Author: Paul Tessy, Senior Vice President, Purolator International

Supply chains being moved out of China. The explosion of e-commerce. The rise of machine learning. Fierce competition for skilled workers. Evolving consumer expectations. The march toward corporate sustainability.

This decade, logistics companies have had to contend with an influx of change, much of it beyond their control. Now, looking ahead through 2024, it’s clear that evolving industry conditions are the new normal, and companies must be prepared to pivot where needed.

With that in mind, here are the key trends I believe will shape the rest of this year and beyond:

1. Shaking up global supply chains

The biggest source of change in logistics is in our supply chains. I’m seeing three key trends playing out now, and in the many months ahead.

Nearshoring: This phenomenon is picking up tremendous steam as companies bring their production closer to home, to nearby countries with similar time zones. To minimize disruptions to supply chains caused by the questionable durability of global trade agreements and norms, we’re seeing the reverse of what happened when companies outsourced production to China in the 1990s.

"As business models change, expect more and more reshoring, nearshoring, vertical integration, and increased sourcing from new geographies. This is particularly true alongside economic signals such as China’s pivot away from manufacturing toward a service economy. Clearly, the cross-border trade and investment between Canada and the U.S. will take on an even greater role than ever."

As business models change, expect more and more reshoring, nearshoring, vertical integration, and increased sourcing from new geographies. This is particularly true alongside economic signals such as China’s pivot away from manufacturing toward a service economy. Clearly, the cross-border trade and investment between Canada and the U.S. will take on an even greater role than ever.

Changing market demographics: In the U.S. alone, consumers are spending nearly US$60 billion for on-demand services such as online marketplaces and transportation. This is driving high demand for custom goods and fast delivery even while companies seek growth opportunities in new markets and new customer groups.

I expect such dynamics to push plenty of businesses to situate manufacturing closer to end customers. As a result, by next year, many supply chains will shift toward national, regional, and even local networks of buyers and suppliers.

Automation: Advancing technology will further influence the digitization of supply chains, how products and services are made and delivered, and managing supply chain data in new ways. Companies will revolutionize their supply chain management through innovations in machine learning, blockchain, and augmented reality.

Ultimate transparency is the name of the game, particularly as suppliers, workers, and communities focus on measuring and reporting on environmental and social performance.

Partnering with companies that have the technology and tools to drive value, simplicity and efficiency is key to manage the challenges that can come with these trends. For example, offerings such as web portals and virtual assistants can provide unparalleled access to shipment visibility, support and issues resolution, resulting in seamless customer access and experience.

2. An increased push for sustainability

Environmental sustainability needs no introduction at this point, but when it comes to trends affecting the logistics industry in 2024, few are as widespread as this one.

First, we know that climate change puts vulnerable supply chains at much greater risk, due to a reliance on raw materials and in geographic areas that are being impacted by an increasingly warming climate.

Second, we know that modern consumers care about the carbon footprint of companies they endorse through their wallets. They want to know if a brand puts sustainability first, including all the way through its value chain. More people are adopting greener lifestyles and purchasing sustainably sourced products. One PwC report found that half of all global consumers say they’ve become more eco-friendly.

Sustainability is no longer a nice-to have offering; indeed, it is quickly becoming a key factor in carrier selection. Furthermore, there is real economic value in getting out ahead of sustainability efforts before regulatory mandates are imposed. It is imperative that every logistics company embeds purposeful sustainability objectives in strategy and operations planning throughout this decade.

"We recognize that customers and stakeholders value action on sustainability, which is why Purolator is committed to reducing its Scope 1 and Scope 2 emissions by 42 per cent, diverting 70 per cent of waste from landfill and reducing emissions from electricity use by 100 per cent this decade. This is all in pursuit of our mission to achieve net-zero by 2050."

Purolator is leading the way in Canada, making continuous investments toward reducing our environmental impact. As a transportation leader, we have focused on our area of greatest impact: fleet decarbonization. We started with hybrid electric vehicles before introducing all-electric vehicles in 2020. Last year Purolator rolled out a plan to decarbonize our Canadian network, pledging $1 billion to electrify 60 percent of the last-mile fleet by 2030. We recognize that customers and stakeholders value action on sustainability, which is why Purolator is committed to reducing its Scope 1 and Scope 2 emissions by 42 per cent, diverting 70 per cent of waste from landfill and reducing emissions from electricity use by 100 per cent this decade. This is all in pursuit of our mission to achieve net-zero by 2050.

Companies must begin their sustainability journey by planning for the nuts and bolts of this transition, from infrastructure to supply chains to technology needs. The shift must also align with overall corporate values and be well-communicated to all internal stakeholders. Keep in mind that meaningful change requires a long-term commitment, and managing such change needs a lot of care and patience while navigating through impacts on operations.

3. Prioritizing the employee experience

Workforce challenges will continue this year, aggravated further by cost pressures. Some roles will be particularly onerous: take freight transportation, for example, with the ongoing shortage of long-haul delivery drivers.

The result is that all companies will need to evaluate hiring practices and both build and promote a positive company culture so that they can attract and retain skilled employees. Competition in the logistics industry is fierce – we are seeing this not only in labor-intensive jobs in transportation and warehouses, but also with knowledge workers (especially in light of the automation technology being a greater focus as noted above).

"Companies are best to put in place technology to improve the employee experience and tools, resources and programs so they can develop and grow their skills. These are essential to attracting and retaining skilled professionals to support all sets of workers who must manage supply chains as well as the technology to move things forward."

Companies are best to put in place technology to improve the employee experience and tools, resources and programs so they can develop and grow their skills. These are essential to attracting and retaining skilled professionals to support all sets of workers who must manage supply chains as well as the technology to move things forward.

A focus on physical and mental health in the workplace is similarly essential, and there are plenty of great resources out there (like this one) from which to build strategies. Companies are in a unique position to meet these needs head-on by being willing to prioritize the well-being of their most valuable asset: their people. The benefits of doing so are many, both for a worker’s personal well-being and for their overall work performance. Engaged and motivated employees make better decisions, foster a culture of continuous learning, and promote creativity, resilience and innovation. It also cuts down the rising and expensive threats of burnout, absenteeism and turnover.

Across the industry, more is being expected of companies as places not only to earn a paycheck, but to find a sense of belonging and safety.

Opportunities ahead

I believe these trends in the logistics industry are the ones whose influence will be greatest here in 2024, and certainly looking ahead as well. While each possesses challenges, they also offer important opportunities.

Staying operationally flexible will be key in order to embrace change as it comes – rather than reacting in ways that compromise parts of the business, the brand or the culture. That will position companies well to meet the spiking demand for logistics and transportation assets in today’s climate.

For more information on Purolator International, please visit our website: https://www.purolatorinternational.com/