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Machines to deliver on human needs

Nina Oswald

The speed of change in logistics is dramatic and the industry has become highly dynamic. Globally, new technologies and ever-changing customer needs are pressuring businesses to adapt to the way customers perceive and use logistics solutions.

The 2016 Interbrand Best Global Brands report highlighted six shifts driving growth in logistics: from autonomous driving and on-demand delivery solutions to smart warehouses and open systems. All of these are still relevant. What has changed from 2016 to 2017 is the speed of implementation for the new technologies in the sector. What was drafted and tested in 2016 is now on the market and becoming a commercial reality. PwC’s 2017 Commercial Transportation Trends reports that technologies such as autonomous driving, advanced telematik, AI, and robotics—which have been disrupting the industry for years—are now being implemented by new competitors with fresh business models.

This creates new challenges in the logistics sector. Competitors entering the field from outside the industry are disruptive and difficult to promptly recognize. At the same time, there is a growing gap between evolving customer desires and the technological capabilities of some established carriers, which enable them to deliver on new expectations.

Nimble new players

While the established incumbents are making strides in the sector, some of the most dynamic growth is represented by new companies entering the category. These new players come from outside the classically defined industry and will each focus on a portion of the logistics value chain, only. These brands better deliver on customer needs by responding more quickly through new information systems, sophisticated data networks, more transparent tracking opportunities, and definitive delivery targets. Most remarkable are new technological solutions like Amazon Prime Air, a drone delivery system, or Uber’s autonomous trucking fleet. The rising share economy represents new growth opportunities for logistics—manifesting in models like UberCargo in Hong Kong, Nimber in Norway, and Convoy in the US. All respond better to  customers by meeting their technological standards in the way they interact with them and operate.

For established industry leaders, it can be difficult to transform their businesses and implement new technologies throughout the whole value chain they control. However, smoothing the tension between technological possibilities and human needs will be crucial to long-term growth in the sector. Logistics will become dominated by latest technologies but highly shaped by human demands: AI and robotics will realize the future of logistics for businesses, while people will care more about products, services, seamless experiences, and more sustainable modes of delivery. 

Robots realize transportation

Among the technologies that continue to transform the logistics industry, robotics and AI are the most promising. AI enables adaptive scheduling of deliveries and smarter routing of vehicles. Products can be transported more efficiently through vision-based driver assists and automated (robotic) systems. DHL is pushing hard to become the leader in global e-commerce logistics by expanding its own capabilities and investing in IoT, machine learning, and robotics ventures. DHL won the German Mobility Prize in 2016 for its Parcelopter drone and is the new worldwide title sponsor for the upcoming DR1 Drone Racing Series.

It launched Ocean View, an online platform offering greater visibility into ocean freight, and recently partnered with Amazon’s Alexa to implement voice-activated delivery updates.

UPS is also making strides in automation with the continued roll out of its Smart Logistics Network. From facility automation within UPS hubs to network planning tools to its data-driven route-optimizer, ORION, and the EDGE tool at package centers, UPS is making impressive efforts to transform its operations and continues to grow as a result.

People want goods—and good

From a customer perspective, speed, information, and services are constantly increasing. At the same, time people care about their goods and more socially responsible modes of delivery. They’ve started questioning the importance of next-hour delivery and “everything, everywhere” service, and are thinking more about damaging CO2 emissions and the enormous paper waste for packages delivered. Some smaller companies are addressing this rising social consciousness by reusing delivery boxes or creating new ways of packing, like the reusable moving boxes from FROGBOX. Others engage through charity, like Give Back Box, which partners with online retailers such as Amazon, to enable customers to reuse delivery boxes to send donations.

Others are investing in future-forward solutions. To reduce CO2 emissions, FedEx has begun buying biofuels from Red Rock Biofuels, which turns forest waste into jet fuel. 48 million gallons of blended aviation fuel will be used in the FedEx Oakland Hub starting in 2017. New companies like Greencarrier, a Swedish logistics company, are going one step further. It specializes in eco-friendly transportation solutions and aims to convert air freight back to rail transportation, as railways in many nations will be switching to electric energy very soon.

Growth is about customers, and your brand

Keeping up with customers’ demands that brands claim machines and appeal to humans at the same time. Logistics carriers need to transform their businesses substantially in two ways: by closing the technological gap between capabilities and customer desires, and offering smarter and more sustainable solutions.

This will open up some questions for the role of brand in designing new experiences. What are we branding in the future? The biggest change for established brands like UPS, FedEx, and DHL will be that they won’t be able to rely on a consistent chain of experience. Today, the most visible touchpoints are delivery trucks but multiplying modes of delivery and consumers’ focus on the tracking (digital) side of the process will disrupt the traditional brand experience. Going forward, established leaders, small companies, and even those outside of the sector may have to combine the strengths of their brands in order to keep up with customers and navigate these new shifts in logistics.

Managing Director, Cologne
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