Eric Johnson, Senior Technology EditorMar 9, 2023, 12:53 PM EST
Articles reproduced by permission of Journal of Commerce.
Eric Johnson, Senior Technology Editor
Mar 9, 2023, 12:53 PM EST
Articles reproduced by permission of Journal of Commerce.
A survey of logistics professionals found companies budgeted an average of $3 million for digital projects in 2022. Photo credit: Travel mania / Shutterstock.com. More shippers say they are committed to logistics-based digital transformation strategies than the asset-based and non-asset-based service providers that support them, according to recent research from S&P Global Market Intelligence.
The study, Digital Transformation Projects Take Hold Among Shipping and Logistics Firms, was released in late February in conjunction with the Journal of Commerce’s TPMTech23 conference in Long Beach. It found that 70 percent of shippers who participated have a formal digital transformation strategy, compared with 64 percent of logistics service providers (LSPs) and 57 percent of carriers across modes.
The degree to which shippers have such a strategy in place is dependent on size, with 81 percent of shippers with at least $1 billion in revenue having a formal strategy, compared with 59 percent for those with less than $1 billion in revenue.
The report was based on an S&P Global Market Intelligence survey of 513 supply chain professionals from Oct. 20 to Nov. 16, with shippers accounting for approximately 60 percent of total respondents.
In terms of specific areas where shippers have already implemented solutions or are planning to do so, purchase order management and supply chain planning were at the top of the list, slightly ahead of real-time tracking.
“Shippers are showing healthy adoption of a wide variety of digital transformation projects,” Mark Fontecchio, research analyst at S&P Global Market Intelligence’s Technology, Media and Telecommunications (TMT) division and author of the report, wrote. “The most widely adopted ones are reflective of their needs — primarily back-office software applications related to downstream supply chain planning, as well as tracking technologies to see where their goods are and when they’ll reach their destination.”
The report found that shippers were turning more often to cloud and data storage providers to assist with their digital transformation plans, ahead of transportation and logistics software providers, broader supply chain management software vendors, or hardware/IoT vendors.
The study, Digital Transformation Projects Take Hold Among Shipping and Logistics Firms, was released in late February in conjunction with the Journal of Commerce’s TPMTech23 conference in Long Beach. It found that 70 percent of shippers who participated have a formal digital transformation strategy, compared with 64 percent of logistics service providers (LSPs) and 57 percent of carriers across modes.
The degree to which shippers have such a strategy in place is dependent on size, with 81 percent of shippers with at least $1 billion in revenue having a formal strategy, compared with 59 percent for those with less than $1 billion in revenue.
The report was based on an S&P Global Market Intelligence survey of 513 supply chain professionals from Oct. 20 to Nov. 16, with shippers accounting for approximately 60 percent of total respondents.
In terms of specific areas where shippers have already implemented solutions or are planning to do so, purchase order management and supply chain planning were at the top of the list, slightly ahead of real-time tracking.
“Shippers are showing healthy adoption of a wide variety of digital transformation projects,” Mark Fontecchio, research analyst at S&P Global Market Intelligence’s Technology, Media and Telecommunications (TMT) division and author of the report, wrote. “The most widely adopted ones are reflective of their needs — primarily back-office software applications related to downstream supply chain planning, as well as tracking technologies to see where their goods are and when they’ll reach their destination.”
The report found that shippers were turning more often to cloud and data storage providers to assist with their digital transformation plans, ahead of transportation and logistics software providers, broader supply chain management software vendors, or hardware/IoT vendors.
Lack of people, skills a hindrance Across all sectors — shippers, LSPs, and carriers — the top hindrance is a shortage of people and skills, with 40 percent of respondents citing that as their number one challenge preventing digital transformation. Other hurdles include a legacy mindset, insufficient proof of return on investment, and lack of executive support.
Meanwhile, more than one-third of very large respondents across all categories — those with $10 billion or more in revenue — cited sustainability as their top digital transformation driver.
“Likely these firms produce the highest volumes of greenhouse gas emissions and are looking to digital transformation to mitigate that,” Fontecchio wrote. “Shipping and logistics firms are ready to spend on digital transformation.”
He added that the median annual budget for digital transformation projects among shippers, carriers, and logistics service providers was $3 million in 2022, with that expected to increase 19 percent on average this year.
The Journal of Commerce is part of S&P Global Market Intelligence.
Meanwhile, more than one-third of very large respondents across all categories — those with $10 billion or more in revenue — cited sustainability as their top digital transformation driver.
“Likely these firms produce the highest volumes of greenhouse gas emissions and are looking to digital transformation to mitigate that,” Fontecchio wrote. “Shipping and logistics firms are ready to spend on digital transformation.”
He added that the median annual budget for digital transformation projects among shippers, carriers, and logistics service providers was $3 million in 2022, with that expected to increase 19 percent on average this year.
The Journal of Commerce is part of S&P Global Market Intelligence.
· Contact Eric Johnson at eric.johnson@spglobal.com and follow him on Twitter: @LogTechEric.