Like most other industries, transportation and logistics (T&L) is currently confronting immense change; and like all change, this brings both risk and opportunity. New technology, new market entrants, new customer expectations, and new business models. There are many ways the sector could develop to meet these challenges, some volutionary, others more revolutionary.
Themes that will be central to the digital transformation of the logistics industry over the next decade:
- Information services
Digitally enabled information services will put data at the heart of logistics businesses through initiatives such as logistics control towers and analytics as a service. These will reduce operating costs while improving operational efficiency.
- Logistics services
Digitally enabled logistics services will grow trade by creating digitally enhanced cross-border platforms. They will also help satisfy growing customer demand for faster same-day deliveries, and promote the concept of city logistics, which will allow firms to operate in ‘megacities’.
- Delivery capabilities
New delivery options such as digital trucks and drones mean more efficient ways to deliver shipments, while 3D printing and crowdsourcing offer new ways to think of manufacturing and logistics processes.
- Circular economy
A circular economy will foster a more sustainable product life cycle, helping to lessen the industry’s environmental footprint by reducing carbon dioxide (CO2) emissions, air pollution and waste material.
- Shared logistics capabilities
Shared warehouse and shared transport capabilities are expected to increase asset utilization in the near future.
Digital transformation in logistics:
Data-driven information services
This initiative offers an $810-billion upside to the industry. Industry players will use analytics to optimize routes, reduce maintenance costs and improve utilization. The big players will implement control tower solutions to augment these benefits with real-time visibility, which would generate incremental profits by reducing downtime and recovery costs.
Crowdsourcing is a potential game changer for the industry. It will make the sector more competitive, and major trucking companies could be at a risk of losing $310 billion of operating profits to players enrolled on crowdsourced platforms.
Digitally enhanced cross-border platforms
This digital initiative will increase trade flows by simplifying import-export processes. These platforms could earn $120 billion in the form of commissions. Logistics companies could earn $50 billion in additional profits as a result of this increase in trade.
Long-term bold play capabilities
Autonomous trucks and drones will increase the industry’s efficiency and bring significant societal benefits once the regulatory hurdles are overcome and mass adoption becomes feasible. However, over the next 10 years, they will have a relatively smaller contribution to the tune of approximately $50 billion.
Customer and societal benefits
The greatest impact from digital transformation in the logistics industry will come from societal benefits. These include lower carbon emissions, less traffic congestion, lives saved through reduction in accidents, increase in cross-border trade as a result of platforms simplifying trade, and discounts to customers on account of increased utilization levels. Digital alone has the opportunity to reduce emissions from logistics by as much as 10 to 12% by 2025. We estimate the total benefits to customers and society to add up to approximately $2.4 trillion coming primarily from three initiatives: crowdsourcing, digitally enhanced cross-border platforms, and shared warehouse agreements.
Unlocking societal value: crowdsourcing
Crowdsourcing platforms – the ‘Uber’ of logistics – can be a game changer. By helping smaller firms raise utilization levels, they will make the industry more competitive, and bring societal benefits such as logistical cost reductions for customers of $800 billion. They could also reduce CO2 emissions by 3.6 billion tonnes, while generating additional income for consumers who decide to use their personal vehicles to deliver goods while on personal trips. Clear regulation will promote these platforms and increase adoption.