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Whether your products rely on ground, rail or sea to reach end-customers, today’s levels of disruption are unprecedented. Industry providers and those managing their own transport needs now must rethink everything from warehouse locations to logistics technologies to fleet and carrier strategies.
So what’s driving change within the industry today? According to Forbes Insights research, there are four primary forces:
Shifting economic and industry fundamentals
The economy is surging with lower U.S. taxes, and related reforms, such as accelerated depreciation and incentives to move offshore cash home, are helping drive demand. Coupled with strong consumer confidence and a resurgence in U.S. manufacturing, the net result is more freight demand, more loads and more vehicles on highways that stress industry capacity. Add to this a chronic driver shortage and conditions become ripe for significantly higher transportation costs, so much so that companies like Hershey’s and Sysco report commensurate reductions in margins.
Overall, says Avery Vise, vice president of trucking research at FTR Freight Intelligence, “key indicators of freight demand such as manufacturing and construction remain strong. Aside from any major negative impacts due to trade relations, which is difficult to forecast at this stage, freight demand should lead to even stronger trucking conditions in the near term.”
The rise of the “Amazon” effect
As demand rises, fundamental distribution patterns are shifting — and radically so. In particular, customer demands for ever more rapid fulfillment are forcing businesses of all kinds to warehouse their goods ever closer to intermediate and end-customers.
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