There has been a lot of speculation regarding the future of logistics after the Covid 19 pandemic finally passes, and the worldwide package shipper DHL International recently offered its own perspective on what it expects to take place.
The ecommerce boom is just beginning and is expected to outlast the Coronavirus lockdowns that fueled its growth this year, notes the company, a subsidiary of Deutsche Posts in the fifth annual edition of its Logistics Trend Radar forecast.
Global ecommerce continues to grow at around 20% every year and sales. It passed the $3 trillion mark in 2019, and is expected to exceed $4 trillion in sales this year.
“The technology-driven revolution has plenty more room to run. Ecommerce still accounts for only a sixth of total retail sales,” DHL states. “There are many sectors that are only beginning to embrace online commerce.”
The same experiences that consumers have had with ecommerce are carrying over to business transactions. In the next decade, business-to-business ecommerce may transform the procurement of industrial equipment, automotive spare parts, and many other goods, DHL predicts.
“The barriers that prevent companies from moving online are rapidly falling. And the emergence of a new generation of third-party vendor (3PV) solutions make it much easier for even small organizations to add sophisticated ecommerce offerings to their existing business models,” the company adds.
It cites the increasing prevalence of and familiarity with application programming interfaces
(APIs) in the logistics industry that allow organizations of all sizes to connect core supply chain IT platforms with virtually any other system. For example, an API can connect inventory and order management systems with Web shops, and with external fulfillment and logistics services.
Investing in Disruptive Tech
The fact that investors are choosing to put their money into innovative technologies disrupting the traditional logistics market shows growing confidence in this future. “Since 2012, venture capitalists have poured almost $30 billion into the logistics sector,” DHL says.
Today, around 3,000 startups are working to develop new products, services and business models in the logistics space. Innovation in supply chain management covers a broad range of technologies and activities, with four areas promising disruptive change that have been attracting particular attention and investment interest.
The first is in the conjunction of big data and advanced analytics. “Many supply chain organizations have put data analytics at the top of their strategic priorities, yet many still struggle to systematically and effectively make use of that data,” DHL observes.
This trend is driving interest in smart analytics techniques that are designed to help diagnose operational issues, optimize network planning and predict future scenarios.
The second area is Artificial Intelligence, which DHL characterizes as being critical to solving the most complex logistics operational challenges, like dynamic route optimization and precise capacity and demand prediction, as well as intelligent physical automation.
It also points to the logistics industry embracing the arrival of workflow automation software, commonly known as robotic process automation (RPA). The report says AI will continue to play a vital role in the development of RPA, which will allow these tools to address more complex, unstructured data formats and processes.
According to research by the logistics industry trade association MHI, 79% of supply chain professionals now expect AI to become a core competence in their organization by 2022, and 88% believe it will help to improve risk management and predictability in operations.
The third trend involves warehouse operators’ old friends, robotics and automation, technologies that are becoming increasingly commonplace thanks to lower costs, improved capabilities and the greater availability of products tailored to the unique needs of the industry.
Among the key innovations behind this trend are autonomous driving technologies for both indoor and outdoor mobile assets and new flexible picking and manipulation systems.
“Robots are becoming easier to integrate, too, powered by machine learning and powerful sensors that allow them to adapt rapidly to changing environments and work safely alongside logistics personnel,” according to DHL.
And trend No. 4 is The Internet of Things (IoT). IoT has already had a profound impact on the world. Half the earth’s population can already access the Internet through smartphones, and the rapid growth of IoT technologies has linked billions of objects. “A new generation of communications technologies promises to close the remaining connectivity gaps,” DHL says.
Among the innovations fueling this revolution are 5G data networks that offer higher speeds, vastly increased capacity, and greater flexibility for the connection of both people and things.
“The development of IoT and these next-generation wireless technologies will bring total visibility to supply chains, greatly increasing transparency and service quality for operators and customers,” DHL says.
Beyond these trends, DHL points to a host of other technologies showing great potential, but that have yet to see widespread use in logistics.
One is blockchain, the underlying protocol behind cryptocurrencies, which is believed to have potentially game-changing benefits for leaner, faster and more transparent and secure supply chains. DHL contends that cultural and technical hurdles need to be overcome for deployment in logistics.
Unmanned aerial vehicles (UAVs) and drone deliveries have seized the industry’s imagination. Although niche players are realizing this vision, regulatory frameworks may fail to keep up.
Self-driving vehicles herald immense leaps forward in the efficiency and safety of freight hauling, and so a number of players in the industry who are actively exploring this space. However, for many of these new technologies, their time has yet to come.
Logistics marketplaces that aggregate shipper demand and carrier supply across increasingly complex supply chain networks eventually will be adopted by warehouse operators, DHL predicts.
“Warehousing marketplaces offer flexible, on-demand warehouse space and enable seamless
quote comparison. Solutions could expand to include robotics and other in-warehouse logistics services.”
It notes the more than 19,000 warehouses in the U.S., and $35 billion in private capital deployed in warehouse construction in 2019, increase the need for digital platforms for utilization and management of warehousing and distribution centers.