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What Does Elastic Logistics Mean for Freight Forwarding?

Apr 5, 2019 2:59:06 PM / by Fauad Shariff

Over the past few years, many freight forwarding trend lists have counted elastic logistics as an exciting development. Lists as far back as 2016 have identified it as an emerging trend in supply chain management, and while elastic logistics hasn’t become the standard that it is hyped as, it’s still frequently touted for a reason.

But the concept of elastic logistics has been around long enough that important questions are being asked about what it can deliver. Namely: what does elasticity mean for the freight forwarder?

 

What Is ‘Elastic Logistics?’

Before we can guess about what an elastic future could look like for you, here’s a quick primer: elastic logistics is a concept in supply chain management where each chain expands or contracts efficiently based on the demand for its services.

The concept traces its roots back to lean business models where the goal, in broad terms, is to reduce expenses by controlling waste and meeting inventory requirements rather than exceeding them and risking overstock, or falling behind demand and risk losing revenue to supply shortages. Lean business practices are always iterating and improving.

While lean business practices are meant to be flexible, they’re not as well adjusted for logistics, or the speed of demand fluctuations of modern e-commerce. While lean business models work best on manufacturing and shelf stock, the first- and last-miles, they’re not adapted for middle-miles.

Elastic logistics aims to cover the gaps, particularly along the middle-miles and in warehousing. While the actual practice is still a bit nebulous, in theory, elastic logistics adjusts variables like carrier space, sailing schedules, container count and usage, and even route optimization to make the supply chain run with the least amount of waste as possible. Elastic logistics would help tackle problems such as half-full vessels, over-manufacturing or overstocking, and even price volatility. And, as an added bonus, elastic logistics could prove to be a key cog in shipping’s green future, as traffic optimization would reduce emissions from ships and trucks that are only hitting the seas and roads now because supply wasn’t allocated correctly.

 

A Technology-Dependent Idea

One of the reasons why elastic logistics has gained so much popularity in the last few years is because its benefits are only realized through technological solutions.

Data analytics of freight traffic are more insightful than ever before, and volumes are easier to predict within smaller time frames. Supply chain management software has moved past its infancy and grants logistics companies better, near real-time visibility of their customer demand.

Freight marketplaces like CoLoadX make procurement and shipment execution simpler than ever. Even things like container sensors are helping vessels iterate on optimal stacking and storage protocols, giving them better control over how they can achieve optimal capacity. Technology helps manufacturers, vessels, and delivery trucks scale according to both predictive and real-time demand.

In warehouses, automation is the new tech most often linked with elasticity. Automated warehouse fulfillment works almost exclusively to meet demand. But with the rise in popularity of warehouse bots, automation also appears to pose the biggest threat to warehouse workers. After all, cost optimization includes salary.

Which leads to the question: if elastic logistics requires technological solutions, and some technological solutions require automation to become their most efficient, could freight forwarding professionals be threatened by an elastic future?

 

People Are Part of the Solution

Staffing optimization isn’t strictly a product of elasticity. As such, an elastic logistics future and the technologies that it depends isn’t designed simply to cut staff. Staffing optimization is an allocation solution that is (in theory) aimed at the proper allotment of resources. Here’s the thing: in logistics, even in an elastic logistics future, people are still a critical resource.

Elastic logistics needs freight forwarding professionals to work. At its core, elastic logistics informs adjustments and scalability: but it still requires freight pros to fulfill its promise of low waste and supply chain optimization.

While technology-enabled solutions may seem scary, any technology-enabled solution of the near future is a tool to assist your work, not take it away.

Elastic logistics, when it does arrive, will do the same.

 

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Topics: Freight Forwarding, Freight Forwarders, Technology, elastic logistics, logistics future

Written by Fauad Shariff

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