The business of transporting goods remains a hot topic in the city that boasts the area’s fourth-largest and fastest growing container port, and Wednesday’s third annual Savannah Logistics Lunch was an indicator of that interest.
And for good reason.
“Savannah is a well-positioned port with a unique balance of import and export trade, which presents an incredible opportunity for retailers to take advantage of the lowest possible costs,” said Bob Robers, senior director of industrial brokerage services and global supply chain solutions for Cushman and Wakefield, a worldwide commercial real estate company headquartered in Chicago.
“Savannah’s importance in the overall national supply chain is well-known,” he said. “With the Panama Canal expansion and Suez Canal traffic continuing to build, we’re already seeing the biggest ships in Savannah.
“Granted, they aren’t full capacity, but they will be full once the Savannah Harbor Expansion is complete. Those ships are definitely going to continue to influence the flow of goods”
Robers was one of four panelists taking part in the regionally focused discussion on logistics trends and industry disruptors at the event co-sponsored by Savannah law firm HunterMaclean and the Georgia Center of Innovation for Logistics at the Savannah International Trade & Convention Center on Hutchinson Island.
What are industry disruptors?
Before he introduced the panelists, moderator Colin McRae of HunterMaclean defined a disruptor as an innovation that so revolutionizes a technology or market, that it actually displaces the existing market or industry and produces something that is new, efficient and more worthwhile.
“Think the invention of the Blackberry PDA, Uber, drone technology and the emergence of autonomous vehicles,” he said.
Then there is Amazon, which is the billion-dollar gorilla of logistics disruptors, having literally revolutionized the buying public’s “get it now” philosophy.
Panelist Derek Banta, director of digital channel and mobile applications for UPS, described how his company’s Orion system uses a combination of machine learning and artificial intelligence to re-optimize a route that has been affected by weather, traffic or other unforeseen circumstances.
“This has allowed us to save approximately 4 miles a day, which doesn’t seem like a big deal until you multiply it by 80,000 drivers and realize that’s an annual savings of $400 million,” he said, adding that Orion is only one disruptor that is making a difference in an industry where time is money.
The e-commerce factor
Stephanie Crowe, senior director for global learning and development at Manhattan Associates, said it’s easy to see how much disruption is going on in the industry.
“All you really have to do is look at your own shopping and buying habits – from ordering groceries online to researching products before you buy,” she said. “But it’s not just retail.
“By 2020, the B2B (business-to-business) e-commerce industry is projected to be $1.3 trillion dollars in the U.S. alone. We’re also seeing more and more branded manufacturers and wholesalers going directly to the consumers.
“And, while retail is growing between 2-3 percent, the e-commerce portion is growing in double digits, from 15-20 percent. We’re also seeing that digital is driving physical store attractions and purchases.
“So that interaction is creating more business and more impact on the logistics side of the industry,” she said. “That flexibility has resulted in 62 percent of businesses saying that, within the next three years, they will invest in adding or improving their ‘buy anywhere, ship anywhere’ capability.
“That has logistics written all over it.”
Finding the future disruptors
While studying current disruptors is a great way to see how the logistics industry is changing, it’s also important to look at potential future disruptors, said Nagi Gebraeel, Georgia Power associate professor at Georgia Tech, whose research is focused on sensor-based predictive analytics, especially as it relates to asset management.
“Predictive analytics has tremendous potential in logistics,” he said.
“For example, one of the key supply chain aspects that is often overlooked is the inventory of spare parts.
“Consider the major airlines, for example. Some of them have up to a billion dollars in spare parts just sitting in warehouses. Many of these parts can become obsolete over time and have to be discarded.
“Using predictive analytics, it’s possible to move from a culture of ‘just in case’ to ‘just in time,’ which will save huge amounts of money.”
One way this can happen, he said, is the installation of sensors on everything from over-the-road trucks to airline engines that will help predict when a part may be needed and move that part to the proper location.
Savannah sitting pretty
Meanwhile, Savannah will continue to reap the benefits of its optimal location for trade, Robers said.
“Savannah is not the biggest of the MSAs, there’s not huge consumption, but it is a tremendous import location. If you employ the ‘four corners’ strategy that so many retail and distribution companies do, Savannah is going to play such a significant role in the Asian trade lane that its importance will continue to rise,” he said.
Rober’s case in point:
“Savannah has 15 million square feet of industrial inventory and our projections have that growing to 75 million square feet – not in 10 years, but in the next five to six years,” he said.
“We see a lot more investment coming to Savannah.”