Guide to Supply Chain and Logistics Technology
Increasing technology innovations are making big waves across industries, and logistics and the supply chain may be one of the most impacted sectors. Notorious for its heavy use of manual processes and large amounts of data stored in different ways and in different places, the logistics industry has perhaps the most to gain from implementing new technologies and following the most innovative Supply Chain and Logistics technology trends.
Recent years have seen massive advancement for the logistics industry in areas like artificial and augmented intelligence, advanced analytics, and automation, to name just a few. These technologies have evolved faster than ever while startups with even newer solutions and innovations continue popping up at a rapid rate. But attached to these innovations are new expectations and standards, forcing logistics companies to either adapt or fall behind. Much pressure comes from customers in the form of individuals and enterprises, all of who are demanding their products or services come faster and cheaper than ever before.
Companies within the logistics and supply chain sphere must continue getting ready for all of these bigger changes with innovations. From digital twins to blockchain to real-time supply chain visibility, Transmetrics has identified the Top 10 important logistics technology trends your company should be keeping an eye on:
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Artificial and Augmented Intelligence
Over the past several years, the logistics industry has started to integrate Artificial Intelligence solutions including intelligent transportation, route planning, and demand planning in their operations — but this is only just the beginning. From last-mile delivery robots and sustainability solutions, to warehouse automated picking systems and predictive optimization software, AI is already making a huge difference in logistics. Shippers, carriers, suppliers, and consumers can all expect to benefit from these logistics technology trends continuing in 2022.
Along with AI, Augmented Intelligence is also expected to spike in use. Augmented intelligence combines human intelligence with AI automated processes. For example, in logistics planning, using Augmented Intelligence can even be superior to using AI alone, since it can combine inputs from human planners (experience, responsibility, customer service, flexibility, common sense, etc.) together with AI technology which is left doing the repetitive and tedious work. According to Gartner, augmented intelligence is on path to create $2.9 trillion of business value and lead to an increase of 6.2 billion hours of worker productivity globally by the end of this year. Logistics companies can be expected to implement more Augmented Intelligence solutions, which ultimately allow logistics professionals to do their job more quickly while reducing mistakes and creating cost savings.
Digital twins are possibly one of the most exciting logistics technology trends to keep an eye on at the moment. As many logistics professionals know, products are never exactly the same as their computer models. Modeling in its current state doesn’t take into account how parts wear out and are replaced, how fatigue accumulates in structures, or how owners make modifications to suit their changing needs. However, digital twins technology is changing this once and for all: Now, physical and digital worlds can be melded into one, thus allowing us for the first time to engage with the digital model of a physical object or part just like we would with their physical counterparts.
The potential use cases for digital twins in logistics are vast. In the shipment sector, digital twins can be used to collect product and packaging data and use that information to identify potential weaknesses and recurring trends to improve future operations. Warehouses and facilities can also use the technology to create accurate 3D models of their centers and experiment with layout changes or the introduction of new equipment to see their impact, risk-free. Furthermore, logistics hubs are able to create digital twins and use those to test out different scenarios and increase efficiency. In addition to that, delivery networks could use the technology to provide real-time information that will improve delivery times and further aid autonomous vehicles in their routes. It will be interesting to see what other impactful logistics use cases develop over the next year.
Real-Time Supply Chain Visibility
Supply Chain Visibility (SCV) is no longer just a great thing for logistics companies to have. Now, it needs to take another step forward – becoming real-time. This real-time data is now more in demand by customers and carriers than ever, which means logistics and supply chain enterprises need to focus on implementing cutting-edge SCV solutions into their operations. New supply chain visibility startups are providing technology that promotes quick response to change by allowing companies to use real-time data. Such data includes traffic patterns, weather, or road and port conditions which are used to take action and reshape demand or redirect supply and optimize routes. Logistics companies that fully use integrated supply chains are now reported to see 20% more efficiency than those without integration.
One can’t speak about supply chain visibility without also mentioning IoT sensor technology, a crucial asset for tracking shipments. Connected IoT devices on parcels allow warehouses to track inventory, vehicles, and equipment through cloud services. At the same time, container management powered by IoT also becomes easier through real-time monitoring, increasing fuel efficiency, implementing preventative maintenance and making container operations proactive instead of reactive. With that in mind, partnerships between IoT startups and logistics companies are another big trend to watch. A recent example comes from Hapag-Lloyd, which chose IoT startup Globe Tracker to power its new real-time container monitoring system, Hapag-Lloyd Live. Prepare to look forward to seeing more of these big-name partnerships with IoT startups as the sector begins to demand real-time tracking for customers.
Since its advent in 2008, blockchain has grown to become one of the biggest buzzwords in any industry as well as one of the most overhyped logistics technology trends. However, the complicated concept of the blockchain has been difficult to grasp for the general public, and despite its strong potential for incredible use cases both in and outside of the logistics, there’s been an overall lack of real development. This has led blockchain to become extremely overhyped and logistics professionals to feel fatigued from the term’s overuse. That said, there are pilot projects and small-scale operations in effect: CargoX is one startup that has emerged fully dedicated to bringing blockchain to the logistics industry by using the public Ethereum Network to securely validate document transactions. Other big names are also expressing interest in the blockchain: UPS and Warren Buffet’s BNSF Railway joined the Blockchain in Transport Alliance. However, they are all still very new projects with much work to do.
As a refresher, blockchain is an open ledger of transactions distributed among computers in a given network. Since everyone on the shared blockchain has access to the same ledger of transactions, there is complete transparency, which makes it impossible for users to hack or trick the system, and thus eliminates the need for third-party involvement. In the logistics industry, this could make it much easier for different carriers or shippers to share sensitive data; and companies could create trade finance and supply chain solutions, like that of Maersk and IBM’s blockchain joint venture called TradeLens.
But there are still a few steps required for logistics companies to completely adopt the blockchain. First, logistics companies need to digitize, standardize, and cleanse their data. Then, once industry-wide standards are implemented, companies must form an ecosystem of supply chain partners to use the standard in a shared, permissionless blockchain environment. Hopefully, with TradeLens leading the pack on this mission, the logistics can finally start taking advantage of blockchain’s full potential.
Data Standards and Advanced Analytics
Traditionally, data in the logistics industry has always been completely siloed. Companies have stored data however they wanted and wherever they wanted, leading to a fragmented ecosystem, creating massive inefficiencies, and making it difficult to digitize operations. One of the biggest logistics technology trends, that we’ve identified, points out that data in silos will no longer be an option for companies who want to keep up with the changing times. For example, new data standards are finally being created in container shipping, thanks to the advent of the Digital Container Shipping Association (DCSA) in 2019. The DCSA’s mission is to create common information technology standards for digitalization and interoperability in an effort to make the shipping sector more efficient for both customers and shipping lines. Just months after launching, the organization released its first Industry Blueprint, which details the new industry standards for data processes used in container shipping.
However, the DCSA only represents the data standardization movement within the container shipping sector and it will take time for the association to develop new standards covering different sub-sectors of shipping. Meanwhile, Traxens, an IoT company providing high-value data and services for the supply chain industry, has announced it has led the development of the first standards for smart container data exchange published by the United Nations Centre for Trade Facilitation and Electronic Business to facilitate the use of smart container data.
Other logistics fields still have work to do when it comes to solving the data inconsistency issue, which is leading many young startups to focus on creating predictive and advanced analytics platforms as a solution. These logistics startups are helping bigger companies to cleanse and digitize their data, allowing them to then use that data for advanced analytics and predictive optimization. This includes better supply chain visibility, demand forecasting, proactive linehaul planning, predictive maintenance, unexpected conditions detection, and last-mile delivery improvements. When data is standardized and digitized across the logistics industry, all companies will be able to benefit in a massive way.
The Growing Importance of Industry Newcomers
But it’s not just new technology shaping the future of logistics: It’s also emerging business models and new industry players. Often driven by startups, new systems incorporating elements of the sharing economy are gaining prominence fast. Without the need for a rich asset background, startups tend to focus on the “asset-light” parts of the value chain, for example by turning into digital freight forwarders.
With more flexible operations, they can offer more agile pricing and provide quotes faster, while championing transparency. This is the case for Uber, which launched its Uber Freight feature in the US in 2017 and has expanded to Europe and Canada this year in pursuit of a more effective global freight marketplace. Uber Freight is considered by Uber to be one of its most promising ventures: in an August earnings call with investors, Uber CEO Dara Khosrowshahi reportedly said, “Uber Freight continued to see impressive growth and great progress in Q2 despite soft market conditions.”
Even the industry’s own customers see potential in venturing into freight forwarding: Amazon plans to expand its in-house expertise in warehousing and transportation to develop its own delivery capabilities. The company has made plenty of headway already through its development of Prime Air, the drone service it’s building to create fully electric drones that can fly up to 15 miles and deliver packages under five pounds to customers in less than 30 minutes. Moreover, it’s reported that the company has been importing new Amazon-branded intermodal containers from China. In addition to that, the company has announced Amazon Flex, a platform, which uses on-demand contract drivers to help accelerate the expansion of the Prime One Day delivery program.
Amazon has also announced its new robotics products heading to hundreds of fulfillment centers around the world. One of such products is a sorting system Pegasus — which has driven two million miles to date and has already cut down mis-sorted goods by 50%, all while preserving the safety features of the existing drive system. Furthermore, the e-commerce giant is testing Amazon Scout, which is designed to safely get packages to customers using small autonomous delivery vehicles. To top off all their recent developments, Amazon CEO Jeff Bezos has announced that Rivian, an electric vehicle startup, is going to make 100,000 electric delivery vans for Amazon following a $700 million investment from the online retailer.
Another great example of a company impacting the industry is Flexport, a freight-forwarding purpose-built cloud software, and data analytics platform. The company secured $1 billion funding earlier this year and is planning to launch an Operating System for Global Trade, a strategic operating model for global freight forwarding, which combines the best of all technologies and brings together all parties to the supply chain through a highly available and secure cloud software platform. With so many upcoming technological advancements being developed, it’s clear that this is one of the logistics technology trends to keep an eye on.
Increasing Investment into Logistics Startups from VCs and Enterprises
As we see growing VC funding in logistics startups, major logistics companies are beginning to follow this path. Many of them have invested millions of dollars in new technologies developed by innovative startups or even acquired them altogether. This way, logistics companies can get the best of both worlds – leverage their capacities while driving R&D through their new partners. Giants like UPS see great benefits in sealing partnerships: the company made a minority investment in TuSimple, an autonomous driving company, to test self-driving tractor-trailers in Arizona, to see how this addition could potentially enrich the existing UPS networks. Maersk also recently announced it’s joining fellow shipping giants CMA CGM and MSC in investing capital in Traxens, an IoT, high-value data, and services platform for the supply chain industry. The e-commerce players are aiming to participate in this race as well with Shopify, a multi-channel commerce platform, acquiring a Massachusetts-based 6 River Systems, a provider of collaborative warehouse robotics solutions.
The race for innovation has also encouraged Singapore’s sovereign wealth fund Temasek to partner with transport giant Kuehne + Nagel to launch a $50 million venture fund for logistics and supply chain startups. According to the director of the fund, Marc Dragon, there is a high level of expectation from vendors that because of technology, there would be new powerful methods to approach supply chains.
There are also companies looking to expand their technological portfolio in-house. For example, C.H. Robinson Worldwide, the biggest freight broker in North American, announced it would double its technology spending to $1 billion in order to expand and develop its services to counter the competition from digital startups. Additionally, in what appears to be an effort to adapt quickly to digital innovations, Deutsche Post DHL Group announced in October 2019 that it plans to invest $2.2 billion in digital initiatives through 2025. With so many partnerships created over the past year, it will be interesting to see what kinds of solutions result from these investments.
Sustainability Powered by Technology
Sustainability is a trend that has been cutting across industries and logistics is no exception. Last-mile delivery, in particular, is traditionally very time- and energy-consuming, which is also why it presents many opportunities for fresh and smart approaches. To lessen the negative environmental impact, companies leverage a plethora of technologies, from actual electric vehicles to AI-based software that calculates the route with the lowest generated emissions.
Amazon recently announced its “Climate Pledge”, a commitment to meet the goals of the Paris Agreements 10 years earlier. By doing so, the company hopes to encourage other businesses to join and aim to become net-zero carbon across their operations by 2040 and promote renewable energy. To do so, Amazon has contracted Rivian, an electric vehicle startup, to supply it with 100,000 electric vans.
Deutsche Post, the world’s largest courier company, has also committed $552 million to the production of light cargo electric vehicles and micro e-mobility units. Partnering with a Chinese manufacturer, the multinational partnership is set to result in the production of up to 100,000 street scooters per year.
Similar logistics technology trends can be seen across the entire shipping sector. Just recently, over 60 commercial groups, including Maersk, launched an initiative that aims to use ships and marine fuels with zero carbon emissions on the high seas by 2030. These efforts are fundamental not only due to their direct impact but because they inspire the whole industry to adopt a more sustainable mindset.
Even though autonomous vehicles, be it trucks or drones, have become closely associated with the close future of logistics, we are still likely to see it in only its trial stage throughout the next year. Nevertheless, one of the most discussed logistics technology trends of recent time.
For example, UPS Ventures has made a minority investment in autonomous driving company TuSimple. Together, both companies are testing self-driving trucks on a route in Arizona to determine whether the vehicles can improve service and efficiency in the UPS network. This means that UPS and TuSimple join the ranks of other companies, including Daimler, Tesla, Starsky Robotics, Einride, and Embark, that have the aim to remove the drivers from freight haulers altogether.
But interestingly, companies are starting to see the potential of autonomous vehicles even in unexpected areas, such as fleet maintenance. Austrian Airlines is using drones that are deployed in hangars to perform standard maintenance tasks and document any potential damage outside of the aircraft. Doing this could not only cut down maintenance costs but also free up the workload of technicians. As more drones are being considered for small package delivery purposes, it wouldn’t be surprising to see more trial runs and pilot project approvals. In fact, Alphabet’s Wing, the first federally-approved delivery drone in the US, has made its first delivery while UPS became America’s first nationwide drone airline. It will be interesting to see how many other companies can take their lead on drone delivery.
It’s without a doubt that warehouse operations have undergone a significant shift in recent years – and with technology being progressively integrated, this is one of the logistics technology trends that is likely to continue. One of the obvious innovations is warehouse robotics, a fast-growing field. After all, according to the Global Customer Report 2019, there has been an 18% year-over-year increase in testing of warehouse robotics. Boston Dynamics’ mobile warehouse robot, Handle, is one great example: The company has developed a completely autonomous robot with a small footprint, long reach, and vision system which all enable it to unload trucks, build pallets, and move boxes throughout any warehouse facility.
Whether it’s wearable technology, driverless vehicles, or multifunctional robots, robotization can significantly improve the efficiency and speed of warehouse processes. Companies such as GreyOrange and Locus Robotics already incorporate robots that autonomously move around the warehouse. With machine-learning technologies and sensors ensuring extreme accuracy and easy traceability, the modern warehouse will start seeing the inclusion of many more autonomous robots.