Outsourcing will remain a key part of supply chain and logistics: Part II

New research confirms that the current risk mitigating trend in the third-party arena will continue this year. Indeed, eighty-five percent of logistics managers expect that their outsourcing budget will increase by more than 5% in 2020, according to Gartner, Inc., with a sizeable portion of that aimed at choosing multiple third-party-logistics (3PL) partners.

Much of the same advice is offered in a new report from the London-based consultancy, Transport Topics (Ti). Titled, “Global Contract Logistics 2020,” researchers examine the growing concerns in the 3PL sector surrounding the environment and what the differing actions governments are taking to address pollution levels. Again, risk mitigation is key.

“An increasing number of governments are implementing emissions regulations and diesel bans which will have consequences on transport and logistics companies’ delivery operations,” notes Ti’s research analyst, Cameron Morrison. “These regulations, however, remain inconsistent, even at a national level where regulations can differ within the same country.”

Ti also looks at the challenges posed to logistics in the complex environment of megacities. No two megacities are the same, some resembling Singapore with high levels of organization, good transport infrastructure, and a prospering economy. Others, however, may develop into cities like Kinshasa or Mexico City, with relatively high levels of wealth juxtaposed with endemic poverty, poor infrastructure, crime and corruption.

“This creates a complex and ever-changing environment in which logistics providers must navigate and adapt in order to remain efficient,” says Morrison. “In developed countries, megacities still prove to be as complex as in emerging markets.”
He adds that contrary to what some logistics managers may think, a city being developed and thriving economically does not necessarily equate to having the perfect environment to operate a logistics network…other factors come into play.

“Population density can be equally as high, inequality can also be prominent and the lack of space available to set up operations is increasingly sparse,” says Morrison.” Logistics providers are still faced with many of the same challenges to overcome as in emerging markets.”

In addition, the report explores the implications of “Circular Fashion” for logistics and supply chains. With fashion supply chains on the verge of a major transformation which will have drastic effects on the associated logistics industry, changes are being thrust upon manufacturers and retailers in the sector.

“There’s increased pressure regarding the negative effects modern practices and culture are having on the environment,” Morrison observes. “The emergence of new markets such as online clothing rental is an example of how reduction of waste in this industry is possible without the reduction of consumerism.”