The transportation industry, both passenger and freight, is in the midst of a major transformation due to the rapidly changing demands of the global marketplace. Consolidation, globalization, and ever increasing service level requirements are demanding companies become more agile and work smarter in order to be competitive in 2008 and beyond.
As companies begin to create 2008 plans, EDS has highlighted their top technology trends affecting the freight, logistics and rail industry.
1. End-to-End Supply Chain Visibility.
As much of the global manufacturing base moves offshore and the demand for just-in-time inventories rise, the need for tracking information has increased exponentially. At the same time, transportation companies are facing increasing costs associated with the movement of goods with fuel and labor costs rising rapidly. Technology is the key to holding down supply chain costs by helping to reduce inventory in the pipeline. It is important to have the right level of connectivity and the software and data have to coexist and cross communicate real-time.
2. Cargo and Port Security.
US Homeland Security officials have warned the next terrorist attack could be launched through the country’s cargo and port systems. A variety of leading edge technologies can allow officials to track what is being sent, where it is going and how it got there. In addition to the port system, radio frequency identification (RFID) tags can help monitor freight vehicles as they carry cargo across state lines.
3. Consolidation Continues.
As the business landscape across the transportation space continues to change, mergers and acquisitions are becoming an everyday occurrence. In the freight, logistics and rail marketplace this is driven by customer demand for end-to-end service and visibility from a single carrier. Technology can ensure that merging companies’ solutions are compatible and complementary to allow for a smooth transition.
4. Agility–Now.
As transportation companies transform, it’s imperative that technology becomes more efficient. Companies want to reduce dependency and the amount they spend on legacy system maintenance costs, so they may redirect their IT spend to prepare for the future. This goal is especially true for freight, logistics and rail companies, where maintenance costs are increasing rapidly. The preferred supplier is going to be the agile supplier who adheres to service oriented architectures and industry standards and has flexibility to be able to react quickly and provide seamless connectivity.
5. Promises of a Fully Integrated Supply Chain.
Today’s companies are beginning to integrate pipelines horizontally across the entire supply chain. Although the potential is large, the challenges are many. If companies can synchronize raw materials, labor, production, shipping, and distribution requirements, the industry stands to save billions of dollars..
6. Outsourcing to Improve Functionality.
As fuel, labor, insurance and capital costs continue to climb, the transportation industry is challenged with saving money while ensuring high levels of customer service. These facts, coupled with IT growing in complexity and importance, are leading transportation companies to look at outsourcing functions and standardizing business processes as a means to both reduce costs and improve functionality.
7. Growth of IT in the Supply Chain.
Over the past 20 years, the cost of transportation in the US has fallen from over 15% of total gross domestic products to well under 10% today. While transportation itself has become more efficient, the majority of savings has been in inventory reduction.
Gregory C. Mathy is vice president of logistics freight and rail for EDS, a $20+ billion technology services provider. At EDS, more than 9,000 people serve transportation clients, providing business strategy support for air carriers, freight and distribution businesses, and government agencies.
