Supply chain management and logistics are aspects of a huge industry that involves shipping, packaging, distributing, and more. But thanks to a variety of advancements, the industry has changed significantly over the past few decades.
Here are some of the most interesting facts about supply chain and logistics.
15 Facts About Supply Chain and Logistics
1. Over 5 Million Are Employed in Transportation and Warehousing
According to the Bureau of Labor Statistics (BLS), the U.S. alone is home to over five million transportation and warehousing employees. While the BLS classifies transportation as “the transportation of passengers and cargo,” it still shows the sheer size of this industry. In fact, warehousing and storage alone account for over 1 million employees.
2. Supply Chain Management Software Is Huge — and Still Growing
Other countries have even higher employment rates. For example, India’s logistics industry already employs over 22 million people, and that number is expected to continue increasing by roughly 7% each year.
A recent report showed that SCMS usage grew 9% year over year, a huge annual change for an already massive business. By 2025, the global SCMS market is expected to be over $22 billion.
Considering that logistics is expected to be a $15.5 trillion industry by 2023, SCMS usage should only continue to grow.
3. Online Shoppers Keep Coming
As the internet continues to spread across the world, the number of global online shoppers will continue to rise. One estimate predicts that 2021 will see over 2.14 billion online shoppers. That’s over one-quarter of the global population.
For suppliers, the growing number of shoppers will complicate shipping — just one reason why supply chain logistics is expected to continue growing.
4. U.S. Online Retail Is Booming
The number of online shoppers in the U.S. isn’t growing as dramatically as global numbers since many Americans already shop online. But Americans are buying more online than they ever have.
Last year, the U.S. e-commerce market grew 15%, a significant growth that has correlated with the decline of brick-and-mortar shopping. Unsurprisingly, this growth has also correlated with the growth in logistics. The two go hand in hand.
5. Different Types of Logistics Exist
Most people know what logistics are, but did you know that different types of logistics exist?
Party logistics, or PLs, represent the breadth and types of services offered by a logistics company. Perhaps the most common type is third-party logistics (3PL). In a 3PL relationship, the shipper, or business, maintains control of the supply chain while the 3PL provider finds ways to make the supply chain more efficient. 3PLs often take care of shipping and warehousing, among other tasks.
6. Most Fortune 500 Companies Use 3PLs
Back in 2001, only 46% of Fortune 500 Companies used 3PLs. In 2017, that number jumped to 90%. Not only are more businesses using 3PLs, but bigger businesses tend to lean on 3PLs more than anyone else.
One reason big businesses use 3PLs is scalability. Scalability allows businesses to rapidly change the size and scope of their supply chain, and 3PLs provide the flexibility to scale as needed.
7. Outsourced Logistics Reduce Costs
Not only do 3PLs make supply chains more efficient, but they can lead to reduced costs. In fact, 70% of shippers say that a 3PL saved them money while improving their service.
3PLs often find the most cost-effective ways to perform these tasks, and that could directly correlate to savings. For example, a 3PL could own a warehouse and employ workers that perform tasks for multiple businesses, and only a portion of that cost would be shifted onto each business.
8. 3PLs Improve Customer Service
Because 3PLs are often in charge of large parts of the shipping process, they’re going to impact your relationship with your customers. Fortunately, 3PLs have a positive effect.
According to 83% of shippers, 3PLs improved their customer service. This could be due in part to complex actions, such as reverse logistics, that directly impact the customer but can be difficult for businesses to handle in-house.
9. Shipping Alone Is a Trillion Dollar Industry
Shipping is only part of the supply chain, yet it is a trillion dollar industry.
- More people are buying online, increasing the demand for shipping.
- Businesses are becoming more willing to spend to increase the efficiency and quality of their shipping.
For obvious reasons, shipping is an important part of logistics. But businesses need to provide better shipping options to customers to stay competitive, so expect shipping to continue to grow.
10. Same-Day Shipping Is Becoming the New Normal
It seems not that long ago that same-day shipping was just starting to become viable. Now, an incredible 65% of retailers are expected to offer same-day shipping before the end of the year.
Shoppers are starting to expect same-day shipping from retailers, and that puts pressure on supply chains — just another reason 3PLs are so popular with big businesses.
11. Trucks Are Still Dominating Shipping…
Despite all the buzz about drones and airplanes, trucks are still dominating shipping — and it isn’t close.
Trucking is a $721 billion industry, and it accounts for 63.3% of all freight transportation in North America. Trucks remain an affordable, reliable, and increasingly sustainable way to ship goods. However, North America is facing a growing shortage of truckers, which could cause problems going forward.
12. …But Air Shipping Is Growing
Air shipping has grown to a $44 billion industry, good for 3.8% of the entire freight market in the U.S. When looking at U.S.-Canada shipping, this number jumps to 4.7%, making it a larger industry than vessel freighting (using ships).
While air is growing, costs associated with this freighting style are still higher than trucking. However, advancements in transportation technology — such as drone shipping — could continue to increase air freighting’s market share.
13. RFID Is Making Warehousing Even Better
Radio frequency identification (RFID) may not be something you’ve ever heard of, but it’s changing supply chains around the world.
Implementing RFID tags could make inventory accuracy as high as 95%, meaning inventory is less likely to be lost. RFID tags will also make it easier for warehouse workers to find and keep track of goods, increasing their efficiency and decreasing the time it takes to ship goods.
14. Logistics Are Working Toward Sustainability
Like many other major industries, logistics is working toward better sustainability. Unfortunately, freighting is a leading contributor to air pollution. But things are going to improve.
Trucks, which account for a huge amount of shipping, are becoming more environmentally friendly. Also, as supply chains become more efficient, less energy will be wasted, meaning fewer emissions. Some companies are even selectively picking supply chain companies that push for sustainability.
The supply chain logistics industry still has a long way to go, but efforts for better sustainability are being made.
15. Last Mile Is Still Changing
One of the biggest hurdles for shipping is last mile, the term given to any delivery that is within one mile of its destination.
In the final mile of shipping, delivery vans often have to deal with auto and pedestrian traffic, lights, stop signs, and complicated routes that take them around a city. This is the least efficient part of shipping, and logistics companies are eager to improve this. Better last mile shipping will cut costs and increase customer satisfaction.
Right now, the future of last mile could be drones. Drones are able to avoid many of the physical barriers that delivery vans face, and they are significantly less expensive to operate. Of course, drones still aren’t viable, and it may be a while until we see them delivering our packages on a regular basis.