Industry Innovation: July 5, 2017
How E-Commerce Has Changed the Face of Logistics and Where it’s Headed Next
By: motto

To look at where e-commerce is going, you must look at where it began – the tipping point of its impact on transportation and logistics. Rob Piccioni, CEO and founder of Fuel Transport can pinpoint the year: 2009.

“The fundamentals of logistics and the supply chain were the same, but everything started to move so much faster,” says Piccioni. “There was a fire going and e-commerce just dumped gasoline onto it.” According to eMarketer, coming out of the recession, U.S. e-commerce sales jumped by nearly 15% in 2010 and kept rising at double-digit rates in the years after.

In 2009, American retail e-commerce sales totaled $144.1 billion. Five years later it had more than doubled to $298 billion. With the growth in e-commerce, consumer expectations started to change and that meant businesses of all types started to change how they moved products around the continent.

E-commerce and the Need for Speed

Piccioni recalls one Ohio-based client with rising e-commerce sales demanding a 44-hour delivery time to Western Canada. “We were handling it for two or three months when we got called in,” says Piccioni. “We were told, ‘You’re not getting it done. It’s taking you 48, 50 hours.’” In that moment, Piccioni realized this wasn’t going to be a passing trend; it was the way of the future.

His company went away to tackle the challenge once more—diving back into their software and dissecting the problem from different angles. They discovered that a different border crossing would allow them to run on some easier highways in Canada at higher speeds and it saved a few miles. “It was a small adjustment, but it wouldn’t have been possible if we weren’t willing to find new ways to get desired results and we weren’t armed with the technology to uncover new options,” says Piccioni.

As Piccioni predicted, the industry was undergoing a seismic shift. Still responding to the transformational aftershocks of the recession, new cost-containment pressures—an obsession with leaner, more efficient operations—led to fundamental strategic and tactical changes in how businesses ran their supply chains.

Production locations were moved closer to markets, warehousing was scaled back and lowest-possible-inventory became the new reality. In that increasingly complex and fast-tracking world, firms that offered traditional A-to-B trucking services couldn’t deliver the kind of value-added solutions to complicated logistical problems.

Technology and The Future of E-Commerce

New kinds of pressures call for new kinds of thinking and acting. “What you’ve seen is more transportation and logistics companies having to become technology companies,” says Piccioni. “It’s forcing companies like ours to invest in software and analytics, even artificial intelligence, to help us meet the needs of our customers, not just from growing e-commerce but from the broader trends in the economy.”

Fuel has developed its own software that allows it to connect in real time with its own trucks and the trucks of its carrier partners right across North America, constantly searching for synergies within that network of clients, lanes and carriers and eliminating every inefficiency they can find to meet the ultra-high-speed expectations of shippers.

While the explosion in e-commerce happened nearly a decade ago, it’s also still just the beginning of something much larger. The basic constructs of e-commerce—digitally connected buyers and sellers, increasingly making automated transactions—will extend to most corners of the economy, far beyond the consumer purchasing we think of today, predicts Piccioni. “What we call e-commerce right now is just a stepping stone to some things that are more progressive, new and fresh,” he says. “It will affect the way we manufacture things, the way we purchase and distribute things right across North America.”

The successful transportation and logistics companies of the future will be those that can quickly find new solutions to new problems that appear out of nowhere one day, and are ready to find other solutions to other problems the day after that. Concludes Piccioni: “E-commerce is going to evolve, but it is still going to ask for speed. I can only see things accelerating, not slowing down.”