Can LEO satellites transform how global supply chains work?

"We see an ever-increasing need for digital solutions – not just since the pandemic, but surely further accelerated by it," stated Dagmar Joswig, Vice President of Digitalisation and Corporate IT Office at DHL Group, in a DHL blog.

Many industry experts believe that digitalisation is essential for creating successful, visible and transparent supply chains. Modern supply chain models utilise advanced transport and warehouse management systems and IoT-enabled smart sensors to track goods from raw materials to delivery. However, a significant challenge is connectivity. According to a Portugal-based aviation and aerospace component manufacturing company - Connected, 80% of the Earth's surface still lacks cellular coverage, leading to visibility gaps.

Connected data also reveals that most of the world lacks cellular coverage, with 450 million people worldwide lacking mobile connectivity. An International Telecommunication Union (ITU) report shows that internet penetration is 87% in developed nations, 47% in developing countries, and only 19% in the least developed countries. These numbers clearly indicate the dire need for an infrastructure that enables a digital, visible and transparent supply chain on a global scale.

One way to address this challenge is by building a physical infrastructure. However, geographical challenges and the high cost of laying fibre optic cables make it difficult to provide widespread broadband access. On the other hand, LEO satellites can offer an alternative solution by providing global coverage and low-latency internet.

Unlike traditional methods, LEO satellites do not require extensive ground infrastructure. In fact, they are portable and self-assembled terminals that are enough to connect to the internet. This makes LEO technology a viable solution to bridge the digital divide, ensure connectivity in remote areas, and maybe even enable bluetooth connections between earth and space for enhanced supply chain visibility.

What are LEO satellites?
According to National Aeronautics and Space Administration (NASA), “Low Earth orbit (LEO) encompasses Earth-centered orbits with an altitude of 1,200 miles (2,000 km) or less. This orbit is considered near enough to Earth for convenient transportation, communication, observation, and resupply. It also is the area where the International Space Station currently orbits and where many proposed future platforms will be located.”

As compared to traditional geostationary (GEO) satellites, LEO satellites are positioned much closer to Earth. As a result, it allows LEO satellites to offer low latency (under 30 milliseconds) and high throughput (approximately 100 Mbps), making them ideal for real-time data transmission applications such as logistics, transportation and communication.

LEO satellites communicate with land-based IoT devices directly or through gateways, using smaller antennas and requiring less power. So, these satellites are cheaper and quicker to deploy than GEO satellites. Moreover, these satellite's reliability is enhanced by being positioned in regions with less space debris. However, LEO connections require a direct line of sight to function, which can sometimes be a limitation.

Some of the most recent examples of LEO satellites in action include SpaceX's Starlink, which is one of the most prominent LEO satellite networks. Starlink offers broadband internet to remote and underserved areas globally. Another large-scale LEO satellite constellation in development, is Amazon's Project Kuiper, which aims to provide affordable broadband services to underserved communities worldwide. Amazon's first satellites are expected to be launched in 2024, and the goal is to create a network of 3,236 satellites. However, there are updates saying the company is postponing this plan to next year.

On the other hand, OneWeb, which is a subsidiary of the London-based Eutelsat Group, and provides broadband satellite Internet services in low Earth orbit, is currently working in collaboration with governments and businesses, to bridge the digital divide by offering internet connectivity in remote locations like Alaska and even parts of the Arctic, by using LEO technology. Moreover, this technology is crucial for enabling better logistics and supply chain management in difficult-to-access regions.

ISRO launched the Earth Observation Satellite EOS-08 on August 16, 2024, via the SSLV-D3 rocket. Built on the Microsat/IMS-1 bus, EOS-08 carries payloads for surveillance, disaster monitoring, environmental analysis, and UV monitoring. Operating in a Low Earth Orbit at 475 km, the satellite features advanced technologies like an Integrated Avionics system, phased array antenna, and flexible solar panels, marking significant innovations in satellite design and indigenization efforts.

Impact on logistics and supply chain
Numerous studies show that these satellites can significantly impact logistics by improving visibility and enabling stakeholders to track everything along their supply chains. As a result of these technologies, companies can now monitor every good in transit in real time. By connecting vessels across high seas where traditional networks fail to connect, LEO satellites can not only improve security of those cargo ships but also aid in its efficiency and operational transparency.

Recent advancements show that LEO satellites can also contribute to the effective operation of autonomous vehicles by enabling real-time data communication between vehicles and control centres. For instance, organisations are already using LEO connectivity to test autonomous shipping routes in Norway, because of its seamless communication and navigation features.

SpaceX's Starlink, established in 2019, is leading the market. As of July 2024, it had deployed over 6,200 LEO satellites and served 2.6 million customers. Amazon's Project Kuiper aims to compete by launching over 3,200 LEO satellites by 2029.

BCG predicts the global satellite communications service market will reach $40 billion by 2030, growing at around 7% annually. Much of this growth will be driven by LEO technology. LEO satellites are expected to account for 40% of the market by 2030 due to their superior service quality and coverage in areas lacking terrestrial connectivity.

LEO technology enhances visibility and tracking throughout the supply chain, enabling better transportation and goods movement management, especially in regions where traditional infrastructure is unavailable.

By enabling real-time data and IoT integration, LEO technology significantly improves operational efficiency and connectivity in sectors like oil and gas, maritime, and logistics, making remote operations more secure and efficient. These advancements have far-reaching benefits for logistics and supply chains, supporting economic and technological growth.

Low Earth Orbit (LEO) Overview

• LEO Economy: Expanding with services like satellite internet, remote sensing, and space-based research, driven by public-private partnerships.
• Commercialisation: Companies such as SpaceX, Amazon’s Project Kuiper, and OneWeb are launching large satellite constellations for telecommunications and global connectivity.
• LEO Manufacturing: Already happening with microgravity manufacturing and satellite assembly in space, enhancing production capabilities.
• Cargo Transport Potential: LEO opens possibilities for faster and efficient transport, and connected as well as transparent supply-chain models.
• Key Players: SpaceX, Amazon, OneWeb, Lockheed Martin, and Airbus.
• Privatisation: NASA shifts focus to deep space, while private companies take lead in developing sustainable LEO ventures.

Overcoming challenges from space
Because of LEO satellites, logistics players can enjoy uninterrupted coverage across the globe, whether on land or sea, without having to face the complexities of roaming arrangements.

These satellites are crucial for the aviation and maritime industries, offering essential support for communication and navigation. It enables real-time tracking of fleet and cargo, improves global coverage, enhances efficiency, and enhances security.

"The day when satellite connectivity overtakes cellular is still yet to come, but we're already seeing the transformative effects of 'hybrid' networks that combine cellular and satellite – and these solutions will become more prominent in logistics operations," stated Jordan Racek, Senior Manager BD & Innovation, DHL Smart Solutions IoT in a company blog post.

LEOs enable companies to track assets in remote areas, ensuring better visibility in the supply chain and allowing operations to continue even when land-based communications are unavailable. LEOs' low latency is crucial for implementing AI solutions and monitoring the safety of personnel in challenging locations. Improved connectivity also enhances the Internet of Things capabilities, enabling quick detection and recovery of assets.

Furthermore, LEO satellites can play a vital role in the aviation industry's sustainability efforts by reducing CO2 emissions and enhancing fuel efficiency. Advanced satellite communication systems enable real-time aircraft performance monitoring, allowing for optimised flight paths that minimise fuel consumption. The European Space Agency (ESA) reports that these systems can reduce aircraft CO2 emissions by up to 10 million tonnes annually, significantly contributing to a more sustainable aviation sector.