SMEhorizon: Supply chain trends for Q4 2023, moving into 2024
Quincus has shared supply chain and logistics trends to watch out for in Asia Pacific (APAC) for Q4 2023, looking into 2024. Comprising insights from logistics and supply chain experts with decades of experience, Quincus looks to help businesses future-proof operations from supply chain disruptions by providing actionable forecasts and data.
“The rapid shifts in APAC’s logistics landscape require us to strategically remove operational inefficiencies and re-look at ESG concerns that are reshaping global business practices. These aren’t isolated incidents but a cohesive, region-wide move towards streamlined, intelligent, and responsible supply chain management,” shared Katherina Lacey, CPO & Co-Founder of Quincus.
“We’ve observed supply chains moving towards customized and sustainable solutions. It is no longer just about becoming faster or cheaper; it’s about being smarter and more responsible across the supply chain. This period moving into 2024 will be critical in shaping this trajectory, and we’re carefully observing these developments,” added Katherina.
According to Quincus, the key trends impacting supply chains and logistics in APAC include:
1: The Rise of Middle-Mile Logistics Will Help Bolster Margins – Middle-mile logistics refers to the transfer of goods from a distribution center to a fulfillment facility. In some cases, there may be several middle-mile delivery stages, making tracking important for consumers and logistics providers.
For supply chain and logistics players in APAC, there lies huge cost-saving potential in the middle-mile. Businesses will find it easy to automate, cut processes, and take complete operational control over the entire supply chain, providing opportunities to tighten supply chains and help businesses get ahead of the competition with competitive pricing and healthy margins.
The rise of middle-mile logistics will be most significant in industries dealing with large volumes of goods that require efficient distribution between various nodes in the supply chain, especially e-commerce, retail, manufacturing, and fast-moving consumer goods (FMCG).
Driven by e-commerce expansion, rapid urbanization, and a growing youth population, the changes would be most significant in developing Southeast Asian markets such as Indonesia, Thailand, Malaysia, and Vietnam, as well as Singapore, a major regional logistics hub that is playing a critical role in the facilitating and connecting of the world’s shipping lines to build resilient supply chains.
2: Omnichannel Logistics and Easing of Supply Bottlenecks – Omnichannel logistics is the synchronization and optimization of inventory, logistics, and distribution across sales channels to meet consumer demand. As global transaction volumes will foreseeably surge closer to the different shopping seasons in H2 2023, the lack of inventory visibility and disconnected supply chain affects timely and reliable delivery, in turn creating pressure for brands, as well as transportation and logistics companies. Omnichannel logistics aims to provide a consistent and unified customer experience across various channels while integrating both front-end and back-end operations.
End-to-end tracking and shipment visibility remain a challenge for logistics companies three years after the onset of the pandemic, with technology implementation challenges as one of the biggest barriers, according to a recent study by HERE Technologies.
In addition, commercial flights played an important role in supporting the global air freight market by providing last-mile support as part of an integrated logistics chain – providing additional capacity, network connectivity, speed, and flexibility to enhance efficiency and effectiveness. Overall, technology presents a significant opportunity for omnichannel logistics to streamline the fulfillment process and enhance customer satisfaction.
3: Multimodal Logistics on the Back of Resumption of International Travel – Multimodal logistics involves moving goods through various modes of transportation. In the face of global supply chain disruptions, the logistics industry is turning to digital solutions to address inefficiencies and vulnerabilities.
As a start, multi-modal logistics presents a viable, low-risk opportunity for integrating digital solutions. Optimizing multimodal operations grants comprehensive operational visibility, ensuring decisions are both informed and cost-effective while ensuring timely delivery within their designated periods.
The reopening of international travel, including in China from June 2023, helps solve a significant bottleneck, in turn, helping minimize congestion as the resumption of flights by both Chinese and international carriers on routes to and from China is set to vastly increase shipment options for shippers.
Asia is set to benefit from this alleviation of congestion as Asia’s export cycle reaches its trough in Q2 and looks to rebound in H2. Teleport, the air logistics arm of Malaysian carrier AirAsia, resumed 18 cargo routes into China earlier in March with a combination of passenger airlifts and freighters chartered from third parties and intends to increase to 40 routes by Q3 2023 from Malaysia, Thailand and Philippines.
4: Optimization, Improved ESG Scoring Reflecting Advances in AI – Route optimization is the process of finding the quickest and most cost-effective route between any two points. The lack of real-time tracking and manual route planning in traditional routing has led to inefficiencies and difficulties in adapting to last-minute contingencies.
To alleviate the pain points, optimized routes provide end-to-end ground-level visibility for better logistics and operation control while also reducing carbon footprint by reducing fuel consumption. Optimization and consolidation will be the way forward to achieving carbon neutrality.
Moreover, AI-driven innovation will also start seeing more use cases as consumer demand will continue to move in the direction of faster fulfillment, smaller order sizes, and more customization – all while demanding lower costs. This, in turn, will cause pressure on companies to use technology to optimize their operations.
“Overall, it’s an exciting year for our industry. To realize its success, it’s important for supply chains to bridge the gap between traditional shipment processes and the demands of modern consumers. With the integration of AI and a keen emphasis on sustainability, supply chains can promptly respond to market demands – making shipments faster and more reliable,” added Katherina.
Home to some of the world’s largest manufacturing and exporting economies, the logistics industry in APAC plays a vital role in the global supply chain network. The study by HERE Technologies also showed that firms are motivated to improve operational efficiency, eyeing to incorporate future technologies and seize opportunities to create a lasting competitive advantage.