How Food Shippers Adapt to Permanent Volatility in Supply Chains

Written by Staff | Jun 18, 2024 3:03:12 PM

It’s clear that successful corporations with significant supply chains are investing in technologies to accelerate resilience, agility and flexibility to better navigate current and future disruption. This is evidenced by the Council of Supply Chain Management Professionals 2024 State of Logistics Report® which was released by CSCMP today.

This is also underscored by a recent whitepaper published by Food Chain Digest, the official magazine of Food Shippers of America (Food Shippers Guide to Supply Chain Digital Transformation). This whitepaper is based upon more than 100 responses by food shippers and third-party logistics providers on how they are investing and deploying resources in their digital transformation.

The 2024 State of Logistics Report finds that U.S. supply chains pressured by global economic volatility – including inflation, climate change and geopolitical conflicts – are enhancing their capabilities by investing in supply chain technologies to accelerate resilience, agility and flexibility to navigate current and future disruption. The annual report offers a snapshot of the American economy via the lens of the logistics sector and its role in overall supply chains.

Volatility and Uncertainty: The New Constant

The report finds that uncertainty is now a near constant in the global economy, and that the smartest way to respond to steady times is to rekindle strategic projects and gather resources to improve resilience. The global economy is expected to experience sluggish 2.5% growth across 2024, which would represent the slowest half-decade of output in 30 years. Demand has not yet fully recovered, with myriad forces at play, and new growth engines will need traction before the tide turns. Highlights include:

A notable statistic, U.S. business logistics costs, is $2.3 trillion, which translates to 8.7% of the national GDP.
As a result of the economic headwinds and geopolitical instability, the continued fragmentation of global trade is complicating supply chain transactions. There were over 1,000 U.S. freight brokers that shuttered their doors since the 2023 report was released.
Carriers have been plagued by high operating costs, while lackluster demand, and the capacity glut, have made it hard for them to charge the kinds of rates that would allow them to sustain rates and protect their margins.
Investments in emerging technologies such as artificial intelligence, end-to-end visibility, and advanced automation are expected to drive competitive advantage and greater resilience to future disruption in the logistics sector.
Major global corporations have adopted rigorous environmental goals. Further government funding programs have been launched to encourage decarbonization initiatives, which indicate progress in both the public and private sector, toward higher levels of sustainability.

How Are Food Shippers Investing in their Digital Transformation?

“Continued volatility drives our clients to rethink and rewire the logistics capabilities that drive their supply chains,” says Josh Brogan, Kearney partner and lead author of the CSCMP report. “Both shippers and carriers find that the people, processes and tools that move goods and information in global supply chains are often inadequate for their needs and require accelerated investment.”

According to food shippers and their providers who participated in the Food Shippers Guide to Supply Chain Digital Transformation study, their biggest supply chain operations challenges are:

Freight market fluctuations/rising costs
Global supply chain disruptions
SCM collaboration and effectiveness
Cargo theft and fraud
Traceability and compliance standards
Navigating nearshoring and cross-border logistics
Spoilage and food waste
Sustainability and ESG concerns

Given these challenges, food shippers clearly are making significant investments in the digital transformation of their supply chains. According to the study, the top areas of investment are as follows:

Examples and Related Articles:

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