2020 has brought new challenges for the container shipping sector. In addition to the existing trade imbalances, the COVID-19 pandemic has negatively affected the industry, creating a new port and travel restrictions for shipping firms to contend with. All of this decreases profitability and puts additional pressure on operations, forcing shipping companies to make tough decisions such as letting go of some of their employees or cutting down trade lanes. The situation is worsened by the issue of empty container repositioning — an industry-wide problem which is caused by the above-mentioned trade imbalances as well as long relocation time, high costs related to safety stock, and unreliable commercial forecasts, which are mainly based on the gut feeling of planners and local managers.
According to the Boston Consulting Group (BCG), one out of three containers is shipped empty, for a total of nearly 60 million empty container moves per year at an annual cost of $20 billion to the industry—up to 8% of a shipping line’s operating costs. Furthermore, there are extra costs associated with storing and maintaining these empty containers, meaning the total cost of empty logistics is estimated by Transmetrics to be more than 12% of operating costs.
The 1970s played a pivotal role in the history of trade, shipping, and manufacturing. In this decade, Toyota revolutionized the manufacturing world with the wide adoption of its Just-in-Time (JIT) production planning process. In essence, that represents operating with low inventory levels where raw materials, goods, or even labor are scheduled to arrive or be replenished exactly when, or shortly before, they are needed in production. Having the system, Toyota could solve some of the problems associated with keeping high-inventory levels, free up a significant amount of capital, and reduce the opportunity costs. It could also minimize storage, service/maintenance, and inventory risk costs.
Nowadays, JIT and its equivalents are the industry standards in the automotive and are also universally adopted in the wider manufacturing and service verticals. However, if automotive or manufacturing sectors can afford to wait for an order to be placed and then produce, in many other business areas, in order to adopt JIT, highly accurate Demand Forecasting must be in place.
An obvious example of such an area is the container shipping industry, which in the 1970s has also experienced a renaissance with the wide adoption of containerization. However, improvident internal processes and trade imbalances led to huge inefficiencies. Empty containers had to be repositioned from big consumer centers such as Europe and the US to big manufacturing powerhouses like China and Southeast Asia. To be able to satisfy demand at any given time and location, and compensate for the long repositioning cycles, ocean shipping carriers keep excess container inventory. Traditionally, inland empty containers account for around 30-40% of the total container shipping fleet.
The logistics industry is no stranger to technological change. Few warehouses would consider using a hand-written ledger or other analog methods in 2020 when standalone digital kiosks and tablets have become the norm. These digital improvements have allowed for greater speed and efficiency, yet there are still gaps to be filled when it comes to logistics technology.
Seconds matter in logistics, where even a short delay in activity can cause issues further along the delivery chain. What’s more, the need for accuracy in identifying, handling, and processing packages is of keen importance. On average, businesses across the globe experience an average shrinkage rate of about 1.44%; given that the worldwide logistics industry is worth approximately 5.5 trillion euros, these losses and inefficiencies add up to billions missing from company balance sheets.
Major firms have begun the search for solutions to these issues. There’s a great deal of promise in wearables – technology that, as the name implies, you can wear on your body and use to improve the logistics processes. Much of this technology is available here and now, while some remains just over the horizon. In any case, these devices could define the future of logistics tech and are already seeing increased adoption in companies seeking the next competitive edge.
Every month we select one logistics startup which represents a positive example of innovation in Logistics and Supply Chain and has the potential to alter the way the industry operates. This month, Transmetrics selected Skyspace Cargo, the world’s leading air cargo booking platform, as the “Logistics Startup of the Month” for its remarkable contribution to air cargo innovation.
In order to learn more about the company and what makes Skyspace unique, we have talked with Toby Raworth, CEO at Skyspace Cargo, about the startup’s journey and what’s ahead for the air cargo sector.
Since its introduction, 5G has quickly become the hot topic of every industry, and for good reason. By 2025, 5G networks are expected to cover one-third of the world’s population, and a 5G economy study found that by 2035, 5G could potentially enable up to $13.2 trillion worth of goods and services and create up to 22 million new jobs.
But what exactly is 5G, and why is it going to make such a difference in the way the world works? You might remember that with 3G, or the third generation of cellular technology, mobile data has been pushed forward, and 4G brought in a new era of mobile broadband. Now, 5G — the fifth mobile generation — will usher in the highest mobile connection speeds and lowest latency rates ever recorded. The new levels of connectivity created by 5G have the potential to impact nearly every industry, making fully-remote healthcare, smart cities, digitized logistics, and more into a way of life.
July 1, 2020, Amsterdam/Sofia – Transmetrics is proud to announce and welcome Jonathan Fath as the Chief Operating Officer. Jon will have commercial and general management responsibilities, driving revenue, and contributing to product development based on his extensive experience in logistics assets management.
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