Logistica Morning Future
Guiding Trend 3 April Apr 2019 0730 3 April 2019

The future of logistics is digital (and the environment will also thank us)

According to the World Economic Forum, between now and 2025 there are $ 1.5 trillion worth in value for logistics operators and an additional $ 2.4 trillion in benefits for the company following the digital transformation of the industry

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At the last edition of the World Economic Forum in Davos, digital transformation was one of the most discussed topics among economists, entrepreneurs and business consultants: it’s now a priority for companies in every sector. You either innovate or you will fail. And this is also, and above all, true for the logistics sector, which has taken on an increasingly central role in the supply chain and in the business models of companies. With e-mail, which (in part) retired "ordinary mail", and digital downloads, which have replaced physical products, one would have expected a crisis in the logistics industry. But this was not the case. Indeed: never as in this day and age are packages and parcels of any kind being shipped. Every single day as many as 85 million packages and documents are delivered worldwide. Increasing global demographic trends and the e-commerce boom have boosted the logistics sector. However, they cannot afford to rest easy and enjoy these fruits without innovating, as was warned at the World Economic Forum.

The logistics sector has introduced digital innovations at a slower pace than other industries. However, this slower digitization rate entails enormous risks, which, if ignored, could potentially be catastrophic even for the largest players in the sector. While other industries with close ties to logistics, such as retailing, have been revolutionized by digital technology, the chances of digital disruption for the logistics industry increase. The rise of e-commerce, not surprisingly, has led to new digital big players who control the "last mile" of the delivery market. And digital platforms are becoming increasingly important, allowing even small businesses to have a global reach and compete with industry giants.

With the logistics sector suffering from some very significant inefficiencies - for example, 50% of trucks empty out on the return journey after making a delivery - digital transformation can also bring important social and environmental benefits, increasing efficiency and reducing energy consumption and emissions.

According to the analysis of the World Economic Forum, between now and 2025 there are 1.5 trillion dollars of value at stake for logistics operators and an additional 2.4 trillion dollars of benefits for companies who embrace the digital transformation of the sector. In other words, experts write, industry stakeholders should take note and come together to prioritize digital transformation initiatives.

From now to 2025 there are $ 1.5 trillion in value for logistics operators and an additional $ 2.4 trillion in benefits for companies who embrace the digital transformation of the industry

According to the World Economic Forum, five topics will be at the center of the digital transformation for the logistics industry in the next decade: the use of Big Data; the creation of digital platforms that allow daily deliveries to every part of the world, increasingly requested by customers; new delivery capabilities through technologies such as digitalized, self-driving trucks and drones; the adoption of circular economic methods reducing consumption and emissions; sharing of logistics infrastructures.

The construction of sharing platforms on the Uber model, for example, could be the solution to avoid the so-called "empty trips". According to a study conducted by the principal startup in this sector, Chronotruck, one truck out of four, in Europe, travels without goods. The idea of Chronotruck is very simple: if a company wants to send a product at a lower cost than a traditional transporter, all they have to do is enter the site and find a driver who has planned a trip on a route close to that the company needs. This would save money and harmful emissions.

Not only. The displacement of goods now imposes the obligation of a high level of transparency and greater attention to a timely delivery, as well as the protection of loaded and transported goods. Digitizing travel through IoT (Internet of Things) technologies, it is possible to record a vast number of information concerning, for example, variations in temperature, humidity, pressure, altitude, but also information concerning movements, shocks and tampering. Just think of how this can be useful in the world of the agri-food industry, for example.

The use of IoT technologies, certified later by the use of the Blockchain, also allows access to the flow of information to be obtained with greater reliability, speed and security. Tracing each knot of the supply chain. The Blockchain makes it possible to share data on a shared database, which is difficult to attack from the outside. And through cloud systems, moreover, all systems can exchange information with each other, allowing efficient communication and collaboration, from the order to the final delivery, between all the partners involved in the process.

In short, the logistics warehouses will no longer be the same. And they will need specialized "new human resources" able to interact with these technologies. In this sense, technology should not be considered as a substitute for people, but as a complementary tool, an indispensable operational support to simplify and improve the work. A sector in rapid innovation, which will therefore be able to attract many young people, who have long remained at the gates of this sector precisely because of the sometimes excessive obsolescence of the processes and the mentality of the companies resistant to change.

Logistics contributes 13% of all emissions globally. In light of the COP21 agreement in Paris, it will be necessary for the parties involved to agree as soon as possible on the development and adoption of more environmentally friendly technologies

However, robotics and artificial intelligence are gaining more and more space in the world of deliveries, the famous "last mile". And not just with Amazon drones. Some companies are also studying the first self-driving trucks equipped with artificial intelligence, aimed at constantly improving and optimizing road transport conditions. And let’s not forget, as was reminded at the World Economic Forum, of the development of 3D printing applications, which could allow the creation of product parts or entire products on the spot and could therefore reduce the need for transport of some goods. Again, this is not a man-machine replacement: there will always be a need for someone capable of managing and monitoring these technologies.

In this context, however, the ability to use Big data will be decisive, an immeasurable resource also in this sector. Today, the use of data is not limited to gathering information in real time. The use of data helps the decision-making process, above all thanks to the possibility of interpreting the information and predicting possible future accidents and slowing down the operating process scenarios. By analyzing the data of thousands of shipments, it will be possible, for example, to optimize routes with the aim of reducing the cost of travel, increasing efficiency and customer satisfaction.

The World Economic Forum has admitted that the time and complexity required for these transformations in the market may vary from case to case. But there are two points that companies should prioritize: improving data collection and the ability to analyze it to gain insights that improve operational efficiency and enable the launch of new services. Logistics contributes 13% of all emissions globally. In light of the COP21 agreement in Paris, it will be necessary for the parties involved to agree as soon as possible on the development and adoption of more environmentally friendly technologies.

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