The Future of Freight: How the Amazon effect, nearshoring and technology are transforming the industry

The next few years will bring further disruptions to a freight model that the industry spent decades optimizing. In 2024 and beyond, new consumer demands, technological advancements and broader changes like nearshoring will present new opportunities for logistics leaders from  first to final mile.

Today, consumers expect to be able to order just about everything online and have it delivered within a day or two. The Amazon effect is a simple concept, but it’s completely disrupted our freight chain model. It requires more fulfillment centers and a constant rebalancing of inventory further upstream in the supply chain, with more freight touch points and increased logistics complexity.

In response, more freight companies are turning to fulfillment centers, trailer pools and drop-and-hook equipment capabilities to keep drivers (and their goods) constantly moving. Although employment is high right now, driver shortages are a perennial problem. With a limited supply of drivers, customers can’t afford for those drivers to be waiting. Research conducted by the MIT Freight Lab shows these drivers typically wait four hours every day, only driving 6.5-7 of 11 working hours.

Having trailer pools loaded and ready to go can reduce driver inefficiencies and optimize limited dock doors and warehouse staff to keep fulfillment centers running smoothly. But these changes are just the start. Looking ahead, I see 2024 as a year of deeper conversations reimagining a more efficient, resilient and responsive supply chain. Three areas in particular stand out.

Nearshoring: With continued geopolitical instability around the world, more investments are happening in manufacturing in the U.S. and Mexico. Two-thirds of respondents to a survey by McKinsey & Company said they were obtaining more inputs from suppliers located closer to their production sites over the past 12 months — double the share of companies that reported using such nearshoring strategies last year. This nearshoring trend could expand even further into regionalized manufacturing, with both trends resulting in more demand for trucks, trailers and equipment domestically.

Electrification: Now that we’re seeing light-duty electric freight vehicles on the market, we expect further electrification or another anti-emissions technology for commercial trucks within the next five years. This innovation presents challenges in materials and engineering, as well as infrastructure. If today’s diesel tractors were replaced with much heavier electric trucks, one-third of the truckload sector would be too heavy for U.S. roads, according to the American Transportation Road Institute’s analysis of data in its 2023 Operational Costs of Trucking report. OEMs today recognize extreme lightweighting will become necessary to facilitate the transition and allow the supply chain to maintain similar levels of freight on trucks.

Electrification will also impact cold air management, currently powered by diesel fuel. If these systems were simply swapped out for an electric motor, it would make the vehicle heavier. Composite materials offer a game-changing solution as they are engineered to be lighter and more thermally efficient and could be the path to adopting electrification for transporting food and pharmaceuticals.

Autonomous freight: We expect adoption of autonomous trucking in the next 10 years, especially for long distances through middle America. The first major use could be in dedicated routes from “drop zones.” Imagine: an autonomous truck grabs a trailer from an AV drop zone on the West Coast and hauls it the very straight, rural thousand-mile trek east to the Midwest. Then, that autonomous truck drops the trailer at another AV landing pad, right off the highway, where a driver from Louisville, Kentucky drives up and picks up the trailer, then navigates the tricky urban interchanges and ultimately delivers the trailer to its final destination. These advancements could help ease driver shortage concerns, reduce inefficiencies in the network and eliminate empty miles.

As a convergence of simultaneous, yet distinct, macro trends unfolds, a unifying thread emerges: a profound shift in the movement of freight across North America. Nearshoring will disperse freight origins across diverse geographic locations, in stark contrast to current state where a significant portion of freight originates from port cities. The rise of electric vehicles is anticipated to concentrate freight flow around well-equipped infrastructure, particularly charging stations. Additionally, the emergence of autonomous vehicles promises fundamental alterations in freight transportation.

This transformative landscape necessitates an increased demand for not only more equipment, but also enhanced equipment. It is within this context that trailer pools have emerged, as well as new offerings like trailers as a service (TaaS). And it is why the equipment of tomorrow must be lighter, more thermally efficient and more intricately connected than ever before.

The challenges arising from these changes are complex, and no single company will be able to solve them alone. Solutions-focused collaboration requires a group effort of battery technology, robotics, material science and engineering experts. Organizations that address freight system inefficiency now will be the market leaders of tomorrow. Our supply chain, society and business climate will be stronger for it.