As we look back on the year, the supply chain and logistics industry received more attention than ever before as it faced a myriad of challenges and circumstances. As we look towards 2022, here are some of the top trends and priorities to keep an eye on in the year ahead from Nuvocargo, the first digital freight forwarder and customs broker for US/Mexico trade.
Platformization and integration of data across the whole supply chain. The pandemic pushed the adoption of digital platforms lowering the friction to try new solutions that will drive migration from informal and manual communication platforms to specialized products that make their workdays more “automagical” by providing one source of truth and higher visibility. According to a report by Alloy Technologies Inc., 92 percent of executives agree supply chain visibility is important to success, only 27 percent have figured out a way to achieve it. This means, we may see a shift from discrete software to manage specific use cases (TMS and warehouse software) to platformization and integration of data across the whole supply chain, which will increasingly make operations smoother and companies more competitive. To achieve this, blockchain technology can be used to integrate all supply chain components in one platform and offer more transparency in the process.
Vetting suppliers and vendors based on resilience and adaptability. With digitalization revolutionizing the logistics industry and bringing about more efficient processes, information exchange and visibility, we will see the industry shifting into a careful selection of partners based on their technological aptitude and insights. This will strongly be the case for Mexico since new tax regulations are forcing companies to adapt and optimize their processes in order to comply. Smaller carrier companies will struggle to comply with requirements when dealing directly with clients without the technical infrastructure of brokers. The accounting team of every logistics company will be put to the test and the ones that manage to leverage efficient and automated processes will avoid the crisis of on-time compliance for every shipment. From that angle, staying competitive will require a stricter filtering system of logistics partners and suppliers.
Regionalization of supply chain and nearshoring. Organizations have been impacted by COVID-19 supply chain disruptions which have led companies to find suppliers closer to home to reduce costs and be less affected by more complex logistics or uncertainties. McKinsey’s report on the coronavirus effect on global economic sentiment says that uncertainty over COVID-19 is no longer executives’ foremost economic worry. Instead, they perceive the mounting fallout on the supply chain and inflation as the biggest threats to growth in their companies and economies.’ “Companies have learned the importance of being agile, adapting and solidifying to be able to thrive in volatile and unpredictable environments. That includes a restructure of the business core, technological implementation, regionalization, partners, etc.,” says Anaid Chacón, Head of Product of Nuvocargo. “Businesses have already started implementing new strategies over their supply chains and we can expect these shifts to continue in the coming years.”
Creative and technological solutions to address driver shortage. Delayed delivery is the accumulation of many factors. According to the American Trucking Associations (ATA), in order to keep up with the current economic demand, more than a million truck drivers will have to join the industry. In 2022, we will see how the industry fills this need by tapping into talent from other areas or demographics with previous low representation among drivers. A 2019 US Department of Transportation report states that 28 percent of the current heavy truck driving workforce will be 65+ years in the next decade. This means that the industry will have to promote and offer more benefits to younger people and women since the current average US truck driver is 48 years old. We may also see solutions based on process automation or self-service systems for customers to deal with these labor shortages. Autonomous trucks are also on the rise since large transport lines are starting to buy and test efficiency and costs.
Innovative financing solutions for the supply chain. Continuously offering partners alternatives that will help finance their operations and improve their cash flow will benefit all parties in terms of incrementing capacity and in keeping the supply chain moving. “Our data collection and experience has taught us the pain points of our partners who have high expenses, get paid 30 to 60 days after delivering shipments, and often need loans with high fees to continue operating,” says Chacón. “This is an industry-wide condition that requires attention if we wish to continue strengthening and growing the industry. Financing is one of the solutions to cash flow unpredictability that is required to respond to demand spikes.”
Greener supply chains. Logistics and transportation companies are pushing environmental efforts to make their supply chain less invasive or harmful. This may include eco-friendly warehouses with advanced energy management systems, climate-smart supply chain planning, etc. We can expect these initiatives to continue rising and becoming more sophisticated over time.
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