Site icon Pakistan & Gulf Economist

Emerging trends for the logistics companies this year

Emerging trends for the logistics companies this year

Logistics companies are facing an era of unprecedented change as digitization takes hold and customer expectations evolve. New technologies are enabling greater efficiency and more collaborative operating models; they are also re-shaping the marketplace in ways that are only just beginning to become apparent. New entrants, whether they be start-ups or the industry’s own customers and suppliers, are also shaking up the sector.

For the logistics industry, we start by taking a closer look at some of the key disrupting factors: changing customer expectations, technological breakthroughs, new entrants to the industry, and new ways to compete or collaborate. These disruptions have very different implications for individual companies, depending on which segments they operate in, their type of ownership, and where they are located. They also don’t exist in a vacuum: in each case, the interactions between them are equally, if not more, important. Government intervention and trade flows between regions and territories are influencing the industry too, but very much depend on national politics and geography.

Like individual consumers, industrial customers now expect to get shipments faster, more flexibly, and with more transparency at a lower price. No surprise that across the industry, both operating models and profitability are under strain. And the pace of transformation for large manufacturing and retail customers may turn out to be even faster than for private final consumers. Many logistics companies also serve B2C customers. Consumers went digital long before many of the retailers, and some parts of the sector are still struggling to keep up process. The leading players are adopting what we call ‘total retail’, which is an operating model across bricks and mortar, online mobile and other retail channels.

Technology is changing every aspect of how logistics companies operate. ‘Digital fitness’ will be a prerequisite for success: the winners will be those who understand how to exploit a whole range of new technologies, from data analytics to automation and platform solutions. Those who don’t, risk obsolescence. But with so many technologies competing for management attention and investment, defining a clear digital strategy that’s integrated into business strategy will be critical. Labor is a critical element of any logistics operating model, and up till now there’s always been a trade-off between service levels and costs. But automation breaks down this equation, allowing firms to offer better service and save money at the same time. Some of the industry’s most labor-intensive processes are on the way to being fully or partially automated, from warehousing to last-mile delivery.



Automated solutions in the warehouse are already being implemented and their level of sophistication is increasing. For example, automated loading and unloading systems are already available, but in the future, these are likely to be able to bypass obstacles and adjust routes automatically. Advances in data processing and optics now allow tasks to be automated which were once thought too complex – like trailer loading and offloading at acceptable speeds.

Platform technology has given rise to new business models, often driven by start-ups that enter the logistics industry. New ‘sharing’ business models could have as much of an impact on the sector as new technology. And the industry’s current customers and suppliers may end up being the biggest new entrants. Major players from other industries may have even more potential to shake up the industry’s competitive dynamics. Autonomous vehicles are one possible example: technology players, or technology-automotive collaborations may enter the industry, especially with ideas like self-driving lockers, or machine-to-machine parcel-station loading for last-mile delivery. Crowd sharing platforms may also emerge from autonomous vehicle development, or independently. As car-sharing increases, so may the use of the storage space available in these vehicles as a flexible way to expand capacity.

Horizontal collaboration is already happening, especially in last-mile delivery, but it is hampered by inconsistencies. Higher levels of efficiency could be achieved by more consistent standards, defined through the physical internet and increased collaboration, whether in the form of alliances, joint ventures or mergers and acquisitions. There are many other less radical ways for logistics companies to use assets more efficiently by collaborating. For example, by sharing fleets and networks, and establishing agreements like the airlift purchased by postal agencies from commercial couriers, or the code-sharing used by airlines.

[box type=”note” align=”” class=”” width=””]The writer is a Karachi based freelance columnist and is a banker by profession. He could be reached on Twitter @ReluctantAhsan[/box]

Exit mobile version