The global logistics industry has evolved into one of the world’s largest and most important industries. The revenues are projected to touch US$ 15.5 trillion by the year 2023, and the industry is expected to grow with a CAGR of 7.5% up till 2024. Its ever-growing significance could be attributed to the fact that it is the industry which keeps other industries afloat. In the absence of a well organized and efficient logistics and transportation industry, it would be borderline impossible for other industries to grow at the pace that they are currently growing at.
Logistics has tremendous utility and significance in some of the world’s leading industries such as e-commerce, automobiles, pharmaceuticals, chemicals, manufacturing, retail, telecommunication, financial services etc. Their orderly functioning is dependent on the effectiveness of logistical processes employed in their regular operations. The vitality of a functional and effective logistics industry for global trade activities is undeniable.
Current Problems in the Logistics Market and How Logistics Apps Could Solve Them
Trucks ferry about 71% of total freight in America and the trucking industry brought in 81.5% of the country’s total freight revenue in 2016. However, despite its overwhelming impact on the fortunes of the American economy, and its centrality in the global logistics market, the trucking industry is plagued with challenges.
- The ‘Empty Miles’ Problem
The greatest challenge the trucking industry faces is the ‘empty miles problem’. A truck that drives empty miles (sans any cargo) proves to be a costly affair for even the large freight companies. In the USA, for example, all the trucks in the country together travel about 50 billion empty miles annually. A truck’s empty mileage, on an average, could go up to 28% of its total mileage. When you factor in the approximate average operating cost of a truck at $1.38 per mile, the losses faced by the trucking industry become apparent.
- Repositioning of Truck
- Repositioning an empty truck is not inexpensive either. The industry spends about $16 billion every year for repositioning such trucks.
- Omnipresent Middlemen
Another major setback for trucking companies is the massive presence of middlemen in the industry. Shippers need to take the help of freight brokers for moving their freight. However, these middlemen charge hefty amounts as commission for their services.
- Lack of Transparency and Communication
The processes of the industry are largely opaque which does not bode well for the logistics market as a whole. There is an appalling lack of communication between shippers and trucking companies and that has led to the fragmentation of the industry.
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