Can GIS predict an economic recovery?

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Geospatial data is key to logistics, including for the huge increase in e-commerce we are experiencing following the 2020 COVID-19 shutdown.

The best customer service is if the customer doesn’t need to call you, doesn’t need to talk to you. It just works. — Jeff Bezos

This past year has been a boon for the e-commerce industry. It increased from 4% of retail sales a decade ago and pushed past 20% in 2020, reaching nearly $800 billion — a 32% jump in 10 years.

Online businesses climbed to all-time highs. A few examples stand out. Amazon’s stock increased in value 83% over the course of last year. That type of growth happens with startups and small-cap companies but is usually unheard of with large blue-chip stocks.

Along with Amazon’s growth last year, FedEx had $69 billion in annual sales. DoorDash, an e-commerce food delivery company, has a market valuation of $45 billion, making it larger than Domino’s Pizza, Texas Roadhouse and Yum! Brands combined; and Yum! Brands owns KFC, Pizza Hut and Taco Bell.

The e-commerce global trend in online sales is expected to reach $4.9 trillion in four years based on only 2.14 billion online shoppers. That is less than one-third of the world’s population. There is a lot more room to grow. This past year moved the trend several years forward.

Where are all those goods stored?

Photo: Navy Petty Officer 2nd Class Jasen Moreno-Garcia/U.S. Navy

Each consumer requires an average logistics space of 35 square feet. In the United States alone, there are more than nine billion square feet of warehouse space, and when online sales increase another 10% it will require 3 to 4 billion square feet more of space to keep up with demand.

The increase in freight driven by this trend is captured in the chart below published by the Federal Reserve, with data provided by the U.S. Department of Transportation. The blue line is increasing freight transportation services, while the red line indicates on-hand inventories.

As transportation increases and becomes more reliable — a reflection of the overall health of the logistics supply chain — the amount of on-hand inventory decreases, allowing sellers to free up space and save money, or offer greater variety knowing that stocks can readily be backfilled.

However, when inventories get too low, the system is subject to severe supply shocks, making prices more sensitive to the law of supply and demand. The grey-shaded areas on the chart are economic downturns officially recognized as recessions.

 If delivery took six-to-eight weeks these days, it would signal a crisis somewhere in the world.

21st-century logistics

Goods from global corporations now arrive at each customer’s doorstep. This is 21st-century logistics. Home delivery in two days or less is the expectation. The compression of time in this industry is astounding when compared to “the way things used to be.” The way things are compared to the way things used to be reminds me of hearing my grandparents talk about life before automobiles.

Back in my day, ordering from a catalog required calling the company and speaking to a representative. The call had to be made from a corded landline, and long-distance charges might apply. If ordering a gift for someone in the household, it was difficult to be clandestine with everyone nearby. The other option was to mail in an order form. Either way, delivery took a minimum of six to eight weeks, and sometimes more. If delivery took that long these days, it would signal a crisis somewhere in the world.

Screenshot: VesselFinder

Fighting an epidemic with GIS

Knowing where to pre-position supplies ahead of anticipated demand is a geospatial problem. Most think of this in terms of sales to customers and deliveries ahead of seasonal demands, but many countries in the world are facing this dilemma right now figuring out the best way to distribute COVID-19 vaccines. That challenge is taking place in your own community and has been a long-standing public health challenge.

Beginning in the mid-2000s, geospatial information systems (GIS) were brought in to help control outbreaks of the deadly Ebola virus. In 2014, I took a Penn State geospatial intelligence course. The final exam addressed the geospatial challenges of fighting an epidemic. Theoretically, it was difficult to get the required goods to the right place at the right time. But now, it’s not an exercise, and getting it right is not an option.

If you have received the COVID-19 vaccine, you can appreciate the pharmaceutical industry for developing vaccines in record time. However, getting the vaccines to everyone is a logistics challenge, and GIS is the unsung hero. Logistics is the life blood of empires — it is the game of kings and generals. With it, wars are won and commonwealths prosper; without it, empires crumble to dust.

How Geospatial Data Guides the Goods

Back to the traditional understanding of supply chains from seller to buyer. The needs of the buyer are simple: faster, better, cheaper. For the seller, it is much more complex, and considerations deal heavily with location.

• Where is the best place to have a distribution center?
• Is it more important to be close to a multi-modal transfer station, or to population centers, or are land prices more important?
• What about access to highways?
• What are the trade-offs in delivery times being further away from the population?
• Is the trade-off worth it for the cost of land and lower taxes?

Geospatial data can answer all of these questions, even going so far as to run “what-if” scenarios.

At the local level, transportation logistics schedules the most efficient routing to deliver more packages along the shortest path. This saves time and fuel, as shown in the image below using Maptitude software. Radiuses can also be calculated based on drive times instead of distances.

Caliper truck routing software can be used for planning deliveries that account for vehicle capacities, time windows, multiple depots and more. (Image: Caliper)

Navigation routing applications are dynamic, and pick-ups are automatically routed to drivers while out on delivery runs. Dynamic routing avoids delays such as accidents and road closures.

This same type of technology is used for emergency services to respond to a call. Ambulances, police and fire trucks all use dynamic routing to get to distress calls as soon as possible.

Global transportation logistics also need to account for international laws and regulations as cargo passes through each country. These regulations can be onerous, but the logistics industry has worked out the legalities to ensure a seamless, uninterrupted flow from ship to train to airplane to truck and to final delivery. It is symbolized by the universal 40-foot international shipping container standardized throughout the world.

At each facility, inventories are tracked. Each item passing through receives a time and location stamp. Estimated delivery times are sent via text message to your mobile device or email. When the item is out for delivery, it is possible to watch it on a map as the delivery truck makes its way towards your location. When the item is delivered to your doorstep, a picture of it is sent to your phone with an alert that the package was delivered.

Only a few days earlier, the manufacturer — perhaps on the other side of the world — placed the item in a box and taped it shut; even though you ordered it in your language, the order received by the manufacturer was in their language. The package started its journey to you at the next scheduled pickup, maybe within an hour of you placing the order. Shortly afterward, your order was on a ship or an airplane. As you went about your usual business, the incredibly efficient system of e-commerce sped your package around the world to deliver it to your doorstep.

Logistics has undergone a revolution built upon the most advanced technological innovations: robotics, artificial intelligence, machine learning, mobile devices, cloud computing, electronic payment processing, and a vast geospatial framework.

In fact, it is a continuously operating, seamless, geospatial mesh running on a global scale across all time zones that allows the industry to function. Every aspect of the logistics supply chain relies upon GIS in some way, from land, air and sea navigation from global location-based systems down to inside a warehouse for storage and retrieval of merchandise. Modern-day logistics is a geospatial industry connecting goods and services to consumers, putting the GIS in lo-gis-tics.

Image: U.S. DOT

Can GIS predict the future?

Regarding whether GIS can predict a market correction… I’ll not make a prediction, but the Transportation Services Index (TSI) for March is due to be released today, May 12. If it is down from February, it would mean two months of back-to-back decline. April’s numbers won’t come out until June. However, here is an indicator of where things currently stand. The ports of Long Beach and Los Angeles, CA, the largest shipping ports in the United States is five days behind schedule, which is down from over 10 days in January.

The TSI is a leading indicator of the economy. When 20% of sales are online in a consumer-based economy, the wellbeing of the commonwealth is measured one delivery at a time.

“Trade isn’t about goods. Trade is about information. Goods sit in the warehouse until information moves them.” — C. J. Cherr

William Tewelow

William Tewelow works for the Federal Aviation Administration. He is a graduate of the FAA management fellowship program. He served on special assignment to the U.S. Department of Transportation leading a national strategic geospatial initiative for the White House Open Data Partnership. He is a Geographic Information Systems Professional (GISP) and a speaker for the Maryland STEMnet Scholar program.

He was among the first in the nation to earn a Geospatial Specialist Certification from the U.S. Department of Labor while working at NASA Stennis Space Center. He has degrees in Geographic Information Technology, Intelligence Studies, and is completing a masters degree in Organizational Management.

William is a 23 year veteran for the U.S. Navy serving as a Geospatial Specialist, Imagery Intelligence Specialist, a Naval Aviator, a Meteorologist, and a Tactical Oceanographer. He is married, enjoys writing and traveling.

His favorite quote is, “A man’s mind changed by a new idea can never go back to its original dimension.” — Oliver Wendell Holmes