By Marcia MacLeod
Relentless innovation is one of the five ‘mega trends’ that will hit logistics over the next year, said Agility Logistics’ CEO for Europe, Beat Simon, at eyefortransport’s 3PL conference held in the Belgian capital Brussels recently. The others he outlined were economic moderation, the rise in emerging markets and decline in the developed world, as well as sales growth in emerging markets and increased competition.
“Emerging markets will overtake the developed world in 2011 for the first time in 150 years,” Simon said. “This will require a redesign of transport networks, trade lane priorities, distribution hubs, warehouse location, and even pricing. It will also require greater collaboration between shipper and 3PL,” he added.
To meet these demands Simon recommended that logistics providers build centres of innovation for technical transfer, standardisation and other processes that can help make the shift to the developing world.
Other 3PLS agreed on the importance of innovation. “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change,” quoted Carlos Escario, president EMENA at UTi Worldwide. “If the 3PL cannot meet the changes in their customers’ circumstances, someone else will. We developed an LCL [less-than-containerload] product two years ago in response to customers demand for smaller, more frequent shipments.”
Innovation may be as simple as creating contingency plans for all eventualities. For example, if the 3PL knows there is going to be a strike in Marseilles, they bring the cargo into Hamburg, not Le Havre, which could be more congested.
It will almost certainly mean developing ways of dealing with the new growing economies before services are required. For example, the Black Sea is an emerging market with huge potential for growth, fuelled by increased consumer demand. But why bring cargo into Rotterdam, Hamburg or Felixstowe and then tranship it back to the Black Sea?
“We are taking cargo direct from South East Asia to the region,” said Jeremy Davidson, deputy MD of NYK Logistics. “Russia plans to develop Black Sea ports as an alternative to the Baltics.”
“Logistics providers and shippers should also collaborate to work with governments world-wide to improve regulatory regimes that restrict trade,” said Michael Canon, chief commercial officer of Dubai World Central. They can develop processes to facilitate trade, while still protecting national interests in terms of security. Most companies are reluctant to get involved and are reluctant to spend money to find solutions – or to be seen by government as a troublemaker.”
Many 3PLs lack the skills to be innovative, according to John Pattullo, CEO of Ceva Logistics. “As an industry, we don’t have the right skills and talents to really innovate in the supply chain. I would like to see a supply chain engineer qualification developed to give graduates a profession they can consider. We need to bring a flow of real talent to stimulate innovation in the industry.”
But innovation cannot be left to the 3PL. Shippers should be willing to try new ways of working, too, including new modes of transport. Macandrews, the shortsea operator, has one automotive customer shipping most of its Iberia traffic to the UK with its service, but it cannot convince other automotive companies to follow suit.
European waterways, as well as coastal services, can provide a useful alternative to congested and expensive road services and the inflexibility of rail. Rhenus Logistics makes great use of waterways, including the Danube and Rhine, to move cargo. “There is no congestion, no road accidents, and it is good for the environment,” said Peter Widmer, CEO. “And you can use the barge as a moving warehouse.”
It just takes a little extra planning to ensure supply chains are kept flowing. But isn’t that what innovation is all about?