How these trends are shaping up the future of logistics
The rapidly changing pace of the world in the 21st century has not only brought the increasing dependency on technology but also how it is being used to create futuristic logistical solutions. According to the fifth edition of the DHL Logistics Trends Radar report, there is a visible rise in the number of investors investing in logistics technologies that are driven by elements such as data analytics, artificial intelligence, robotics and automation and the internet of things (IOT). While most of them are self-explanatory, their use in the logistical framework for companies is vast. It is no surprise then that 37 of 80 CFOs in one PwC survey have said that automation will be at the forefront of their post-Covid-19 strategy.
It is not only technology advancement but also globalisation walking hand-in-hand with logistics to bring about a significant change in supply chain and distribution networks stretching across continents. In the e-commerce sector, cross-border transactions are said to be increasing at twice the rate as their domestic counterparts, according to the study. However, it also sounds a word of caution saying that supply chains need to take into account political changes like the UK's departure from the European Union and the escalating trade war between the US and China.
The Covid-19 effect
As if the politics wasn’t enough, Covid-19 brought on an even bigger challenge and accelerated the need for better approaches in logistics, faster than they expected. While testing the efficiency of supply chains, the fifth edition of the DHL Logistics Trend Radar points out that the pandemic has also made companies use technology like never before. From the use of smart glasses to Augmented Reality (AR) solutions for on-site repair requirements to 3D technology helping people make PPE kits to solve shortages. The increased risk of virus transmission also gave rise to contactless operations as robotics and automation not only stepped up to load and unload containers but also to substitute sick workers.
The pandemic saw a reactionary approach from supply chains and to avoid problems in the future, the study suggests a proactive approach with digital tools and strategies. However, the need for a resilient and agile approach also means that there will be a rise in the demand for skilled supply chain personnel to carry it out. Using multisourcing strategies to use under-tapped, alternate geographic locations could help reduce the pressure of obtaining material through traditional methods.
It is also the very same reason why the report expects more organisations to adopt a China Plus One strategy, with manufacturing capacities being supported by alternative sources and facilities elsewhere.
Interestingly, according to the study, 84 percent of the businesses in China do not want to move their manufacturing out of the country and 74 percent that source from it will continue to do so. It is also the very same reason why the report expects more organisations to adopt a China Plus One strategy, with manufacturing capacities being supported by alternative sources and facilities elsewhere. With the future in mind, the report has been divided into two important areas — social and business and technology to touch upon pre-existing and future trends that will shape the industry.
Autonomous robots by Locus increase picking productivity multiple times in warehouses and fulfilment centres
Automation and marketplaces
According to the report, the World Economic Forum expects automation to replace 75 million jobs globally by 2022 yet also generate 133 million new ones. There is no doubt then that with automation already in progress, human-machine collaboration will be essential in the future of working but it warns that companies need to take a human-centred approach. While the robots will carry out the tasks in the supply chain, the collaborative effort will act as a buffer in the process. This also shapes the future of work, which involves an adaptive need for on-demand staff and that is highlighted in the fresh chain boom during Covid-19. While it was already present, the need for meal kits, ordering of groceries and medicines has seen exponential growth and will continue post-pandemic.
The study says supply chain experts will have to build adaptive strategies that include bundled refrigerated orders and automated subscriptions to optimize operations not only locally but also globally through cold-chain networks. To carry out these processes, logistics marketplaces including freight forwarding, warehouse and last-mile with specific services can make it easier. From cost-effective methods to integrating seamless digital solutions into their processes and adopting easier multi-modal transport options while looking at mass personalisation can also help create a supplemental business model with a market-for-one approach. The study sees platforms which are situation-dynamic and can offer different modes of transport that will be the most successful.
Picavi Smart Glasses
Cybersecurity and sustainability
Being the second most targeted industry by cyber attacks in 2019, the next-gen technology is easily available for the logistics industry but organisations also need to see how they can be used to provide security solutions like protecting shipments, privacy, authenticity and people. Intelligent physical security with smart devices that can detect any unwanted activity like unsanctioned stops to shipping container conditions in the supply chain is the way forward. AI-powered autonomous surveillance systems which can help record any disturbances in the delivery of goods, biometric screenings to detect intruders are going to be the future of logistics, according to the study. Pre-existing omni-channel logistics has now developed into version 2.0 and is likely going to take the lead.
Interestingly, it is not just about the existence of a business across channels but also cross-channel quality and finally personalising customer experiences regardless of the channel that is important. However, the study states that for this method to be possible, it is important to break down the different parts while also making it easier to share data internally and with partners and service providers.
As the logistics chain is evolving, the need for sustainability has also given rise to the need for rethinking packaging especially because most of it is multi-layered to protect the product.. The study states that the global packaging industry alone is near a whopping $1trillion making it an important part of the industry. An easier way to address sustainable packaging is by using multi-trip packaging, which is already being used but sees a bright future as return rates in e-commerce are as much as 30 percent.
Interestingly, automation will be beneficial in rethinking packaging as processes will be streamlined to use it efficiently. It hints at an encouraging partnership between companies helping with automation and those with packaging. However, sustainability isn’t limited to packaging alone. A 2020 report by the World Economic Forum predicts that by 2030 the growth of e-commerce alone will result in 36 percent more delivery vehicles which will generate an additional 32 percent of carbon emissions. Apart from transportation, it includes inventory, packaging and paperwork, which leads to better waste management. The study also suggests that zero-emission logistics fleets will be the most impactful solution. Sustainable material can also be used to build warehouses with better insulation and IoT devices to manage their utilities and more, thus reducing operational costs.
Shared and silver economy
If there is one trend the pandemic has highlighted, it is servitization. Instead of purchasing expensive equipment, companies can simply opt to pay for equipment only when they are in use, usually per hour or number of items picked up. The onus will also be on them to figure out the best way for service billing models and tools and to adopt software which can simplify the bills to manage and analyse recurring revenue and payments, the study says. Interestingly, blockchain-based smart contracts will play an important part as they can simply perform the steps through pre-agreed conditions. If there is one aspect that recurs, it is that the post-Covid-19 world is going to be looking at companies partnering with each other to enhance user experience by keeping everything at their fingertips.
Intelligent physical security with smart devices that can detect any unwanted activity like unsanctioned stops to shipping container conditions in the supply chain is the way forward
Using the sharing economy model, the study suggests it will be instrumental to help rethink not only transportation and fulfilment but also labour models. This further lays emphasis on the need for on-demand warehousing through servitization. It gives rise to a shared workforce with on-demand staffing that lets personnel work from warehouses close to them, giving them the desired flexibility. Catering to the elderly customers not only during deliveries but also with job opportunities is a prospective market which will grow and it is rightly called the silver economy, according to the study. This could work perfectly well especially because there is an increasing demand for health assistance at home. Reducing the need for regular tasks with technology, while also using their experience to carry out the operations can help address labour shortage. Exploring worker support packages along with part-time employment could not only work in favour of the company but also the employees.
Interestingly, even though cargo containers have been there for a long time, their role in the supply chain is evolving. Smart containerisation is evolving to become an upcoming trend, which sees containers in new formats to help with volume flexibility, time and cost pressures. The study suggests that using connected containers with sensors and next-gen wireless networks can help providers understand why delays occur and also help handlers intervene and reduce the impacts in the supply chain. Collapsible containers, on the other hand, could help reduce costs as the need for their storage has been eliminated. It will also help a cargo truck or ship transport four times as many containers, and thus reduce carbon emissions in the process, according to the Trends report.
SpaceX’s Cargo Dragon
Space and supergrid logistics
The future of logistics doesn’t only lie on the earth, as advancements in space research are being made, there will be an increasing need for space logistics as private players are investing in exploration missions. While the logistics will essentially remain the same, there will be various constraints as they will have to be transported in extreme conditions. The supply chain will not only have to be efficient but also to be sustainable while considering how products can be packaged to survive zero-gravity and high radiation.
The spotlight is on satellite logistics because there are going to be thousands of satellites launched in the next few years, the other is supplying cargo which could grow, according to the report. In 2019, NASA awarded $7 billion in space cargo delivery in preparation for lunar colonisation. This has led private companies to propose working on building bigger space vehicles to carry people and cargo, which has been a challenge till now. Believing in the next stage, the Trends Radar also predicts that supergrid logistics could be beneficial for all - those involved in the supply chain and the end-customer. It will provide a single platform with flexibility to integrate all the players in multiple supply chains to serve all kinds of customers while maximising efficiency and reducing costs, while also reaching the user in the shortest possible time.
The spotlight is on satellite logistics because there are going to be thousands of satellites launched in the next few years, the other is supplying cargo which could grow. In 2019, NASA awarded $7 billion in space cargo delivery in preparation for lunar colonisation.
3D Printing and Artificial Intelligence
3D printing is at the forefront of technology, and its use has been seen during the pandemic and the study sees it as one of the most disruptive trends. In 2019, the global market surpassed $10 billion and analysts expect it to double in size every three years. As 3D printing technology spreads, it predicts that there will be more regional logistics networks as the products can be made closer to the consumer. It will help reduce the need for inventory as production will be carried out through digital blueprints that will be present at every hub, called print farms; thus helping change passive storage areas into active manufacturing centres.
Even though AI has been there a while, the Trends Radar reinforces it. From intelligent computer vision allowing the provider to know the shipment dimensions and inspecting for damage and labelling, it can also help self-driving vehicles achieve maximum accuracy while picking up goods. The use of predictive logistics is also turning out to be a major breakthrough as it is able to analyse data and help in capacity planning and forecasting, especially to minimize the time and resources spent on the last-mile. The study predicts that it could also help build anticipatory delivery models to help the customer even before they realise it for themselves.
AR/VR and bionic enhancement
Just like AI, Augmented and Virtual Reality could change the way the logistics industry works, however, conventional policies seem to be the only hurdle right now. The use of smart glasses (which are already being turned into lenses) for worker assistance helps in inspection and quality assurance even in repair and maintenance services. On the other hand, VR is being used to train and help employees understand the environment by simulating situations in busy virtual warehouses. Big Data Analytics is at the centre of most logistics processes today and even though it was mentioned in the first edition of the Trend Radar in 2013, it holds true even today to understand how to deal with surging demand especially for personalised services. It will help supply chains predict the need in real-time for a crisis-like situation.
The robots being used with the help of AI in logistics have human-like dexterity, improved vision and quick movements and so it is the best time to consider their adoption.
By uncovering patterns and anomalies, the operators can do things like allocate the optimal number of staff to certain tasks within warehouses and even help understand the weakest link in the process. There has been a positive shift for bionic enhancement in the logistics industry especially for the elderly workforce and to address labour shortage and helping reduce health and safety risks while working. It can help other workers on crowded floors and simply improve productivity and retain talent. With such advancement, it is no surprise when the study states that spending on smart wearables will total $52 billion in 2020, a 27 per cent increase from 2019. Exoskeletons are already in increasing demand for lifting and reaching while also being used for sorting, picking and packing among other tasks.
Geodis deployed exoskeletons for its warehouse staff
Blockchain and cloud-based platforms
Bringing a one-stop solution for transactions, blockchain is all set to help with the need for trust and transparency in financial transactions. The current aim by the stakeholders, according to the study, is to enable not only traceability and transparency but also the automation of commercial processes, and probably become an acceptable form of payment for products and services. While the need for traceability of the product from the start till end tops the priority list, there is also the need for automation of processes through blockchain smart contracts. It helps calculate and streamline the service and payment while reducing errors in the back office. However, the study says blockchain is now even being also looked at as a means of carrying out processes beyond payment to include documentation, cargo handling, tracing and more.
The use of predictive logistics is also turning out to be a major breakthrough as it is able to analyse data and help in capacity planning and forecasting, especially to minimize the time and resources spent on the last-mile.
One of the major vulnerabilities that Covid-19 exposed was in logistics data and IT infrastructure after the failure of complex operations, according to the Trends Radar. While cloud-based platforms exist, having a multifunctional cloud-based platform will help customers benefit from the expansion of service offerings, faster delivery, and price transparency. On the other hand, Application Programming Interfaces (APIs) will be instrumental in providing shipment tracking, full landed cost calculations, rate sourcing, and other logistics services anywhere.
Digital Twins and IoT
Taking AR/VR a step further, Digital Twins will simply help make working better as the physical and virtual worlds can be seen as one. Workers can interact with and analyze the objects and processes to be able to fastrack solutions. It not only saves them the material costs for tests but also helps get data that could help in the future apart from accelerating the development timeline. Digital twins will be beneficial to understand how to use warehouses better in a crisis like the Covid-19 pandemic, and also how to make efficient supply chains by seeing the life-size process integrated with the data. Interestingly, the report says that it could help in aftermarket logistics services by using the technology to identify a problem in the vehicle that could delay delivery time.
While Digital Twins is yet to take over the market entirely, the Internet of Things (IoT) has already proven to be a driver of higher efficiency and better service quality. Among the many aspects, smart shipments are on the rise and despite many challenges, shipment sensors are becoming a part of many company’s supply chains that can help manage temperature and monitor damage among other aspects of the delivery of goods. The sensors used to monitor containers not only help prevent losses but also pave the way for the likes of Digital Twins and servitized business models. They can even help optimize usage of light and heat at facilities to help create sustainable solutions, provide security, inventory management and parking and thus become a cost-saving factor for logistics providers.
Next-Generation Wireless and Quantum Computing
Apart from internet services, next-generation wireless is not only going to enhance operational efficiency but also accelerate automation. They will help manage supply chains faster and make them more flexible and resilient. Using the likes of radio frequency identification (RFID), near field communication (NFC) and Bluetooth low energy for short range networks can help track inventory, monitoring of passive temperatures and cartons on a single palette respectively. It also extends to the use of LAN with WiFi6 which can help logistics operations operate larger fleets through faster speeds and more bandwidth. On the other hand, ultra wideband (UWB) will help with the tags being used for social distancing and tracing contact, especially during pandemics. The use of 5G cellular networks, low power WANs and Global Area Networks (GAN) will help time-critical assistance, tracking logistics over large regional areas over a long period of time with low power consumption and help logistics providers access remote locations across different terrains respectively.
Quantum computing is not far behind as it goes a step further than supercomputers to help calculate real-time complex logistics algorithms and help in building a better supply chain and improve cybersecurity but not without challenges. The Trends Radar report warns that logistics companies need to evaluate cybersecurity risks due to quantum computing in the future. Additionally, it could not only help the simultaneous packaging of millions of parcels and avoid unnecessary delays but also help in rapid modelling and testing of designs to build better products including next-generation batteries for a sustainable future.
Robotics, self-driving technology and drones
Robotics and automation sit at the core of the future of logistics as it will not only support zero defects but also boost productivity. The robots being used with the help of AI in logistics have human-like dexterity, improved vision and quick movements and so it is the best time to consider their adoption, the report states. The Automated Mobile Robots (AMRs) working alongside humans are already in the process of increasing productivity, and will also end up having better safety precautions. On the other hand, stationary robots are able to carry out functions like bin picking, sorting and putting objects on the conveyor belt with a 99 per cent accuracy rate. As micro-fulfillment picks up, the need for automation through simpler robotics technologies also has a bright future.
Among the many aspects, smart shipments are on the rise and despite many challenges, shipment sensors are becoming a part of many company’s supply chains that can help manage temperature and monitor damage among other aspects of the delivery of goods.
While self-driving vehicle technology is still not perfect, it has a lot of potential, according to the Trends Radar report, and could make the logistics industry more efficient by reducing the time through optimized routing and even environmental impact. More technology advances and tests along with standardisation of rules and regulations can help large scale use. It could particularly be useful in the last-mile with the help of delivery rovers as it could reduce significant cost for the logistics provider, if the customer pays a delivery surcharge. However, it is up to the stakeholders to see how they can fully integrate it into the business model, the study states.
The use of Unmanned Aerial Vehicles (UAVs) or drones has seen a significant rise in the last few years and looks to be the solution for the first or the last mile deliveries. While they may not immediately replace traditional modes of transport, they can help reach remotest locations. The regulations around the world are evolving in a positive direction and even though it is limited, they are already being considered for commercial operations. They are also being used for property surveillance and inspection and are able to do faster than humans. Even though intra-logistical operations are still challenging due to short battery life and the inability for error-prone inventory scanning and counting under variable lighting, they are cost-effective and convincing more companies to overcome these problems to see large-scale usage in the future of logistics.