Transportation market poised for radical change

Five forces are reshaping the freight industry following two years of supply chain strain that disrupted trade worldwide, according to a study from Deloitte, released this week.

For The Future of Freight: Transforming the Movement of Goods Deloitte surveyed more than 300 executives at transportation and manufacturing companies in the United States and Europe with annual revenues ranging from $500 million to $50 billion. The researchers followed up with executive interviews for more perspective on the evolving supply chain, and identified five key trends that are driving the future of the freight market; they include nearshoring, new competitive forces, and the growing importance of data and analytics in supply chain operations.

“Deloitte’s research reveals a transportation industry poised for significant transformation, where success will be determined largely by the ability to deftly navigate five major forces,” the researchers wrote. “These combine to present major challenges and opportunities for the transportation industry.”

The five forces, according to Deloitte are:

• Onshoring and nearshoring to redraw the transportation map. Our research shows increased interest in moving manufacturing closer to the end consumer to mitigate disruption risk and the inflationary impact on the cost of goods. Even if this happens at half the rate our survey respondents expect, it will represent radical change, creating new opportunities for established leaders and openings for new competitors to enter the market.
• Well-curated data is the great differentiator. Companies with advanced, unified digital strategies are currently at a significant advantage, as an industry that still suffers from data fragmentation rushes to close the gap. Nearly half (48%) of survey respondents expect data to improve visibility into assets and goods in the next three years. Over the same time horizon, many say data will help improve customer relationship management (44%) and workforce optimization (35%). The ascent of data and analytics could pave the way for new competition from digital-native startups and hyperscalers to set their sights on transportation as a source of profits.
• New competitive dynamics abound. As the industry reconstitutes itself, cloud services providers, megaretailers, vehicle manufacturers, and tech startups are pursuing the transportation industry and its profit streams. As their interest and expertise grow, they are positioned to usurp territory and customers from legacy logistics companies while prompting new models of collaboration.
• Restructuring will align core capabilities to a changing environment. Transportation leaders recognize they need to change to meet this moment. Most survey respondents are in the process of reshuffling their structure and operations—60% are outsourcing non-core capabilities, and a similar share (59%) are actively seeking acquisitions to expand their capabilities. These trends are not mutually exclusive: Companies that are outsourcing are also building or acquiring new core capabilities.
• New vehicles and new insights mean new competition. The coming wave of next-generation vehicles harnessing electric power, autonomous technology, and IoT data will not only alter the capabilities, efficiency, and sustainability of the transportation system, but will also potentially precipitate a power shakeup. Among our survey respondents, 60% believe it is inevitable that truck manufacturers will seek to become fleet managers as technology advances and lines of supply are redrawn.

The researchers added that business leaders should prepare for a rapid acceleration of these forces in the years ahead, while also keeping an eye on the role of the public sector in setting policies and modernizing infrastructure to achieve transportation and freight industry goals.

“A new era of partnerships with governments and regulators will factor into the long-term success of the industry’s incumbents and new entrants,” the researchers wrote.