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How Covid 19 is Changing the E-commerce Supply Chain

The Benefits of eCommerce During COVID 19

How It All Starts?

As people have embraced social distancing as a way to slow the spread of the pandemic, there has naturally been a drop-off in brick-and-mortar shopping. That would seem to mean there would likely be an increase in online shopping as people turn to ecommerce to purchase the items they may have otherwise purchased in person. Upheaval is here, and e-commerce companies along with their supply-chain partners are going to have to think of new ways to respond.

Shopping from home surged as the way customer responded to the pandemic.

By the Number

According to the Commerce Department, online U.S. retail sales surged to $200.7 billion in the second quarter, up 44.4% from the same period in 2019. “Retailers and logistics providers are ramping up hiring, with plans to bring on hundreds of thousands of workers to help process, package and ship online orders during the holiday peak,” Wall Street Journal.

Total e-commerce revenues for U.S. logistics providers are estimated to reach $53.3 billion this year, up 22.8% from 2019, as a result of the pandemic and as companies continue to outsource online fulfillment operations, according to research firm Armstrong & Associates Inc.

Ecommerce Logistic
Logistics Providers help e-commerce businesses in all steps of goods distribution

The Importance of Logistics & Supply Chain

Smart companies are recognizing that e-commerce will remain a major sales channel for packaged goods manufacturers and retailers. Investments in plant or process will help build future business. However, shifting to an advantageous e-commercial model will require more than a website and marketing. Companies need to look at the quality and reliability of their entire supply chain and how to minimize e-commerce order fulfillment costs. That includes logistics and transportation planning as well as multi-carrier parcel shipping strategy.

To succeed, companies will need to develop assets and expertise in these areas, or work with partners who can fill these gaps. For small e-commerce businesses, or vendor in many supply chains, it is time to reach out to others. Let your partners know how your operations are doing and ask how they are handling the crisis. All the relationships you have worked hard to perfect can pay off simply because you’ve been a good partner.

What’s the Difference Between Asset-Based & Non-Asset Based 3PL?

The purpose of logistics and supply chain providers are to increase overall efficiency of a company, cut both hard costs and soft costs, decrease errors and mitigate risk, and accomplish everything on time. Logistic companies are typically sorted into two categories: asset-based and non-asset based.

A non-asset based logistics service provider does not own assets to manage and implement a supply chain. Their specialty is more for negotiating contracts with carriers and maintaining carrier relationship management programs to manage your supply chain at the lowest cost. Since they are non-asset based, they don’t have to utilize an inventory of assets to remain profitable and are generally more flexible. Even though clients work closer with a non-asset based 3PL provider, the execution of it is all up to the provider in the end. One of the disadvantages of working with a non-asset based logistics provider is that they may find difficulty in finding cost effective solutions.

At US Cargo Link, we are an asset-based logistics provider meaning we own all the assets necessary to run a client’s supply chain. These could include trucks, warehouse, distribution centers, etc. A well-established asset-based 3PL company should be able to lower the expense of moving and sorting goods for their clients. However, because this type of 3PL has made investments in their physical assets, they are somewhat attached and obligated to use those assets when devising ways to manage logistics. This limits options for customization and flexibility. In terms of hard costs of procurement, most of the time asset-based 3PL service providers offer lower costs on warehousing and transportation because they are not paying a third party and are setting their own prices.

We take pride in servicing our customers by providing solutions that addresses every unique concern in a project. We offer competitively low prices, end-to-end solutions for your supply chain, and one-on-one attention for every client– large or small. Contact us today to see how we can fulfill your logistic needs!

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New Study Reveals Threat of Automation Isn’t That Bad?

If you’re in the logistics industry, then you are all too familiar with the shortage of truck drivers.  Already, there have been reports of us currently being short by about 60,000 drivers with that shortage possibly tripling by 2026. With automation just around the corner, there are now new studies suggesting maybe the threat isn’t so serious?

“Drivers do a lot of jobs other than drive and those still need to get done, and those really are the trickiest things to automate,” states Kristen Monaco, co-author of the study titled Trucking Driving Jobs: Are They Headed for Rapid Elimination? Monaco also blames the media for hyping drivers’ fears.

The study is worth the read and debunks a lot of myths regarding the driver shortage.  In it, Kristen Monaco and Maury Gittleman covers:

  • How the numbers are inflated due to the misunderstanding of the occupational classification system used in federal statistics. 

In the study, it discusses how light truck delivery trucks are included in “trucking jobs”.  They also note how the estimates uses the total number of CDL holders even though many of the people who hold the appropriate license no longer drive at all. 

  • How truck drivers are responsible for non-driving tasks that will continue to be in demand as they are incredibly difficult to automate.

These tasks include pre-check inspections and other safety compliances, operating non-truck equipment like forklifts, tarping, fueling, customer service, paperwork, loading, and unloading.

  • How, if any job is in jeopardy with the advancement of technology and automation, it would be long-haul trucking which is roughly only one-quarter of trucking jobs.

“Our case study of truck drivers suggests, however, that, at least for now, any loss of jobs as a result of automation will be more limited, especially compared with journalistic accounts but also as anticipated by a number of experts.”

– Kristen Monaco

As discussed in previous blog posts, fear that new technology will lead to massive unemployment is not new.  This study suggests that truck automation will be comparable to the first introduction of automated teller machines (ATMs).  While it first decreased the number of employees required per bank branch, the increase in productivity made it less expensive for a bank to open a branch. In the end, it created more jobs and reshaped the teller position as part of customer service.  So instead of anticipating the end of truck driving jobs, automation may reshape the position to something new and useful. 

To read the whole study by Maury Gittleman and Kristen Monaco, click here.

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