Experts Soundoff on Tariffs; Net Zero Progress Stalls; Truck Drivers Feel Optimistic; and More Logistics & Supply Chain News
Read the latest updates on supply chain and logistics news.
Connecting Through the Cloud
Though cloud-driven collaboration within the supply chain is not new, it’s fast becoming a must-have for global supply chain visibility and resilience. That’s the key takeaway from new research by Loftware, a digital platform for enterprise labeling, which shows 90% of survey respondents call for greater connection across global supply chains. Respondents cite cloud technology as one key to improve efficiency, ensure compliance, and reduce overall costs.
Here are some additional insights from the global survey:
Demand for Connection
- 84% of companies say it would be beneficial to join an ecosystem where supply chain partners share access, data, and standards to improve efficiency, ensure compliance, and reduce overall costs.
- 74% of respondents say the cloud offers a flexible and agile framework for streamlining access for trading partners.
Compliance and Labeling Challenges
- 70% of companies with $1 billion+ in revenue report being forced to re-label inbound goods due to compliance issues, leading to high costs.
- 77% agree that controlled access to labeling networks could resolve labeling errors and streamline inbound goods handling.
Security and Transparency Technology
- 78% see AI as a valuable tool for detecting counterfeit goods by analyzing supply chain data.
- 59% use serialization technology to address challenges such as tracking and counterfeiting.
- 68% recognize the role of cloud technology in improving traceability, supporting on-time delivery, and enhancing sustainability.
Tariff Troubles?
In the wake of Donald Trump’s U.S. Presidential election victory, companies around the globe are preparing for likely changes to relevant policies on everything from global trade to manufacturing to environmental regulations. In the supply chain and logistics sphere, talk centers largely around an expected increase in tariffs. Here’s what some experts predict—and how they advise businesses to react.
“President-elect Trump promised to start a global trade war by imposing tariffs across the board and targeting some nations with higher tariffs. If he goes through with this initiative, domestic inflation will rebound. The U.S. manufacturing sector will need to attract capital and workforce talent to build new and restore old domestic supply chains for goods that are now imported.”
—Ed Hirs, Energy Fellow, University of Houston
“Different manufacturing subsectors will experience wildly different outcomes [as a result of proposed tariffs]—electronics makers face potentially painful component shortages while chemical companies may benefit from reshoring. Small manufacturers will struggle with the transition costs while larger players can use this as a catalyst to rebuild their supply networks. The biggest winners will be those who use this moment to fundamentally redesign their operations with more flexibility and redundancy built in.”
—Dan Abramson, SVP of Growth Markets, FourKites
“Trump has signaled a more aggressive tariff strategy, which could significantly disrupt supply chains and impact company margins. Industries with complex cross-border logistics, such as chemicals and automotive, may face increased costs, particularly if tariffs are imposed on Mexico. This approach could reshape global supply chains and force companies to reevaluate their sourcing strategies, potentially accelerating the trend of nearshoring or reshoring production.”
—Bindiya Vakil, CEO, Resilinc
“The knee-jerk reaction from U.S. shippers will be to frontload imports before Trump is able to impose new tariffs. If you have warehouse space and the goods to ship, frontloading imports is the simplest way to manage this risk in the short term, but it will bring its own problems. A sudden increase in demand on major trade lanes into the U.S. when ocean supply chains are already under pressure due to disruption in the Red Sea will place upward pressure on freight rates.”
—Peter Sand, Chief Analyst, Xeneta
Getting to Net Zero
While many companies say sustainability is on the top of their agendas, how many are actually making measurable progress toward sustainability goals? Not enough, according to Accenture’s latest Destination Net Zero report, an analysis of net zero commitments, carbon reduction activities, and emissions data for the 2,000 biggest companies (G2000) worldwide.
The 2024 report shows only one in six (16%) of the world’s largest companies are currently on track to reach net zero emissions in their operations by 2050—down from 18% last year—while close to half (45%) continue to increase carbon emissions.
Interestingly, the report shows AI is emerging as a key accelerant of decarbonization, but only 14% of companies are using it to tackle emissions. Conversely, AI could also have a negative impact given that AI data centers are projected to generate 718 million tons of CO2 emissions by 2030—comparable to the current emissions in the aviation or shipping industries.
The report also includes the following takeaways:
- 55% of G2000 companies have reduced their operational emissions (Scope 1 and 2) since 2016.
- 77% have reduced emissions intensity (emissions per unit of revenue).
- 30% are deploying 15 or more decarbonization levers, which represents a crucial threshold on the path to net zero.
- 64% of European companies have full Scope 1-3 targets, compared to only 26% of North American companies.
Truck Driver Pay Down; Optimism Up
America’s truck drivers are earning less than before, but feeling better about the market’s future. This somewhat contradictory viewpoint emerges in new research from Conversion Interactive Agency, a truck driver recruitment firm, and survey company P.D.A. Their Fall 2024 Driver Survey provides insights into the evolving priorities, challenges, and sentiments of professional truck drivers in today’s market.
While 59.4% of drivers surveyed say they are not earning more now than they were a year ago, 51.1% say 2025 will be a better year for truckers than 2024. Many drivers remain optimistic as economists are indicating a return for most freight sectors.
Truck drivers also indicate the following:
- 59.3% are currently looking for a trucking job—the highest percentage of drivers since Conversion and PDA began tracking this number—while 53.3% of truckers say they feel valued and appreciated at their current job.
- “Predictable pay” (81.9%) is the number-one reason cited by those seeking jobs, followed by “better home time” (65.7%), and “consistent miles” (49.1%).
- More home time does not trump pay; 40.8% say they would be “very unlikely” to accept a pay reduction for more home time.
- When job hunting, 14.7% of truckers apply to one company, 39.9% apply to two or three companies, 17.1% four to five, and 28.3% more than five.
Healthcare RX: A Patient-Centered Supply Chain
The leading healthcare supply chains of 2024 share common priorities including a renewed commitment to improve processes, invest in technology, and integrate systems to enhance service delivery in clinical areas—all in the quest of a patient-centered supply chain. That’s the main conclusion from Gartner Inc.’s release of its 2024 Healthcare Supply Chain Top 25, the firm’s 16th annual ranking recognizing health systems that exemplify leadership and innovation.
AdventHealth claimed the top spot for the first time this year, moving up two positions from last year. Stanford Health Care, Bon Secours Mercy Health, Corewell Health, and Banner Health round out the top five. According to Gartner, these companies, along with the rest of the leaders on the list, are focused on these top three trends:
1. Resurgence of Clinical Alignment
Leading health systems demonstrate a focus on enhancing service delivery in clinical areas. This includes a growing emphasis on providing clinicians with better decision-making tools to identify areas of unnecessary supply variation between facilities or individual practitioners. This focus aims to minimize the impact on patient outcomes while controlling costs.
2. Improving Span of Control
The health system supply chain is involved in only 72% of the organization’s spending, indicating that on average 28% remains unmanaged centrally, according to Gartner research. Even more concerning is that health systems with net patient revenue less than $5 billion have unmanaged spend reaching 38% on average. Leading health systems are addressing this gap by broadening the influence of the supply chain through greater organizational collaboration.
3. Accelerating the Digital Supply Chain
Health systems are significantly increasing their adoption of digital solutions, automation tools, and analytics solutions to enhance their supply chain operations. Initiatives include implementing warehouse automation systems and utilizing robotics and AI-driven solutions for inventory management.
“Leading health systems are navigating risks while prioritizing clinical alignment, expanding their influence, and accelerating digital transformations to build more resilient supply chains,” says Eric O’Daffer, a Gartner analyst.
These advancements, O’Daffer notes, ensure a more efficient, cost-effective, and patient-centered healthcare system.
Industrial Leasing Ticks Up
The consensus is in: The industrial leasing market for logistics centers, warehouses, and distribution centers is on an upswing. As vacancies stabilize, industrial leasing is poised for a rebound amid opportunities and uncertainties from a new administration, finds the State of the U.S. Industrial Market–Q3 2024 report from global real estate firm Savills.
The report provides key metrics on supply, demand, and pricing of industrial real estate along with analysis of related economic drivers at both national and market-level geographies.
Here are five key takeaways from the report:
1. Post-election boost expected for leasing. After a sluggish first half, Q3 2024 leasing improved to 4.3% below Q3 2019 levels. Tenant activity is expected to pick up in the coming quarters post-election.
2. Port volumes rise as shippers pull forward. TEU volumes are up 14.8% year-to-date as shippers pulled freight forward ahead of the ILA strike, a trend likely to continue amid potential tariff escalations.
3. Demand surges from China-focused 3PLs. Logistics providers are leasing large spaces in port markets, fueled by tariff concerns and ecommerce growth, including Temu’s 455 million app downloads in 12 months.
4. Construction has finally normalized. The construction pipeline is down 56% from its 2022 peak, now near 2019 levels, with California’s AB-98 bill to limit supply in key markets like the Inland Empire.
5. Existing leases still below market rates. A large mark-to-market looms on leases signed in recent years, thanks to 70% rent growth in the past five years. Some 2023 leases may now be above market.