensitive to increased fuel and emissions costs, and less output will cause fewer total ton-miles transported.

Increased complexity.
As customers expect service providers to comply with their “green” mandates, there will be more and different regulations to deal with around the globe. Yet, as compliance costs increase, so will the opportunities for differentiation as customers will favor transportation companies that stay ahead of the compliance curve.

high-efficiency 10-wheeler long-haul truck
The diagram above shows a high-efficiency 10-wheeler long-haul truck.

Transformation of Consumer Goods

Consumer electronics manufacturers are focused on “miniaturization” making thinner, smaller and lighter products, thanks largely to advances in microprocessors and batteries. But it costs more to transport these goods as many of these products must be handled with greater care, which means shipments are more labor-intensive. The added value per shipment increases supply chain risk and more security is required as more products can fit into a single container.

Additionally, the elimination of physical goods, or through digitized content such as e-books, mp3s and online video is reducing the need for transportation altogether. Within the next year or two music distribution will be primarily digital and Amazon’s Kindle e-reader, which can hold up to 3,500 books in its digital memory, has spawned numerous competitors, including Apple’s popular iPad.

What is the impact on transportation?

Higher Cost to Serve
As shipments of consumer goods become smaller, more frequent and of higher overall value, it will be imperative for transportation providers to reassess their risk profiles and supply chain security. Costs for tracking and security will rise while overall ton-miles fall.

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Vikneswaran Thevar
Vikneswaran Thevar
Vikneswaran Thevar has several years of experience in the Aviation and Logistics industry, and has developed a special interest in transportation logistics and delivery solutions. He is a member of Singapore Institute of Purchasing and Materials Management (SIPMM), and is currently completing a course at SIPMM Institute on Diploma in Logistics Management (DLM).

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