Exciting things are happening for warehouse technology. We’re seeing everything from physical robots to augmented and virtual realities.
Recently, Worlds Enterprises, Inc., a company that specializes in creating 4D digital twins of warehouses and factories for training and operations improvement, completed a successful $21.2 million Series A1 funding round per an announcement from Business Wire.
What’s a digital twin, and why is it worth such an investment?
A digital twin is a virtual model of a physical object or system. It can simulate and analyze the object or system’s behavior, performance, and interactions with its environment. In simple terms, it’s a virtual version of something that exists in the real world. For example, a digital twin of a car engine can be used to test and optimize its performance before the build, or a digital twin of a warehouse can be used to plan and optimize its operations and logistics. The digital twin can monitor the real-world object or system and use it for training, simulation, and optimization.
The data gathered from a digital twin can provide valuable insights and a responsive testing environment. As Worlds explains, “We show the critical variations that cause inefficiency, lower production, or create unsafe environments – in real-time. As a result, it empowers clients to reimagine and automate their processes in ways that unlock massive unrealized value.”
Amazing things are happening outside of training environments, too.
Firstly, we’ve got to talk about these warehouse robots. Such as these SqUID robots from BionicHive climbing shelves to retrieve and place inventory. Now, look at how Amazon’s robots automate multiple processes at its warehouses. And we certainly can’t forget Locus Robotics, which FreightCaviar reported on last year. Overall, robots are helping warehouses become more efficient, accurate, and safer than ever.
New AR Warehouse Technology Merges the digital and physical worlds.
Augmented reality (AR) is a technology that overlays digital information on top of the real world. In other words, it enhances the user’s perception of the physical world by adding virtual elements. AR warehouse technology makes it easy for workers to move around, access information, and more.
For example, companies like Vuzix Corporations and TeamViewer create smart glasses workers can wear to provide instant access to information in front of their eyes.
Inventory Management: Displays information about the location, quantity, and status of inventory items.
Task Instructions: Overlays instructions or diagrams on top of physical objects, helping workers to understand how to perform tasks correctly and efficiently.
Safety: Reveals safety information and alerts to keep workers aware of potential hazards and reduce the risk of accidents.
It will be exciting to see how companies in the industrial and warehousing sectors will continue to utilize these tools to improve their operations and drive success. One question to ponder is: How can your company benefit from new industrial and warehouse technology?
At FreightCaviar, we believe it’s always important to look ahead and plan for the future. That’s why we’ve gathered exclusive freight market forecasts from top logistics executives for the year 2023. These experts will examine truckload demand and capacity trends from the past in order to make informed forecasts about the future of freight. They’ll also discuss the impact of these trends on businesses in the logistics industry. Get ready to dive deep and find out what the future holds for freight rates in 2023!
Meet Our Experts
Tim Higham is the President and CEO of AscendTMS, the largest TMS with 51,619 active customers. Higham’s software gives him live and real-time access to key information needed to give accurate forecasts.
Jake McLeod is the COO at EXO Freight, the world’s first open deck transportation marketplace driven by technology. McLeod has been in the industry for about 15 years and has seen the worst market (2008/09), an insanely high market (2021), and everything in between.
William Kerris the President of Edge Logistics, a company that’s been recognized for its record-setting growth. Kerr was named one of Crain Chicago’s 40 under 40, which honors company leaders who have successfully improved the world through their endeavors.
We’ve also got input from the CEO of a Leading 3PL, who wishes to remain anonymous.
The Good Times Can’t Last Forever
We’ve got to take a moment to look back. The buzzword of 2020-2021 was unprecedented, and it’s the perfect way to describe the freight market at the time. Such high rates weren’t normal – and this attracted a lot of newcomers and hurried decision-making.
CEO of Leading 3PL: I will say that a lot of our industry is historically not great at thinking long-term. We see companies make decisions that help them most today, here and now, without concern for long-term success and stability. I think some companies overcommitted themselves with hiring, unsustainably lucrative compensation packages…and other short-sighted decisions. As things have turned the other direction in the market, these same companies were forced to make unfortunate hard decisions. Starts with layoffs. When that’s not enough, things get bleaker. We saw a lot of that in the second half of 2022.
McLeod: Unfortunately, thousands (hundreds of thousands) of new carriers and owner-operators entered the market during this time and have no idea what normal rates look like, have never run a business properly before, overpaid for equipment, and could generally run a company that was profitable despite not being particularly well operated. Now that the tide has gone out, we are seeing who is swimming naked, and it is a lot of the industry – these carriers are going to be in desperate times to try and make their business work, or they will exit (voluntarily or by going out of business).
Higham: Amazingly, most people under the age of 35 haven’t experienced a real recession since they’ve been employed. But they’re about to, and it won’t be pleasant.
Predictions on the Market
As for 2023, here’s what the experts had to say.
Higham: I can literally see, in real-time (because of the 51,593 companies that use AscendTMS every day to run their logistics & trucking operations), the rapid downturn in rates on every load, the fewer viable freight companies out there, the lower total staff being employed at each entity, the lower number of trucks running, the lower TL and LTL volumes being moved, and the incessant squeeze on gross margins. These aren’t guesses, these are the real actual experiences of freight brokers, asset carriers, and shippers every single day.
Kerr: We will see a slower January and early February than last year, and then in late February/early March when most of the drop/drop shipper-national carrier rates reset to the 2023 rates, we will see the live/live spot market creep back up to a positive spot market through the summer and into peak season. By positive, I mean I expect that spot rates will be incrementally higher than contract rates on aggregate of live and drop pricing. That is not to say that we will have an inflated or accelerated spot market, I do not think that will occur in 2023 except in short bursts, regionally.
McLeod: What we are seeing is honestly a return to “normal” – the truckload market rates we saw in late 2020, 2021, and early 2022 were not normal or sustainable and truly a bubble (much like everything mentioned previously). While carriers scramble for business, they will take freight for cheaper and cheaper rates, as there are fewer and fewer load opportunities available as production slows, spending slows, etc. At some point, (I keep hearing from people Q1 or Q2 2023, I think it will be closer to 2024,) rates will hit a bottom and then likely bounce up a bit before settling into a normal market rate again (which I think is still lower than we are seeing truthfully). This will be due to capacity crunching again, consumer confidence and spending increases, and an overall increase in economic activity.
Forecast Data from Arrive Logistics
To summarize the report from Arrive Logistics, freight rates in 2023 are expected to be more stable compared to the previous year, with long-term contract rates returning to more typical levels. There may be less demand for shipping services, leading to more available capacity and making it easier for companies to stick to their preferred shipping routes.
However, there may be fewer shipping options available in the first half of the year due to a decrease in capacity, which could leave the market vulnerable to disruptions. There is likely to be less capacity available in the market due to high contract rates forcing some owner-operators and small companies out of business. However, this decrease in capacity may be offset by the influx of capacity that entered the market in the past and strong routing guide compliance.
Demand for shipping services may be impacted by a cooling economy and lower consumer spending, but demand may be supported by the need to fulfill backlogged orders in manufacturing and other industries.
How will these trends impact companies?
These market forecasts are important because they shape how businesses will move in the environment until a new pattern arrives. Of course, nothing can be said for certain, but smarter leaders will adjust their behavior accordingly. The experts give their thoughts on how the trends will impact logistics companies.
Higham: Massive cost cutting will be needed by a massive number of companies in 2023 (and, if you have a big salary that was negotiated during the excesses of late 2020, 2021, or early 2022, watch out). But, every recession can also be an opportunity. Those companies that prepared for the inevitable “rainy day” will manage to stay solvent, and they’ll pick up the customers of those that don’t.
CEO of Leading 3PL: If the trend continues with volumes and rates declining, things will get much worse for that same set of companies[who made short-sighted decisions]. I think right now, there’s a lot of “holding on”, trying to make it through the downturn. If this lasts long enough, those short-sighted companies won’t have the resources to sustain themselves. Hopefully, things turn around soon and business booms again. But if not, things will get uglier before they get better.
McLeod: I am not a doomsayer or getting political by any means either just being real with what I see happening, what I have seen happen, and where I think we are heading and where we are at. 3PLs/Brokers are not immune to this either, as we have seen thousands laid off in the last few months from many of the major players, and I am sure plenty we have not heard about from the medium and small players, not to mention the most recent news from CHR)
There’s a consensus that in 2023, companies will be more risk-averse, in addition to looking for any way to cut costs. This could be a good opportunity for those looking to gain new business. Long-standing partnerships may not be holding as strong when it comes to keeping a company afloat.
Higham: Freight executives are looking to save money right now, and they’ll give their business to those that can show instant ROI. In 2023, people will be more interested in securing cost savings than ever before, and so they’ll finally be willing to go through the pain of switching providers to realize those savings.
So, there could be room for growth and innovation, particularly regarding freight sales technology. Any tool or service that can streamline processes or lower operating costs might have a good year. Our experts discuss why businesses like theirs are in a prime position to take advantage of the coming market conditions.
Higham: Freight sales technology will be at the forefront this year, like ShipperCRM, to secure more (and better) shippers, high-value TMS, like AscendTMS, to eliminate TMS costs, and more automation, with freight AI, to reduce headcount. Everything a broker, carrier, or shipper uses in 2023 will be about VALUE!
McLeod: I am fortunate that EXO is at a point where we have nowhere to go but up, and we continue to capture new business opportunities from new and existing customers. We have built a better mousetrap for carriers and shippers to do business. While traditional brokerage models are not going anywhere, they will have a harder time defining their value prop as time marches onward.
Things don’t seem catastrophic, but companies will feel the pressure this year. It depends on the mindset and decisions a company made in the past that will impact its longevity.
McLeod: So while this all may sound pessimistic, I think it’s more just understanding that there was always going to be a correction coming, and if you thought that 2021 was going to be here forever and not a black swan event then you’ll be in for a really rude awakening, this is not a get rich quick industry. There are ups and downs, but there is a happy normal, and we are not far from that, but there will still be some pain to endure before we get there. Those that have built good businesses will come through better than before.
General Thoughts From Instagram Followers
FreightCaviar’s Instagram poll brought in 1000 responses from followers, who are mostly made up of people working actively in the industry. We asked followers, “Will the market bounce back in 2023?”
48% said yes, the market will bounce back fine in 2023.
52% disagreed. They think we won’t see things improve in 2023.
Take a look at some of the written responses below.
FreightCaviar Instagram poll responses to “What are your predictions for 2023?”
So, of course, many external factors can make the market unpredictable. And here, experts have provided a range of predictions, from more stable rates and healthy demand to the potential for disruptions and lower capacity. It is clear that the market will continue to evolve and that businesses in the logistics industry will need to stay informed and adapt to changing conditions to remain competitive. It is important to stay up-to-date on industry trends and developments and to be proactive in planning for the future (like following FreightCaviar, for example). By staying informed and taking a long-term view, companies can be better prepared to navigate the ups and downs of the freight market in the coming year and beyond.
We were curious when we saw that Trimble spent a whopping $2 billion USD on a freight tech company in Europe called Transporeon, especially after Trimble recently closed down another recent acquisition called Kuebix that they just bought in 2020 for $201 million USD.
So, we asked our resident expert, Tim Higham, the CEO and founder of AscendTMS, a popular freight TMS software company with our readers (and a FreightCaviar sponsor) what this means for the industry and freight tech in general.
Paul-Bernard Jaroslawski (PBJ): Tim, will this deal by Trimble fix all the problems we all face in logistics in North America?
Tim Higham: Ha! Good one, Paul. No, it won’t. But it’s another piece of the puzzle. Digitizing trucking and logistics is going to be an ongoing two-decade process, and this is a vote of confidence by Trimble in that process. Also, Transporeon mainly operates in Europe, and it will take time for an Americanized version to be brought to the United States.
PBJ: Why did Trimble spend $2 billion USD on them? That’s a lot of money, especially after the Kuebix closure. Is Transporeon profitable?
Tim Higham: I have no idea if Transporeon is profitable as they are (were) privately held. But, Trimble stated publicly that the deal would be immediately accretive to Trimble’s revenue growth and margin profile and that they (Transporeon) generated profitable growth over the past 15-plus years. So, this leads me to believe that they are indeed profitable. To me, being profitable means that Transporeon is proven and they have a product that clearly meets a need in the market. Profitability says a lot about market acceptance for any product.
PBJ: Can Trimble easily bring Transporeon to the North American market?
Tim Higham: As a Brit, yet growing our own highly profitable TMS software company in North America, I can tell you that there are a lot of differences between how logistics work in Europe versus North America. Today, AscendTMS is the most widely used TMS platform in the USA, with paying customers, mainly by accident, in over 30 countries today. So, I can tell you from the front lines that every jurisdiction around the world has particular needs, and there is no all-in-one solution that will translate easily between Europe and the USA. So that’s why the major US freight tech providers aren’t big in Europe and vice-versa.
Moreover, the largest companies in North America already have very sophisticated supply chain technology in place, so displacing that will be challenging and take time. When Transporeon started in Europe in 2000, their technology solutions had little competition, and thus it was easier to get a fast market share. However, today in North America, there’s a lot of entrenched technology that will need to be displaced in order to get a foothold, especially in the top end of the market.
PBJ: So, how does Transporeon get a share of the market in the US?
Tim Higham: They’ll probably start by getting one or two of their niche products into a company that meets a particular need, and they’ll likely use that success as a door opener. Then, over time, they’ll hope to further open the door to more of their products as opportunities arise.
Also, their new owner, Trimble, already has a substantial market share of their own existing trucking and logistics technology in North America. So, as the natural technology replacement cycle takes place, Trimble will now have a series of new products and services to offer their existing customers rather than losing them to newer freight tech competitors. So it’s a smart strategy, but it’s a long-ball game.
PBJ: Will this deal help digitize the industry?
Tim Higham: As I’ve said publicly many times, the main issue with freight technology is that getting the top 5% or so of shippers, carriers, and brokers connected and integrated digitally is pretty straightforward. This is because the largest players have big tech budgets and large IT teams. But, if only 5% of the industry is ready to connect with each other, it only works as long as they are working with each other.
Unfortunately, the fact is that the other 95% of the industry, the SMB player, has little to no technology budget and no IT team. So, how do they participate in this digital evolution?
The smaller market players with under 20 trucks or under $20 million USD in sales (as a 3PL) or freight spend (as a shipper) represent over 95% of the entire market, and they need cheap, simple, and fast to deploy solutions in order to participate with the more sophisticated top 5%.
If you leave the smaller companies out of the freight tech evolution, true digitization across the industry will never become a reality. It’s on the entire industry to invite them in.
PBJ: So how can that be fixed?
Tim Higham: It’s already happening. The largest shippers, 3PLs, and technology players are already handing out tools, like AscendTMS, to the smallest players to help to get them digital.
Don’t be fooled that this is a purely altruistic endeavor, though. The most prominent players have realized that if they want to truly see the efficiencies of digital freight and logistics processes hit their balance sheet, they need every single vendor, customer, and partner to be capable of doing business digitally. That’s why many of them today literally give away AscendTMS to their SMB partners so they can participate with them. And in turn, both parties see a rapid reduction in costs and the resulting increase in profits.
PBJ: How long will this all take?
Tim Higham: To use an American baseball analogy, my guess is that we’re only in the 2nd inning in North America. Today over 51,300 trucking, logistics, and shipping companies use AscendTMS, and they all benefit from digital freight technology. But that’s still a tiny part of the total addressable market in North America and even smaller when you look globally.
The good news is that we see more and more large industry leaders helping to educate the smaller players about the available freight software solutions, like AscendTMS, so they can easily participate and realize cost savings themselves.
The pace and urgency are already increasing, and there’s a lot of opportunity for the likes of Trimble and Transporeon over the coming decades to help bring the entire market toward a fully digital future.
Yes, this will all take time. But the good news is that AscendTMS, like Trimble and Transporeon, have shown that there is an eager market for our solutions, and it can be done profitably along the way.
PBJ: Tim, as always, thanks for your expert insight on this subject and for helping us all to understand the freight tech world.
Issues like the Russia-Ukraine crisis, China’s zero COVID policy, high inflation, and the threat of recession have led to a significant drop in air freight demand reports Beroe Inc. in PRNewswire.
Which industries play the biggest role in air freight demand?
North America & Europe: Automotive, industrial, and agricultural sectors
Asia: Electronics, followed by consumer products
These global issues have air freight operators desperately trying to stay afloat by cutting rates, optimizing routes and flights, restructuring pricing models, and reducing load capacity. However, these measures are not enough to offset the decline in demand.
Unimpressive numbers:
Net supply expected to grow a negligible 0.04% by the end of the year.
Demand is expected to grow a little more at 0.8%.
We see some bigger percentages, but they aren’t good news. Rising inflation led to a 40% increase in jet fuel prices. So, the trip is getting more expensive while simultaneously flying light due to a slowdown in global trade.
Another key impact is a labor shortage across W. Europe and America. The lack of workers impacts overall flights, leading to backlogs and cancellations.
Not by Air, By Sea.
An article from SupplyChainDive details the drop in air cargo rates as retailers return to sea shipments.
To summarize, air cargo rates and volumes continue to decline, leading to improved financial and operational results for some retailers in Q3. For example, Gap reported improved operating margins due to lower air freight rates, and Lululemon saw increased product margins driven by moderating air freight costs.
Some retailers have started moving shipments away from air freight and back to the ocean, despite longer transit times, due to the improved market landscape for ocean transport. Shippers are expected to continue benefiting from softening rates in both air and ocean, potentially lowering shipping costs in 2023.
Drone delivery is becoming more popular, with the global market for drone delivery projected to top $53 billion by 2025. In a study from ResearchandMarkets.com, the global drone logistics market was valued at $8.20 billion in 2021 and is forecast to reach $53.32 billion by 2031 at a CAGR of 20.8% from 2022 to 2031, STAT Times reports.
What makes drone delivery so appealing?
Time: Consumers want things fast–there’s a rising expectation for same-day delivery or faster. Drones can bring companies closer to these goals.
Money: “Operational costs are at least 70% lower than a van delivery service,” said Gartner analysts.
Environment: Researchers found that adopting quadcopter drones for small package deliveries could have up to 94% lower energy consumption per package than other vehicles.
In the latest US drone market news…
Amazon has a new drone for 30-minute urban deliveries and is preparing to make its debut. Meanwhile, Walmart is expanding its DroneUp delivery to 34 sites across six states.
Medicine delivery has been a hot spot for the market. Zipline and Wing make deliveries between hospitals, pharmacies, and clients’ homes.
Drones Everywhere?
Though the market is expanding, the use of drones for delivery purposes is still in the early stages. There are many technical, regulatory, and other challenges to overcome before it becomes a widespread practice.
To recap: The adoption of drone delivery is appealing for several reasons, including faster delivery times, lower operational costs and reduced energy consumption. Major companies such as Amazon and Walmart are investing in drone delivery technology, further supporting its potential as a mainstay in the logistics industry. As the technology advances, it will be interesting to see how the drone delivery market continues to evolve.
