C.H. Robinson CEO Wiehoff takes a look at present and future trends in SMC3 keynote

In a wide-ranging speech, Wiehoff categorized some of the bigger picture things he sees happening in the industry, as well as a look at longer-term trends.

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When looking at the last three-to-four years in the logistics and freight transportation sectors, it is clear that there has been an “unusual and high level of activity” occurring.

That was a key theme of a keynote speech at this week’s held at The Greenbrier in White Sulphur Springs, West Virginia by CEO of global logistics services provider and freight forwarder . In a wide-ranging speech, Wiehoff categorized some of the bigger picture things he sees happening in the industry, as well as a look at longer-term trends.

For the latter, Wiehoff broke down the longer-term trends into a few different buckets: digitalization & technology, e-commerce, globalization, and regulations.

“If you look back ten or 15 years ago, globalization and technology have been important long-term topics,” he said. “One of the more important things has been that this digitalization in that we have been able to break everything down into digits….from our DNA to our maps to our location status for a truck. This digital era and the talk around digital transformation and digital disruption is a pretty big deal and is a big change and a lot of the things that are happening today are byproducts of that phenomena. It allows you to think about location services and mobile access differently and blockchain and analytics differently.”

Wiehoff said that when one thinks about the entire world and every shipment “as a bunch of 1’s and 0’s” and how it breaks things down, it changes how one perceives what the digital impact may be, with globalization and technology now having given way to more specific digitalization. E-commerce, he noted, often gets lumped into that, too.       

This in turn has helped lead to various opportunities, coupled with the pace of innovation and advances in technology such as cloud computing and blockchain, artificial intelligence, and autonomous vehicles, among others.

Addressing regulation, he said activity on that front has increased over the last ten years or so.  And he provided an apt analogy between basketball’s  (NBA legend Jerry West spoke at the Day One keynote) three-point shot and the beginning of deregulation in transportation, which each took effect in 1980, as things which could be viewed as major game changers but took time to mature.

Prior to transportation deregulation, Wiehoff said that one of the things the government was unhappy about was that the regulated sector saw a lot of corruption around operating authority and limited access, and regulated pricing, with deregulation still having a big impact on the industry today.

One byproduct of this is free market pricing, as well as opening up and speeding out and improving the game of logistics much like the game of basketball, he said.

“While I am a big believer that transportation deregulation and rule changes in the NBA both have been successful over a long period of time, it is also clear that the world is speeding up and does not work quite like it used to, in terms of how long these cycles work and how rules get made,” said Wiehoff. “What I find fascinating is why did it take 38 years for some of these rule changes to have the impact that they did? It takes decades to change, because you have inertia, capital investment….on top of that, though, is execution and iterations of metrics and data.”

A message that has been a big part of C.H. Robinson’s success that Wiehoff stressed is thinking about the different inflection points, or rule changes, how to innovate, and timing.

“I don’t think there are many things that will take 38 years to react to going forward, as these cycles are compressing, but…the relationship between innovation and change and rule making and timing and how all of these things fit together are equally as relevant as they have ever been in terms of figuring out our business models and our competitive approach and how we are all going to go about things,” he said.

A key part of supply chain business models for most 3PLs and related service providers has to do with e-commerce, which, Wiehoff said, requires new and independent types supply chains and are good for the 3PL sector.

“One of the reasons why we think e-commerce is really important for us is that this whole last mile extension is really the ‘final push’ of trying to turn most of retail into a pull business, rather than a push business…rather than stocking up in malls and instead going online and looking at what we want and pulling it towards us,” he said. “It really requires a whole other extension of the last mile that a lot of companies are engaged in and trying to own and control it.”

This comes with a whole host of strategic issues around things like working with the United States Postal Service, and less-than-truckload (LTL) and truckload operations.

“E-commerce already today is having a tremendous impact, in that it is changing shipment sizes and origins and destinations in just about everything around the mix of freight,” he said. “The LTL industry has experienced that in the last mile and what is going on with shipment sizes. While a lot of it is being enabled by digitalization, it is not a new concept. There have been previous attempts to get people to shop from home, with things like the Sears catalog and the Home Shopping Network, and other tools to try to get us to shop from home. If you think about home delivery, these new digital tools, the scale, and the capital allocation from Amazon alone will make things super interesting over the next decade. Today, supply chains are being impacted in all kinds of ways, with more inventory locations, speed, shipment size, and fluid origins and destinations. We see it impacting just about everything we do today.”   

What’s more, he explained there is a fair amount of rules and regulations related to e-commerce that has not received the same fanfare or visibility.

One of these things is the import duty exemption of up to $800, with C.H. Robinson seeing some customers shipping small parcels globally rather than consolidating and deconsolidating.

“It is rule changes like that, which don’t get a lot of press, that 20 years from now people will say it’s a really big deal about how it optimized supply chains,” he said. “Another one….is the recent ruling that states can now collect sales tax on e-commerce sales.”

As for globalization and its impact on logistics and the supply chain, Wiehoff said it is something C.H. Robinson has lived through over the last 20 years, with a focus on capital allocation and investments, acquisitions, and thinking about how C.H. Robinson has changed during that time to make those decisions in terms of global or enterprise ROI metrics, rather than just North America.

“We have clearly evolved over the last 20 years, and I think more and more of our industry has around thinking around their supply chain and business relating to global optimization,” he said. “We have the tools to do it today and the information is getting better all along. Similar to e-commerce, there are already some interesting relationships and connections between global and domestic supply chains that maybe are not as visible to everyone in the industry as you might imagine. But some of the stuff that is already happening is pretty interesting.”

This is confirmed with industry investments made over the last 20 years into ports, ships, canal expansion, airplanes, and airports, in the form of hundreds of billions of dollars in capital put into global infrastructure and global supply chains, which he said is very likely to carry on for the foreseeable future.

“We are building our future strategies around it, as they are important backdrops for how we think about our industry,” he said.

And as the supply chain becomes more global, more global rule making and regulations become more relevant and prevalent, he said.

“It has clearly come back on our radar more, in terms of trying to understand what sort of rulemaking is going on and how does that impact our thinking and innovation, and what the impact will be,” he noted. “If you look at domestic regulation, especially in the LTL and truckload space over the last decade, almost all of it has been under the ‘safety umbrella’ for things like HOS, CSA, ELD, and others. They have all been driven towards embracing digital capabilities and thinking about how we make things more efficient and safer and, until recently, it has been proven to be a good thing. We have been working through what the impact is going to be and how do you comply. From an industry standpoint, if you go back to the big ticket things from 38 years ago around access, operating authority, and pricing, there really have not been much in the LTL and truckload space around that. We are all still free to charge as much or as little as we feel compelled to do. There is still no change in the amount of new truckload carriers and access to the market. The capitalist part of capacity and pricing and the ability to [innovate] around these tools still feels pretty wide open.”

About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

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Article Topics

3PL · C.H. Robinson · E-commerce · ELD · globalization · HOS · LTL · Regulations · SMC3 · Trucking · All Topics
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