The Vital Role Played by Transport in Supply Chain

Vital Role

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“Shippers, carriers, wholesale vendors, and others in the supply chain are concerned about the performance of the freight logistics system because highway, rail, and port operations affect their costs and profits,” state experts in the report  Measuring the Transportation System from a Supply Chain Perspective, highlighting the vital role and importance of transport to a host of industries.

Indeed, economic growth and competitiveness cannot be achieved without efficient transportation, since it enables logistics to bring its advantages into full play.

What are some of the most important roles played by transport, and why should it be given top priority for all businesses relying on this important stage of supply?

An Increasing Demand For Goods And Services

The Internet age has increased the demand for goods and services beyond a company’s immediate vicinity. As stated by Select USA, in America, business logistics costs reached $1.6 trillion in 2018 (8 percent of GDP that year) and in this same year, foreign direct investment in the industry totaled $1.5 billion.

This means that companies are satisfying client demands through various transport modes – including trucks, maritime transport, freight rail, and air and express delivery. They are increasingly turning to firms that can offer time-sensitive, expedited services for everything from high-end items to small parcels.

Various Modes Of Transport Working Together

Often, companies require more than one mode of transport to get their goods to the end client. Thus, they may rely on both truck and railways services, as well as air transport in the case of remote destinations or urgency. Freight transport service providers need to carry out their duties responsibly, meticulously, and in a cost-efficient manner.

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Thus, maintenance processes are extremely sophisticated, with solutions such as the use of the engine borescope – an optical device consisting of a tube with an eyepiece on one end and a camera on the other. Its aim is to enable efficient detection of issues, as well as the capture of images that indicate the extent of breakage/need for maintenance.

Borescopes are just one tool used in engine maintenance to ensure goods arrive safely and in a timely fashion. This and other technologies, coupled with smart features such as automatic data compilation and analysis, keep transport services clued up on any issue that arises, so it can be dealt with speedily.

Growth Predicted For Global Freight

As crucial as the transport currently is in the supply chain, its importance is only predicted to grow further beyond its already vital role. Experts predict that freight growth will reach 100% by 2030 owing to two factors: the rise of the international middle class and the interest in modernizing supply chain systems.

In the U.S., around 9% of the gross domestic product is spent on supply chains, but this number already stands at 20% in countries like China, and as freight systems grow in sophistication and enhanced organization, the U.S. could potentially head for a similar expenditure.

Freight movement plays a vital role and is a key component of the supply chain on a global level. To stay competitive, issues such as freight corridor planning and taking an holistic view of freight planning can improve competitiveness. Organization between the public and private sectors is also key to improve rapidity and efficiency.

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Currently, automated data obtention and analysis, as well as sophisticated tools are improving this, but there is always room for improved policy to enhance movement, boost safety and security, and reduce costs.

Vital role article and permission to publish here provided by Amy Fletcher. Originally written for Supply Chain Game Changer and published on August 14, 2020.
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