Transportation: Competing for the inside lane

Charting a new course

With the rapid reshaping of the global economic order, the transportation industry is undergoing several fundamental shifts simultaneously. Pre-pandemic, manufacturers and retailers were already reeling under the pressure of just-in-time production and fulfillment operations, pushing their operations to the limit. Then, in an industry instant, production paused everywhere—moving goods globally and locally, via port or plane, became significantly more complicated. This led to disastrous bottlenecks and price spikes, overstretching supply chains and accelerating the need to rethink the future of moving goods.

Now, at the cusp of the automation era, with the latest advancements in data science, each new shift represents a challenge—but, more importantly, opportunity. The difficulty, however, will be adapting to the rapid pace of change and effectively leveraging automation to drive value. This is an uphill battle as new competitors continue to enter the market, with startups, mega-retailers, and hyperscalers all vying for a piece of the trillion-dollar pie.

The solution, perhaps surprisingly, could be found in cooperation with your competition. The novel features of the future transportation landscape may presage a new era of collaboration, forcing companies to evaluate their core strengths, analyzing where they can provide world-class service, and where they are better off partnering with another entity that has attained high-level domain expertise.

Taking the lead

According to Deloitte research on the future of freight, new entrants, retail giants, and cloud service providers will likely emerge as leaders in the new environment created by a confluence of trade flows, advances in technology, and changes in public policy. This, however, can only be achieved with sustained focus and leadership commitment.

The capabilities for success in the next era of transportation will not be limited to current industry leaders as there is also a significant opening for nimbler, tech-driven players to find footholds in the market.

As a real-world example, Uber Freight’s acquisition of Transplace¹ aims to strengthen the parent company’s push to “democratize” the freight and logistics process by promoting transparency and driving efficiency across the logistics value chain. If successful, it presents an exciting new business model providing a supply of ready transportation that manufacturers and retailers are hungry for. Likewise, cloud providers, mega-retailers, vehicle manufacturers, and startups are in a prime position to provide over-the-top services that pose a significant threat to legacy logistics providers.

Accelerating efficiencies

The concept of overnight success doesn’t apply, as both legacy leaders and newcomers in the transportation industry are navigating newer territories in the wake of automation, changes in the labor market, and geopolitical shifts.

While data revolution and the rise of modernized transportation fleets hold promise for established logistics leaders to boost efficiency and provide unprecedented insights, newcomers to transportation will hold their charge with deep competency in data science.

Merging lanes

Redefining mergers and acquisitions (M&A) strategies to rapidly scale digital-first and data capabilities in the ever-fluctuating environment of today will help build a resilient company with enhanced market positioning. While M&A doesn’t have full control over the amount of data it receives, it is still essential to operate under a clear-cut data integration network that ingests only the critical data.

The future, as it looks today, will also push companies to decide which of their operations are their core competencies and which are better handled by outside partners. Tomorrow’s transportation leaders will be set apart by innovation and rigorous alignment with strategic priorities, along with the ability to partner and acquire wisely.

Endnote

¹ Lior Ron, https://www.uberfreight.com/blog/reimagining-the-way-goods-move-uber-freights-next-chapter/ "Reimagine the way goods move,” Uber Freight, October 3, 2022.