Ti’s latest whitepaper looks ahead at 5 key logistics technology trends which are enabling smaller organizations to become increasingly competitive with large industry incumbents. The last decade saw the previously dominant market position of incumbents, based on investments in huge networks and asset bases, eroded by technology lowering entry barriers.
In 2020 we’ve reached an inflection point at which long term investments are now encumbering the incumbents, rather than empowering them.
Check out our 5 logistics technology trends to see how:
Trend 1: Cyber 4PLs
In the past, it was only the very large logistics operators that could manage global supply chains. They had the necessary asset base, geographic scope, workforce and custom technology platforms required to operate at scale.
But as technology has evolved logistics start-ups have developed solutions to rival the incumbent’s technological edge quickly and at much lower cost.
These more agile companies provide only digital services, and are unrestrained by assets and long term investments, are able to create customer centric solutions for new manufacturing and retail models faster and will win the contracts of the future.
So these are the entities we believe will thrive as the cyber 4PL’s.
They will be a combination of domain knowledge and market expertise, adaptable technology platforms, systems integration specialists, data analytics, advanced manufacturing capabilities and the ability to deliver these services to customers anywhere. A majority of their costs will be expended on people and expertise, with the major assets being intellectual property and software algorithms.
Cyber 4PLs will be the market leaders of the future, whether the incumbents can pivot their business models to become like cyber 4PLs, or whether 2030 will see a host of new brands at the top of the market is one of the key developments to watch for the next decade.
Trend 2: Digital Retail Studios
Store closures and the failure of various brands have been a consistent narrative in the news recently. But with high rents and long lease commitments allied to centralised distribution models, many chains are limited by what they can do and bricks and mortar stores are increasingly jeopardized.
The strongest and most successful brands (e.g. Zara, H&M, Uniqlo, etc.) have created operating models that are built on real-time data from the point of sale and strong feedback loops to manufacturing, ensuring that they only make what customers are buying now, rather than what they ‘may’ buy in six months. They have also developed omnichannel distribution models to meet customer needs. Even so, the future of their bricks and mortar stores is increasingly fragile.
One approach to remodeling bricks and mortar stores is that unused outlets be transformed into retail ‘studios’ where, apart from the essential structure, everything is digital. So internal and external walls are covered with ultra large screens that can be programmed to display anything. This would enable the store to be rented out by the hour, day, week, or month to fledgling retailers, or manufacturers looking to market test products. For larger units, half of the space could be the display/experience area and the other half operated as a small fulfilment hub for local delivery and returns, or a ‘click and collect’ point.
We believe that over the next 12 months examples of this blending of technology with new retailing models will be seen and expect this to trigger new logistics technology trends.
Trend 3 : Sharing will be key – leveraging assets, but use by the hour?
This approach to exploiting underused assets is a theme that will gain significant traction over the coming year. Technology is enabling numerous start-ups to develop new businesses that focus on leveraging under-utilized assets by managing them as shared resources that can be hired by the hour.
The idea of sharing or renting assets that used to be ‘owned’ is not new. Indeed the aerospace industry has been working with this kind of operating model for a couple of decades. Rolls Royce aero engines, GE and Pratt & Whitney, in effect, rent the concept of ‘an engine’ to airlines and swap them out for servicing or repair when necessary to avoid waylaying an entire airplane for such tasks. This set up required sophisticated monitoring and an advanced distribution model to move assets where they were needed and was initially only economical very high value assets, but new technology has made this possible for much lower value assets too.
This opens up new opportunities for LSPs to offer game changing services to new sectors eager to mitigate the effects of assets going offline.
Trend 4: Electric Vehicle supply chains
This may be a controversial statement… In ten years the main subassembly for vehicles in many markets (incl UK) will come from China. If this comes to pass, it reduces existing pan European automotive supply chains into irrelevance.
There is an assumption in some forums that while the transition to electric vehicles is inevitable, it will be a gradual evolution and that companies will have time to adapt. We do not believe this is the case. Not only has there been a realisation that the ICE has a limited future, but this has coincided with the explosion in environmental activism demonising the consumption of fossil fuels, alongside the self inflicted ‘dieselgate’ scandal, which has destroyed the market for diesel powered vehicles in many countries. Allied to this is the disinterest of many young people in western cities with the proposition for owning personal vehicles. Aside from the cost of acquisition and insurance, in urban areas, public transportation services or ‘ondemand’ taxi services are viable replacements.
As a result, many existing European automotive giants are considering who they are, what they do and who will be their customers in future. Established giants and new entrants alike will need to be asset light, operationally flexible, supported by powerful information systems to flourish in the market of the 2020s.
Trend 5: Voice controlled devices
Voice controlled devices are now prevalent in many homes and businesses across the globe. They are a combination of voice synthesis, machine learning and AI and form the vanguard for the dramatic evolution that is underway, changing how we interact with the digital devices, systems and services that control our lives.
Over the next year, we expect that an increasing number of voice controlled services will be available across the logistics technology landscape.
The technology to do all of this exists now, but the game changer is that the major cloud service platforms (AWS, Azure, etc.) are now making the systems that underpin ‘Alexa’ and others, available as services that can be integrated into standard operating applications. As a result, some companies have augmented their standard track and trace applications so that customers can call into them and ask for shipment data, rather than having to interact via a keyboard.
In the near future we expect to see systems which enable queries on unexpected supply chain events and which offer solutions to human operators.
Each of these logistics technology trends will reshape the logistics industry in the 2020s, but they all share a common theme, that the ability to compete on technology is the new market battleground, and old defenses like assets and physical networks are diminishing in importance all the time.
Source: Transport Intelligence, January 22, 2020
Author: Ken Lyon
To download your FREE copy of the Technology Trends in 2020 Whitepaper please CLICK HERE.