Logistics: challenges and opportunities in the post-covid-19 world
The global logistics industry has risen with energy and alacrity to the challenges of covid-19, protecting staff and customers while flexing to the peaks and troughs in demand. And now the transformation needs to continue…
The president of a major logistics company recently told me that over the last three months, his business has, effectively, been catapulted into the future by three years. Shipment volumes projected for 2026 now look likely by 2023 – and it’s the same for logistics providers all over the world.
During the early stages of the pandemic, the business-to-business logistics market came almost to a standstill. Impacts were profound as supply chains were seriously disrupted and new regulations rapidly introduced. Now, as the journey to recovery begins, some companies are looking to diversify and relocate their supply chains closer to home with, for example, countries such as Mexico as alternatives to China for US companies.
Meanwhile, the business-to-consumer market has exploded as people in lockdown turned to the internet to make their purchases. And not only did volumes grow; the profile of goods being shipped changed, with more consumers ordering even the largest purchases online. In response, logistics companies fast-tracked their growth and development strategies, quickly expanding to seven days a week and making significant investments in e-commerce, people and assets to cope with demand.
Optimizing every aspect of operations
Yet while operations expanded, deliveries for this side of the market tend to be lower yield; given that drivers and subcontractors are typically paid per stop, we see lower delivery density – a key logistics metric – with major cost implications. There are, therefore, even more intense pressures now on companies to find creative ways to improve delivery density and cost-efficiency.
In fact, across every part of the logistics landscape, all kinds of companies need to optimize their operations – with data and technologies as critical enablers. Gaining greater supply chain visibility is key, by collecting and sharing data to track packages in real time from point of origin to final destination. This data can come from logistics companies’ operational and planning systems, from sensors in warehouses, on pallets in transit, and from telematics in trucks and on ships.
Using data from sensors
Logistics companies have become effective at communicating to customers about precise time of arrival and options to change delivery arrangements. There’s more that can be done to optimize routes using data. By gaining the exact view of a package’s condition and location at every stage, logistics companies can predict any disruption – and when external data sources are integrated (about traffic or weather, for example) together with machine learning, then routes can be changed in real time.
Serving the pharmaceutical market, for example, companies can use sensors to monitor the temperature of packages in real time; if it varies beyond a certain tolerance, then an alert can be sent and corrective actions taken, resulting in less waste, lower costs and more on-time deliveries.
Dramatic drops in the cost of sensor technology are creating a boom in these intelligent supply chain technologies and use of data. And when this kind of big data is overlaid with powerful analytics and machine learning, companies can then use it to track, optimize and predict their operations. They can accurately monitor and adjust the movement of goods to maximize efficiency and even simulate complex supply networks; and they can share information and work more closely with customers and other partners.
Dramatic drops in the cost of sensor technology are creating a boom in these intelligent supply chain technologies and use of data. And when this kind of big data is overlaid with powerful analytics and machine learning, companies can then use it to track.
Transforming the last mile
Logistics providers have stepped up to the challenge of making deliveries safer for employees and customers. Contactless last-mile delivery solutions have been crucial to the industry’s covid-19 response. And given that the last mile typically constitutes around 30% of the cost, optimizing that element is on the critical path – especially as retailers are increasingly positioning products to reduce long-line haul and increase last-mile volumes.
While the use of drones for making deliveries is starting to emerge, these are subject to local laws and regulations and take-up is still relatively slow. In contrast, use of smart locker solutions for safe, convenient, contactless pick-ups is growing significantly.
A safe and sustainable future
More widely, safety and sustainability are critical business drivers for the industry – especially given the urgency of environmental challenge. Leading logistics companies are using connected technologies to collect and share data in real time to help drivers reduce fuel consumption and drive safely.
What’s clear is that the dramatic changes in people’s buying habits look like they’re here to stay; even before covid-19, retailers were shaping the next generation of shopping experiences involving delivery to people’s homes. In response, logistics providers will need to optimize and automate as much as possible and collaborate with others to operate safely, efficiently and pre-emptively. And as the world adjusts to a new normal, the safe and efficient movement of goods is at the very heart of economic recovery.
Data and Artificial Intelligence; Digital Transformation;
Transport & logistics