Riverside Logistics

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Part 2: 2024; logistics nightmare or a re-awakening?

In Part 1,  we looked at the logistics environment to see what is going on right now and what could happen in the future. Our conclusion was that it’s a toss-up and so it is better at this point to prepare for either scenario, a nightmare, or a re-awakening, in-order-to keep your supply chain functionally whole.

In Part 2, we would like to look at how a third-party logistics company (3PL) could help you navigate this environment. 3PL’s are major players in the logistics marketplace and when used correctly they can improve your supply chain’s performance by lowering overall costs and improving service levels.

How does a 3PL fit into the mix for 2024?

Let’s look at some interesting 3PL info. Over 90% of 3PL’s offer EDI related solutions for everything from Order Tender to Freight Invoice. 3PL’s (like Riverside Logistics) can provide technological solutions that make it easier rather than harder to do business in the logistics space. They are tying API-related (Applied Programming Interface) feeds which marry up requests and responses, to EDI (Electronic Data Interchange) feeds to carry all necessary data. This results in seamless informational flows, which provide more information to shippers. The logistics process becomes more “real time” and much more transparent.

The highest portion of out-sourced logistics activity is currently domestic transportation, however, 3PL’s also provide warehousing, international logistics and other useful services that shippers need. They tailor their processes to fit each client. So, instead of a cookie cutter logistics process, you get a custom-made client specific process. Not only do you get improved information flows, but you also get the ones you need, when you need them. 3PL’s are very focused on providing a helpful portfolio of logistics services. Most importantly, they allow you to focus on your company’s core business, while they focus on theirs. They are tasked with making it easier to execute your logistics not harder.

Knowledge-based work related to logistics is going to move more and more towards AI-type automation and will keep increasing penetration levels as long as it produces efficiency and saves money for providers. The IoT (Internet of Things) is a big reality eye-opener for Logistics-related companies. More and more “process stuff” is being handled directly over the internet. More processes are being automated as well. “Big Data” analytics is also coming on strong in Logistics. Data analytics allows 3Pl’s, carriers and shippers to analyze their logistics information, spot trends quickly and make the proper adjustments to ensure that they are operating according to plan. This is being done more and more at a real-time pace,  and not after the fact, when the damage is already done. Data analytics also allows shippers and carriers to set up a better negotiation platform for doing business in the long run. Better data means a better contract where performance metrics are not guessed at, or generalized, but rather they are specifically spelled out for both parties and are “fact-based”.

A recent, new development is “Smart Contracts”. They allow computer programs to automatically monitor and adjust contracts based on their terms and conditions. This eliminates the normal contract review and enforcement processes and ensures closer-to-perfect contract compliance between the parties over time. This also allows Shippers and Carriers and 3PL’s to spend more time on the operational aspects of their deals and less time reviewing their contracts. As more smart contracts are put in place less manpower time will be required to monitor and manage them. Less time haggling, more time executing. This bodes well for tighter partnerships between the 3PL community and the Shipper community.

After reading Part 1 and Part 2, does it feel like a Logistics nightmare is coming in 2024? I don’t think so. Will 2024 provide a Logistics Re-awakening? I don’t think that either. What I get from the above is that rates will stabilize during late 2023 and early 2024. Capacity will remain soft until the stabilization is complete. Then when rates are stable, capacity will start to tighten, and we will see freight costs increase.

How can you best prepare for this middle-of-the-road scenario? By biding your time before entering contracts with your suppliers. My advice is for you to look to a 3PL for help in navigating the logistics environment. 3PL’s usually have more negotiation leverage across a larger carrier base than medium or small shippers. 3PL’s can provide a technological eco-system that allows for better visibility, lower costs, and more process efficiencies that an individual shipper alone cannot. If you think about it, it’s the business that they’re in, so they are good at it.

At Riverside Logistics, we pride ourselves on our operational expertise and the ability to get things done correctly for our clients in the logistics space. We are consistently upgrading our technological eco-system in-order-to improve the level of performance and transparency of data between our shippers and our carriers. We would love to have an opportunity to look into your supply chain and logistics network to see how and where we can help. Remember, the next year could be a nightmare, if you let it!

Call Riverside Logistics any time and talk to a professional logistician regarding your warehouse, transportation, network or logistics consulting needs and questions. We can be reached at 804-474-7700 Option #4. Good luck!

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If I were making decisions regarding my Company’s Logistics functions and my Supply Chain, what would I do now?

The current logistics environment and the status of the Supply Chain are very confusing right now….for everyone. One minute capacity to move shipments is scarce and expensive, the next moment its loose (available) and less expensive. Container rates are thru the roof, then they’re not. Warehousing space is unobtainable, a lot more expensive, and the options are fewer and far between.

Let’s first look at some of the key drivers affecting the Supply Chain and the Logistics community.

  1. Cost of Capital

When money gets more expensive and harder to get investment goes down. This means carriers begin to extend their equipment life cycles, cut back on new equipment investment, and generally hold off on growth plans. The net-net of this is that your access to capacity, warehousing and such becomes harder and more expensive.

  1. Labor Resources

Logistics as an industry is a touch and feel type of environment. Most of Logistics Labor  consists of drivers and warehouse workers and both must be physically on the job to perform their work. In addition, even pre-pandemic, both were in short supply. Now that demand for these roles has increased back to pre-pandemic levels, they are still a scarce resource. This translates in two ways. First it causes upward pressure on labor rates to keep workers from leaving. Second, it puts downward pressure on Logistics Providers ability to grow their operations to meet demand.

  1. Inventory Levels

Due to the pandemic, increases in demand and the length of the supply cycle inventory levels were increased dramatically. All the inventory had to go somewhere so it sucked up available warehouse space, containers, and trailers. Turns out the demand for goods tapered faster than anticipated and now inventories are too high and sitting too long. This means that space is at a premium, containers and trailers used to store product are not achieving good utilization rates and combined, these factors raise costs and lower service levels throughout the supply chain.

To encapsulate the main two sides of the equation, Supply is too few and Demand is too high. The Supply Chain functions most effectively when these two factors are closely balanced. Conversely. If they get out of balance,  life in the Supply Chain is “difficult”. Like the last 2 years.

What I would do if I were you…run and hide. No, seriously I’d wait it out. I’d use the information I have at hand to build a plan on what you want to achieve with your supply chain and how you think that can be accomplished. The market is in transition right now. Rates are moderating, truck capacity is loosening, international volumes are dropping as are international container rates. However, a potential railroad strike is looming which could at the very least result in rail delays, which in turn become truck and container delays.

Now let’s talk about relationships. As a 3PL we (Riverside Logistics) get to see and interact with a lot of different supply chains handling a lot of different products and running on different criteria for execution. This means we have a pretty good thumb on the pulse of the supply chain. The overall Supply Chain can swing one way or the other, dramatically, and quickly. You must be nimble and have options available to you to handle these machinations. One very capable way to prepare for Supply Chain shock is to partner with a 3PL and to build a relationship of trust with that 3PL. When you do that, you get the benefit of their expertise as well as insight into the logistics markets. This can be a powerful tool for you to use when competing in the marketplace. 3PL’s usually have access to a substantial portfolio of carriers and modes. They know how and when to use them to execute competitively. That’s their business. They also in many cases have knowledge and capability in the warehousing space. They can tell you what market occupancy rates are like in the markets they play in and can help you find and manage space that meets your needs in the markets they serve.

So, lets recap. Right now, there are a substantial number of headwinds and tailwinds impacting the Supply Chain. To sort them all out will take some time. It behooves a company to sit back and let the leaves fall out of the trees a little more so you can see what’s coming next. It is also a good idea to try and build a strong working relationship with a 3PL to let them assist you by applying their expertise in the logistics markets.

It’s a little scary in the supply chain right now. If you try and “Time The Market” you’ll probably fail. Just like with the stock market, timing is not a good idea. Taking a long view is a better strategy and one that should pay dividends in the long run. Hope this advice helps set you on a path that provides your company with a good competitive posture in todays supply chain.

 

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Riverside Logistics Celebrates 25th Anniversary!

 

Riverside Logistics 25th Anniversary

Riverside Logistics - 25th Anniversary

Riverside Logistics is proud to celebrate its 25th anniversary!  A lot has changed since 1996. Gas prices were $1.23 gallon in 1996 and the median home price in 2000 in Virginia was $125,400.

What started out as a dedicated service trucking company for one customer developed into meeting the need for warehouse services.  As that customer grew, others soon followed. Riverside Logistics quickly realized that offering Transportation and Warehouse solutions together added value to their growing client base. As time passed, a fleet of trailers and additional warehouse locations were required to continue meeting customer demand.

Today Riverside Logistics currently manages over 1,000,000 sq. ft. of warehouse space and recently purchased a 183,000 sq. ft. warehouse on South Laburnum Avenue near Richmond International Airport. They work very closely with the growing world class Ports of Virginia and have warehouse space near the Richmond Marine Terminal.  And recently, Riverside Logistics  expanded their list of services by offering the management of warehouse operations for individual clients in their facilities.

Warehouse services combined with an extensive Transportation Delivery Network provides clients with comprehensive solutions that are critical during supply chain challenges.  Our fleet of trailers reduces cost and increases productivity. We look forward to the next 25 years as we continue to expand. We are grateful for all the clients who have allowed us to provide logistics solutions and are excited about the future. This is an exciting time for Virginia and Riverside Logistics!

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