Logistics companies are facing an era of unprecedented changes as digitization takes hold and customer expectations evolve. New logistics technologies are enabling greater efficiency and more collaborative operating models; they’re also changing the marketplace in ways that are only just beginning to become apparent.
With an estimate of US$4.6 trillion of revenues at stake, companies cannot simply sit back and watch, but they need to adapt to changes proactively. There are many application such vin decoder that will companies be more efficient.
Companies with this industry must start closer attention to some key disrupting factors such as: changing of customer expectations, technological breakthrough and new entrants to the industry.
The customers (B2B, B2C) expectation are everyday higher and they demand for faster shipments, more flexibility and more transparency at the lower price.
Technology is affecting the way logistics companies operate. Technological Fitness will be a prerequisite for success and the winners will be those that fully exploit the whole range of new logistics technologies from cloud logistics software, data analytics to process automation. Companies that don’t have this vision will be on risk of obsolescence and therefor defining a clear technological strategy that is integrated into the company business flow will be critical.
There are great opportunities for improvement of performance and better customer service with a good use of data analytics. Companies that take the advantages of logistics technologies such as cloud logistics software will be in better position to significantly improve forecasting to scale operations up or down and plan routes. Also, adding machine learning and artificial intelligence to data analytics can deliver truly dynamic routing.
Cloud technology makes possible new business models such as virtual freight forwarding. It also provides scalability and a standardize process across the whole organization, which is especially important for Logistics Service Providers and carrier that have grown through acquisitions and rely on patchwork of legacy systems.
As shown by recent studies the percentage of transportation and logistics companies that rate them self as technically advanced is only a 28%, while some of the industry customers such as automotive companies and electronic companies see them much more advance in a 41% to 45% respectively. The lack of a technology culture and training is thus the biggest challenge for transportation and logistics companies. This companies are in line with other industries in planning to invest 5% of their revenues per annum until 2020. The next few years will be critical, those that don’t start soon enough risk being left behind permanently.
Automation is replacing workforce as a critical element of the new logistics operating model, allowing companies to offer better services, increase productivity and reduce operational expenses. Some of the industry’s most labor intense process are about to be fully or partially automated from warehousing to last mile delivery. A lot of warehousing automation is already implemented and its level of sophistication is increasing. From automated weight and dimensions systems to automated loading and unloading systems are already implemented. Also for package delivery we are starting to see a lot of automation to come using autonomous vehicles and drones. Having a good warehouse management system is a must in the industry
Many logistics startups are driving new business models with the use of new logistics technologies such as cloud logistics software. More of this startup are asset light parts of the value chain; for example, virtual freight forwarders. Many of these new competitors in freight forwarding offer a more agile price, they also provide quick quotes and have an increasingly price transparency. All this is achieved by linking via API to many carriers and presenting to customers the negotiated rates for each of the carriers so they can compare by themselves.
Last-mile delivery has also experience a wave of start-ups that are using technology to tap into the ‘sharing economy’ by matching available capacity with delivery needs. For example, Uber has already stablished a UberCARGO van service in Hong Kong, and UberRUSH is offering express services by targeting online retailers.
Traditional logistics companies need to explore new opportunities, a field where startups have clear advantage due to its freedom from traditional process and hierarchical structures. Yet, investments by traditional logistics service providers in these startups only count for the 6% of the overall venture capital flow.
But, startups are not the only ones that can potentially shake up the industry. Current customer may also become new entrants. Amazon is the more obvious example since it is looking to expand its internal warehousing expertise as well as develop its own delivery capabilities. The company has also leased 20 aircrafts to handle more of its own shipment and it is running a “Prime Air” 30 minutes’ delivery using drones.
We hope this article will help you evaluate the tendencies and future development that will affect the logistics industry and that it allows you to develop a strategy to ensure profitability on this this time of strong change.
PwC. “Shifting patterns: The future of the logistics industry.” PwC. N.p., n.d. Web. Nov 2016.