EACH JANUARY FOR THE PAST FEW YEARS, I’VE TRIED TO
predict what’s in store for us in the coming year. Sometimes, I’ve been
right; other times, not so much. For example, I really thought 2015 was
the year for the Dallas Cowboys, but as we now know, that just didn’t
pan out.
As for what the future holds for the world of logistics and supply
chain management, opinions are mixed. Some say rates will go up;
others say they’ll drop. Some see a severe capacity crunch taking shape;
; Fuel taxes and infrastructure. The big news is that we finally have
a long-term highway bill, and members of Congress are patting
themselves on the back. While the legislation was
much needed and long overdue, it is also flawed
in that it lacks a sound funding mechanism. For
example, about 10 percent of the money is subject
to annual appropriations, and some of it is coming
from unusual sources, such as savings from turning
IRS collections over to private firms ($2.4 billion).
Already, some states are saying that the approved
funding is insufficient and that they will move
ahead with plans for supplemental funding sources.
I believe 2016 will bring us higher fuel taxes in many
states, as they try to find ways to finance planned
improvements.
; LSP market consolidation. The logistics service
provider (LSP) industry will continue to grow, and I see further merger
and acquisition (M&A) activity ahead. As investment bankers become
more involved in the industry, they’re bringing a “bigger is better”
mentality to the marketplace. History has proved that this is not necessarily true, particularly in the LSP arena. Nonetheless, I think we can
expect to see more consolidation activity this year.
; The Amazon effect. To say that Amazon will have an impact in 2016
is a blinding glimpse of the obvious, but it’s difficult to predict what
it might do next. Apparently, it has begun to fly products around the
country in four leased 767 cargo planes, dipping its toes in the FedEx
and UPS waters. Plus, it announced in early December a new fleet of
Amazon-branded trailers for moving goods among the e-tailer’s various DCs. Many already view Amazon as an LSP rather than a distributor, so why not provide its own transportation?
Amazon’s push to same-day delivery is putting enormous pressure
on its retailer competitors, sparking some rather creative responses.
BY CLIFFORD F. LYNCH fastlane
What’s ahead in ’ 16?
Already we see Uber-type deliveries being made
on bicycles as well as in 1990 Toyotas and any
other vehicles individuals can put their hands
on. (I believe that drones are fun and will be
useful in some industries, but I don’t see package delivery as their highest and best use.) I do
not believe that retailers can continue to be
efficient making deliveries from a limited warehouse network, store backrooms, and other
patchwork operations.
I predict we will see two Amazon-driven
developments in the retail delivery arena—and
by responsible, properly
insured, and efficient companies. Their efficiency will
be enhanced by already available, but rapidly improving,
technology for routing, pricing, and so on.
Second, I believe we will
see a major logistics service
provider step up to compete
specializing in rapid, efficient deliveries, similar
to what Genco did with reverse logistics several
years ago.
Overshadowing all this is our increasing concern for the well-being of our businesses and
our employees, and I think it is safe to say that
our lives are going to be changed considerably
for the foreseeable future. Notwithstanding
this, my very best wishes for a happy, healthy,
and prosperous 2016.
Clifford F. Lynch is principal of C.F. Lynch & Associates, a provider
of logistics management advisory services, and author of Logistics
Outsourcing – A Management Guide and co-author of The Role of
Transportation in the Supply Chain. He can be reached at cliff@
cflynch.com.
