For shippers, price still matters, but flexibility is gaining fast

The perfect storm of supply chain disruptions, a booming economy and a significant shift toward e-commerce is pressuring smaller and midsized retail brands like never before. Getting product into the country, storing that product until it is purchased and then shipping that product to the end customer is now a web that is slowly unraveling from 20 different strands.

“The COVID environment has created all kinds of challenges and it has made supply chain a household term globally,” explained J. J. Schickel, CEO of Omni Logistics. “That is a big part of what everyone has seen — you have certain providers and they may have constrained bandwidth in their geography. The dynamic nature of the supply chain got incredibly difficult.”

Supply chains are, by nature, designed to be flexible, but they are also focused heavily on just-in-time logistics — the concept that items are shipped to arrive just ahead of when they are needed to lower costs and excess inventory. COVID changed all that. Schickel told Modern Shipper that businesses are now “treating supply chains differently” and that means looking for ways to move product, and more of it, closer to the end consumer.

“We’re seeing customers look for other options,” he said. “In the U.S. … it tends to be siloed service providers.”

That, Schickel said, no longer works well. Omni Logistics is a global third-party logistics provider operating in over 100 locations in 21 countries. The 20-year-old company has 4,500 global employees and generated over $2 billion in revenue last year.

Schickel said the company’s value proposition is its ability to leverage the aggregate spend of 6,000 customers and significant data collection to create “dynamic supply chains” for its customers.

“If you can’t get timely service on a steamship and you have to go air, you have to have the ability to get to the front of the line or you’re going to have to wait,” he explained, adding that Omni can do that in a market where “scale [has never] mattered more.”

Watch: Maritime’s impact on the supply chain

“The No. 1 theme with customers is that price matters but having access to all modes of transport and more flexibility is becoming more important,” Schickel said.

“It hasn’t been perfect for anyone, and the times have been challenging, and the No. 1 takeaway we have is if you want to have the best prices and have the control [you need access and control over the modes],” he added.

Schickel said logistics personnel are pushing “harder and harder to control every aspect of the move,” but even a small part of the supply chain — such as a container freight station inside a warehouse — can bog down the entire chain. “These things are complicated.”

Warehouse space is a concern, especially in Asia, where so many brands source product. China is a bit easier to find space, Schickel said, but Hong Kong and Taiwan remain challenging.

“It’s definitely there, but you’ve got to have scale to affect the outcomes,” he said. “In the U.S., we have facilities coming out of the ground in Los Angeles and Dallas.”

The other big ask from customers is data, but the 3PL space remains years away from achieving true visibility.

“I think we’ve made massive progress, relatively speaking, but I think you are still in the five- to 10-year range to when data is ubiquitous and incredibly important in how we move things,” Schickel said.

Predictive analytics remain at the beginning stages, but the collection of data overall is leading to positive business outcomes already.

“Some of our clients that are moving in on that data front and leaning into ESG are seeing 20% savings and there is no way that is happening without data,” Schickel said.

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For shippers, price still matters, but flexibility is gaining fast

E-commerce has driven home the importance of using multiple providers to move goods closer to the end consumer

Watch: Maritime’s impact on the supply chain

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Brian Straight