– An Allcargo Perspective:
Will robots take over warehouses? Will the US pull out of NAFTA? How will GST impact businesses in India?
Many such questions are a part of business discussions and boardroom chatter as the year unfolds. Here’s our take on the A to Z of logistics and transport trends in India and the world in 2017:
- To achieve higher productivity and efficiencies businesses will need to AUTOMATE some of their supply chain processes. Warehousing, for instance, has an enormous potential to benefit from automation. With Amazon using its Robotics division to help with picking orders, restocking and shelving, there’s a lot of buzz about robots replacing employees. Our take on that is robotics, and other forms of automation will emerge as a very attractive option. However, they will collaborate with employees rather than replace them.
- Speculations and uncertainties around BREXIT (Britain’s exit from the EU) reigned supreme in 2016. As we move ahead in 2017, we expect to see stricter EU-UK border controls, which may affect road haulage. The good news is that with increased domestic activity within the UK, shipping is likely to get a boost.
- 2016 was a year of rampant mergers and acquisitions, especially in the global shipping industry. 2017 will be more of CONSOLIDATION of these large players that got created last year.
- Trade and logistics went through an adjustment period in the aftermath of the DEMONETISATION drive in India. As the supply of cash improves and with the shadow economy being wiped out with this move, exports and imports are expected to improve in 2017 and drive up GDP numbers.
- E-COMMERCE has been changing the rules of logistics and transportation in the past and will continue to steamroll in 2017, with Amazon leading the way, be it with robotics-driven warehouse operations or setting up new shipping routes. Traditional logistics providers will need to keep pace.
- FREIGHT volumes in shipping will continue to be high, despite rates going up. Global air freight tonnage is expected to show an upward trend, buoyed by the growth showed in 2016. Truckload volumes are also expected to go up.
- The Goods and Services Tax (GST) will be rolled out in India during the year and will have long-term implications on the logistics and infrastructure set-up of the country. It will not only make transportation more efficient but will also usher in an era of highly organised logistics and transportation in India. Experts believe implementation of GST will add ~2% to India’s GDP.
- As promised by the Indian government last year, HIGHWAY construction has received a boost and will remain a focus in 2017, strengthening road infrastructure in the country.
- Businesses will prefer to engage INTEGRATED SERVICE PROVIDERS that can manage end-to-end logistics and transport, and bring in better control, visibility and efficiencies amid chaos in the business environment.
- 2017 started with a joint venture being signed between Sino Sino-Global Shipping America, Ltd and Jetta Global Logistics Inc., setting the tone for the year. More such JOINT VENTURES may come up during the year if providers find synergies in their operations and see opportunities in unexplored markets.
- As consolidation happens, the global transport and logistics industry will be about a few large providers and their success will depend on their KNOWLEDGE of the local markets they operate in. This trend will extend well beyond 2017.
- LCL and FCL rates will go up in 2017, because of reduced global vessel capacities. Also, the complexities of the business environment will make it imperative for NVOCC providers to bring in world-class innovations to help their clients shipping cargo across international borders.
- As the rest of the world goes mobile, the transport and logistics providers will look at integrating MOBILE applications to their Transport or Warehousing Management Systems to provide smarter solutions to their clients.
- There’s a lot of speculation about the future of North American Free Trade Agreement or NAFTA, with Donald Trump becoming the President of the United States. At this point it is important to remember that during his campaign, he spoke about renegotiating the terms of US being a part of NAFTA, not pulling out altogether, as it cannot be a unilateral decision. If US does pull out of NAFTA, it will have implications on international trade, but we’ll have to wait and watch, till an announcement is made by the president’s office.
- If Uber did it in the US, Ola, Meru, Jugnoo and Shuttl did it in India. Not only did these providers make on-demand drives a reality, but have also jumped into the ON-DEMAND TRANSPORTATION space to help last-mile deliveries. Large and established logistics will need to contend with disruptors like these not just in 2017 but in the future too.
- PORTS, the world over are undergoing a massive transformation. Durban was one of the first to adopt drones, mobile apps, track-and-trace technologies, and smart metres to improve operational efficiencies by several notches. In India too, over the last year, operational efficiencies in the three ports of Paradip, Vizag and Kandla have significantly gone up. The trend to improve port operations will continue in 2017. The Indian government is also looking to develop around 40 ports in the country to boost transport and logistics.
- In the industry the world, there will an increased QUEST on hiring the right kind of talent as the industry braces up for the adoption of high-end technology and regulatory compliance.
- Some REGULATIONS are expected to create a buzz in the industry in 2017. The trucking sector in the US, which was deregulated in the past is expected to see a lot of action around retaining or scrapping regulations such as the hours of service (HOS) and the Compliance, Safety, Accountability (CSA) initiative. Also, the rule of making it mandatory to have electronic log devices (ELDs) will come into effect by the end of 2017. In India, the rollout of GST will change industry dynamics.
- SUPPLY CHAIN DEMANDS will be focused on ensuring on-time last-mile deliveries to keep pace with the rise of disruptors and unconventional business models. Here’s where integrated logistics service providers with a sound understanding of global and local markets will come in handy.
- All eyes will be on the US in 2017, as Donald TRUMP takes over the corner office at the White House and rolls out his economic and trade policies. Speculations have been rife about international trade slowing down based on his election rhetoric. What remains to be seen is if he implements what he said or changes track.
- The UNION BUDGET in India, coming up on the 1st of February, 2017, is a first of its kind, being presented along with the Railway Budget, and one month in advance. There could be an increased emphasis on the modernisation of the railway systems and network in the country. The Make in India initiative is likely to get an added push which will improve prospects of manufacturing and logistics.
- VOLATILITY, Uncertainty, Complexity and Ambiguity (VUCA) will not leave the world anytime soon. The logistics and transportation industry will need to contend with volatility in demand and uncertainties in the economy.
- India will soon see the emergence of WAREHOUSING HUBS as a result of the implementation of GST in 2017. Some of the cities where these hubs are likely to come up are Bhubaneshwar, Coimbatore, Goa, Guwahati, Jaipur, Nagpur, Ranchi, Vijayawada and so forth.
- Emerging technologies like drones, RFID, driverless trucks, IoT, Artificial Intelligence will not only turn out to be the X-FACTOR in logistics and transportation in 2017 but also set the pace for increased tech adoption.
- Financial YIELDS for the overall logistics and transportation industry is expected to be good. For Indian operators, it may turn out to be a great year, after the implementation of the GST.
- The ZEITGEIST of the logistics and transportation industry in 2017 makes it the right time to make investments in advanced technologies, automation, equipment, and hiring.
Those were the trends we think will shape trade, logistics and trade in 2017. Tell us what you think.