The logistics industry is often regarded as inefficient, partly due to the slow introduction and adoption of technological innovations compared to other business sectors. However, in the past few years, the rate of digitalisation within the logistics industry has started to speed up.
The increase in innovation within logistics is being propelled to some extent by new digital business models such as digital freight forwarders and software as a service (SaaS) providers. Various digital start-ups have also attracted considerable funding, and some have been acquired by established players in the industry.
Most digital start-ups primarily focus on digitalising and automating the underlying processes which create errors and inefficiencies in the industry. The current fast-paced growth of digital entrants has led to increases in asset visibility, price transparency, asset utilisation, routing efficiency and decreases in the costly manual processes involved in shipping or storing goods.
However, the core infrastructure technology – such as roads and vehicles – which underpins logistics processes has been somewhat neglected in comparison by the digital transformation. This could be due to the larger initial investment needed, longer-term gains, and additional technical expertise associated with infrastructure changes. Due to the link to city infrastructure and legislation, innovation is usually backed by government funding.
There have been some important initiatives and innovations targeting the infrastructure within logistics, primarily within the fields of IoT, delivery drones, warehouse robots and conveyor belt systems, autonomous and electric vehicles. Although lower cost technologies, such as IoT devices and automated warehouse conveyor belts are being increasingly adopted, many of the other technologies mentioned need to be improved further to increase adoption within the industry or are simply not yet ready for implementation.
An infrastructure innovation which has fallen behind is smart roads. Smart roads introduce numerous possibilities for road transport which could benefit general drivers, public transport and logistics services. They are one of the key foundational changes which present the possibility for large gains in efficiency and safety, as well as the advancement of other technologies, namely autonomous and electric vehicles.
Infrastructure changes in the logistics industry are under way, however, not at the same rate or driven by the same level of private investment as digital process improvements.
If we compared the logistics industry to a computer, it can be said that most digital start-ups are upgrading the software but continue to run on the same out-dated hardware. Without smarter physical assets, it will be difficult to improve the industry and reach new levels of efficiency.
Source: Transport Intelligence, December 9, 2019
Author: Sergio Korchoff
Most logistics markets are being forced to adapt to technology and visibility demands from customers. Ti’s Global Freight Forwarding Update 2019/2020 examines advances in supply chain technologies, providing a comprehensive, up-to-date picture of the Global Freight Forwarding digital landscape. Similarly, Ti’s European Road Freight Transport Update 2019/2020 examines the new digital entrants, analysing the effects they are having upon the market.
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)