The Sweeping Effect of E-commerce

In fact, the impact of digital commerce and the subsequent challenge of omni-channel fulfillment cuts across every manufacturing and distribution market—and it’s putting increased pressure on all the major modes of transportation and the distribution center (DC) operations that keep well-managed supply chains fluid.

This month, the editorial staff of Logistics Management has developed several features to help put the sweeping effect of e-commerce into perspective. To lead things off (page 20), executive editor Patrick Burnson not only considers the more traditional “modal heavyweights” and their evolving role, but also looks at the domino effect e-commerce is having on commercial real estate in some of the geographic hotbeds of distribution.

“While most of the attention has been paid to the changes in parcel express management,” says Burnson, “it’s imperative to examine the mounting pressures being felt by the air, ocean and intermodal operations that are working to connect the expanding warehouse and DC network being built to support this explosive growth.”

As Burnson reports, the development of a sprawling network of “massive” facilities has been nothing less than revolutionary for commercial real estate development. Not only is it a bit of a “boom,” but all this new building is forcing the creation of fresh infrastructure in and out of these facilities in order for them to be effective.

“E-commerce has been the catalyst for 117 U.S. facilities spanning 1 million square feet or more over the past six years,” says Burnson. “And there are now 29 under construction across the 10 busiest markets in the U.S., all neatly tied to road, rail, air, and sea access that shippers need to make e-fulfillment work. When you add up the benefits, it’s truly extraordinary.”

Of course, no comprehensive look at the broad effects of e-commerce would be complete without a snapshot of the parcel express market—and group news editor Jeff Berman doesn’t disappoint. Starting on page 26, Berman gathers three top market analysts to offer parcel shippers a deep dive on pricing, volumes, services levels as well as fresh insight into how far Amazon has come in developing its own logistics network.

“It’s no surprise that e-commerce is driving volumes and earnings,” says Berman. “At the same time, shippers should be happy to see that service levels are on their way to hit record levels. Of course, shippers are going to pay more for these services, so it’s critical for them to better understand their freight and options.”

And while the transportation management adjustments are apparent outside the four walls, our “Annual Warehouse and DC Equipment Survey” reveals that the pressures of e-commerce fulfillment being felt inside are now fueling equipment and technology investment levels. Contributing editor Roberto Michel neatly puts the results of our annual study into context starting on page 46.

“The findings couldn’t be clearer,” says Michel. “Spending is up, quite noticeably in IT, while 54% of respondents told us they expect to be spending more on materials handling systems and related technology over the next two years—and all aimed to help overcome e-commerce pressures.”