Syndicate content

Add new comment

The Future is Here: Technology trends currently shaping the world of Logistics

Karuna Ramakrishnan's picture
Also available in: Spanish

Emerging technologies are transforming global logistics. The evidence is everywhere: Logistics companies are exploring autonomous fleets and “lights-out” warehousing, and are looking to Big Data for transport management and predictive analytics. Crowdsourcing start-ups are using a high-tech/asset-light business model. And e-brokerage platforms are providing real-time information from pickup to delivery.
 
How will these emerging technologies and evolving business models be adapted for and used in developing countries?
 
Consider three trends that are rapidly developing, both in the logistics space and elsewhere: the Omni-Channel Approach, the Sharing Economy and Big Data. These trends offer emerging economies the opportunity to leap forward quickly along their development trajectory. It’s valuable to analyze both why these trends matter to developing countries and how they are being adapted.
 
Our teams at the World Bank Group’s (WBG) Singapore Hub for Infrastructure and Urban Development, which work across the WBG’s Global Practices, have been conducting such analyses, helping us identify how development trends will affect the region. In this case, our “learning laboratory” looked at how emerging technologies and evolving business models can transform logistics systems – not just in advanced economies like Singapore, but also in developing countries in the East Asia and Pacific region and beyond.
 
The Omni-Channel Approach
 
With the growing use of the internet and smartphones, shoppers in developed markets increasingly use both online and offline channels to browse, order, pay for, collect and return purchases.
 
The Omni-Channel Approach enables a modern shopper’s journey to be seamless: anytime, anywhere, identical and seamless switching on any device. This approach moves inventory faster, saves the sale, offers cross-channel visibility for inventory, and encourages consumers to spend 15 percent to 30 percent more than traditional shoppers. As the business case grows for retailers to shift to this Omni-Channel Approach, more logistics companies are striving to offer anytime-anywhere delivery services.
 
But Omni-Channel logistics will need effective management to avoid adding to the traffic congestion of many developing cities. While Omni-Channel may mean enabling in-store virtual reality or seamless shifting from malls to airports, it may also mean (in some developing economies) locker services, like those provided by Indonesian companies PopBox and POS.
 
The lockers, which look like vending machines, provide a self-service delivery location to pick up and return packages. The service offers more flexibility for delivery than a conventional logistics service. It also minimizes congestion by reducing the number of drop-offs and by setting delivery times during non-rush-hour periods.
 
Locker facilities can be transformational, particularly in countries where the last mile to the door can be the most difficult. Indonesia offers a good example of that pattern.
 
The Sharing Economy

The Sharing Economy is already transforming many sectors, including logistics. In recent years, we have seen the de-assetization of logistics companies and the rise of logistics platforms, which allow for the sharing and consolidation of services.
 
Today, a logistics company may function without owning a single truck or warehouse. For example, companies like Flexe connect organizations in need of flexible warehousing capacity with warehouse owners who have available space. Flexport is a freight forwarder that aggregates many carriers under one platform and allows shippers to tweak relevant variables until they find the right fit. Shipwire provides a logistics marketplace of value-added services, allowing companies to send inventory to any warehouse and store on demand, by providing integrated order-entry systems that handle the pickup and delivery of goods.
 
Using various platforms, the Sharing Economy can match demand and supply at a fraction of the cost that confronts traditional brokers. This increases freight efficiencies and reduces freight costs. There is a surge for on-demand logistics services and platforms that connect suppliers and consumers, taking advantage of excess capacity to reduce costs.
 
This concept can be particularly helpful in countries with fragmented logistics systems, such as Vietnam, where such local players as Ahamove aim to address the severe fragmentation and inefficiency in the country’s logistics systems.
 
Shared logistics platforms can also be transformational – accomplishing scale and efficiency in countries like Indonesia and the Philippines that have large rural areas and many remote communities.
 
Big Data
 
Companies in every sector are capitalizing on Big Data to obtain accurate, data-driven insights in decision-making. Big Data enables the identification of bottlenecks and opportunities for interventions. In the world of logistics, Big Data offers solutions to problems as diverse as short-term, real-time route optimization to Strategic Network Planning, which is the forecasting of long-term demand for transport capacity.
 
Currently, data from GPS trackers is used to understand bottlenecks. Smart containers allow companies to deliver such value-added services as securing goods; monitoring the status of transit goods (using track-and-trace capability); and using predictive analytics to respond in smarter and faster ways to fulfill extremely short delivery times.
 
In Southeast Asia, Grab Taxi data allows heat maps to help policymakers find solutions to congestion issues. In Cambodia and Myanmar, Thailand-based Drvr is using Big Data to solve the fuel-theft issue. Truck drivers in those two countries often stop in mid-trip to drain their vehicles’ fuel for personal use, prompting logistics companies to reduce their drivers’ pay. Drvr uses Big Data to track those vehicles and detect such discrepancies, helping discourage theft and reward honest behavior.
 
Increased mobile usage – especially in markets like Myanmar that see an evolutionary leap happening in the ways they get online – will spur more such companies to leverage logistics data.
 
Looking ahead, considerable uncertainty surrounds the scenarios for achieving greater impact through the use of logistics technologies. Many trends have yet to mature, yet such trends could be transformational in developing countries. Adaptation could help emerging markets make fast progress toward strengthening their economies and moving toward an ever-higher level of economic development.