E-commerce sales are soaring in the last years, at almost eight times the growth rate of brick-and-mortar retail. In the previous year alone, e-commerce rose from 13 to 17 per cent of total retail. According to McKinsey, a consultancy, that trend is more likely turning into a permanent shift as online penetration is expected to stay six to thirteen percentage points above pre-Covid-19 levels.
And along with the enormous increase of e-commerce volumes, customers’ expectations are equally increasing significantly. Consumers expect to get goods faster, more flexibly, and at low or no delivery cost. At the same time, they demand a highly personalised experience that is also environmentally friendly. No surprise that across the logistics industry, both operating models and profitability are under strain.
Logistics companies are facing a time of unprecedented change. New shipping and trade regulations, a possible economic recession, and as digitisation takes hold and customer expectations evolve, logistics companies will need to be alert and continue getting ready for all of these changes. Adopting new technologies that enable greater efficiency and make the global supply chains more customer-centric and sustainable is crucial.
These innovations are reshaping the logistics industry in ways that are only just beginning to become apparent. This article presents you with the top 5 logistics technology trends to keep an eye on in 2021.
Artificial and Augmented Intelligence
The use of artificial intelligence (AI) in logistics is not something entirely new. AI solutions like route and demand planning or real-time supply chain visibility have been around for several years. The difference nowadays is the much-increased data volume that can be collected in real time and the development of way more powerful computing and algorithms to sort and analyse that data.
Cheaper and better computing power, big data usability, and improved algorithms combined with machine learning will result in more powerful AI applications. These applications will identify supply chain inefficiencies, automate administrative tasks, speed up information-intensive operations, predict and deal with demand fluctuations, and move cargo around the world faster and cheaper than ever.
Along with AI, Augmented Intelligence is also expected to increase in use. Augmented intelligence combines human decision making with artificial intelligence automated processes. While AI automatically does all the calculations and repetitive work saving time and eliminates manual errors, employees can focus more on strategy planning or account with unforeseen factors and emergencies, providing additional feedback for machine learning.
A blockchain is a digital ledger of transactions that is duplicated and distributed across an entire network of computers. A blockchain provides complete transparency since everyone on the shared blockchain has access to the same ledger of transactions, making it impossible for users to hack or trick the system.
Blockchain has become one of the biggest buzzwords and one of the most overhyped technology trends lately due to the increased popularity of Bitcoin and other cryptocurrencies. Unfortunately, blockchain’s complicated concept has been somewhat challenging to grasp for many people. Therefore, despite its strong potential for extraordinary use cases in logistics, there has been an overall lack of development.
That been said, what could be the applications of blockchain in logistics?
By bringing transparency of transactions to the entire logistics process, blockchain can be used to make it way easier for carriers to share sensitive data, securely validate document transactions, create smart contacts that allow for quicker approval, develop supply chain solutions like TradeLens, and more.
In essence, blockchain can bring all parties in the supply chain, like retailers, carriers, ports and terminals, customs, and other government authorities, onto a single, secure, data-sharing and collaboration platform.
One of the main issues in implementing blockchain in logistics is its lack of flexibility in terms of data. Once data is recorded on the blockchain, it cannot be edited or deleted later on.
Unfortunately, logistics data standards have yet to become common practice across the industry, as companies tend to store their data in different formats and places.
One of the most significant logistics innovations for 2021 (and long overdue) will be creating common information technology standards for the digitalisation of data and interoperability. These standards dictate how data should be recorded, stored, and shared, making collaboration and insights extraction a simple and straightforward process.
Once an industry-wide data standard is implemented, logistics companies will be able to cleanse and digitise their data, allowing them then to use that data for advanced analytics and predictive optimisation.
Predictive and advance analytics can then be used to gain visibility over the entire supply chain, which will help to develop unexpected conditions detection, last-mile delivery and customer service improvements, among others, allowing logistics companies to enhance the overall efficiency of their shipments
Higher reliability, improved performance, and reduced costs: its expected benefits have made autonomous vehicles one of the most discussed logistics technology trends. Autonomous vehicles could improve vehicle safety and deliver goods cheaper and faster by eliminating human driving errors, optimising travel routes and full usage by taking advantage of AI-enhanced technology, and operating 24/7.
Moreover, due to demographic changes and the increase in workload, the trucking industry is lacking qualified employees. Many companies, especially the ones specialising in e-commerce logistics, will need an increasing number of reliable drivers with a good track record soon. The use of autonomous trucks could fill this gap, which might speed up autonomous truck development, especially if big logistics companies decide to support truck manufacturers and start-ups’ autonomous vehicle development programs.
Unfortunately, no matter how exciting autonomous vehicles are as a concept, we are still likely to see them only in its early trial stage in 2021. (The Mercedes-Benz prototype of the semi-autonomous truck is scheduled for release in 2025, for example.)
Successful research and development aside, there are still many problems to be solved when it comes to the reality of having autonomous vehicles in the streets, like ethical and legal issues. Nevertheless, many experts agree that the automation of transport vehicles will precede the passenger car sector.
Companies are currently working on Level 4 of automation where vehicles do not require human interaction in most cases, but the driver still has the option to override manually. The final progression is Level 5: ‘fully automated’ or ‘autonomy’, where driving requires absolutely no human attention or interaction.
Warehouse automation can increase efficiency, speed, and productivity by reducing human interventions. Warehouse automation technologies such as automated guided vehicles (AGVs), robotic picking, automated storage and retrieval (AS/RS), and put wall picking reduce error rates and increase efficiency, speed, and productivity by reducing human interventions.
Warehouse robotics refers to the use of autonomous robots paired with specialised software to transport materials, perform various tasks, and streamline/automate warehouse processes. And it is a rapid-growing field; according to the MHI Annual Industry Report 2020, robotics and automation are currently two of the most widely adopted warehouse technologies.
Take Boston Dynamics’ mobile warehouse robot, Handle, for example. Handle is a completely autonomous robot with a small footprint, a 3-metre reach, and deep-learning vision software, enabling it to move boxes throughout the warehouse, unload trucks, and navigate distribution centre aisles, picking from multiple inventory locations to build mixed-SKU pallets.
Warehouses are already struggling with workforce shortage due to the skyrocketing of e-commerce sales, and companies are desperately looking for new ways to keep up with the increasing demand. With machine-learning capabilities and extremely sensitive sensors that ensure maximum efficiency, warehouse robots will begin to be a staple of many warehouses in 2021.
Technology is changing every aspect of how the logistics industry operates. The companies that will rise as leaders in the post-pandemic landscape will be the ones that understand how to take advantage of a whole range of new technologies; from data standardisation to warehouse automation, digital fitness will be the recipe for success.
Nevertheless, digital fitness is still a big challenge for the sector. With heavy use of manual processes and large amounts of data stored in different formats and different places, the logistics industry still lags behind many of its tech-savvy customers in this respect.
Being open to new technologies and innovations and building on the right skills is essential. However, attached to these innovations are new expectations and standards. Defining a clear digital strategy that will help identify which ones of these new technologies should you integrate into your workflow will help your logistics company gain a competitive advantage and become an industry leader in 2021.