From delivering medicine to digitally-savvy older generations to the rise of shared logistics marketplaces. Here are four megatrends to strategise around in transport and logistics.
Trends in transport and logistics can be especially difficult to predict. “It’s hard to know in-the-moment which trends will have a lasting impact and which ones will be nothing more than a short-lived fad. So how do we best prepare ourselves?” says DHL’s Matthias Heutger, senior vice president strategy, marketing and innovation.
To understand, early-on, which trends offer truly game-changing potential for themselves (and which ones are hype), DHL created an ad-hoc trend research programme to help the logistics giant apply a customer-centric and open approach to identifying trends shaping the future of commercial transport. The research programme proved more insightful than DHL anticipated, so the company decided that instead of keeping these insights to themselves, to share them with other transporters.
“Based on our research, we have created a key instrument for the global logistics community – the Logistics Trend Radar. The report is a dynamic tool that captures the development of society, businesses and technology trends.”– DHL’s Matthias Heutger
The current state of logistics in SA
In South Africa, a variety of challenges are currently placing added pressure on transporters to monitor, improve or entirely re-think their operations. According to Blake Ferguson, chief operations officer at Barloworld Logistics, freight movers must evolve and become smart transporters if they want to succeed in this increasingly disruptive, digitally-charged environment.
Related: 4 Game-changing digital trends revolutionising the transport industry
In addition to complying with mounting environmental regulations, dealing with labour matters continues to be a challenging issue for local transport companies.
Ferguson notes that due to a tough socio-economic climate; heightened service delivery protests and labour risks can affect the future growth of transport companies (big and small). “Because local companies operate in an ambiguous labour environment, there is a greater risk of labour disputes in the future,” he adds.
As a ‘smart transporter’, Barloworld Transport is confident that it can automatically secure better rebates and negotiate more attractive deals all round, according to Ferguson.
But just how is the C-Suite executive able to speak with such confidence about the future of the transport conglomerate? He’s able to do so because Barloworld, like DHL, regularly monitors the trends that are shaking up the cargo-moving industry – both locally and abroad.
“We continually strive to optimise payloads, so that we can safely carry more while burning less diesel per ton delivered, for example,” he says. “And as a leading logistics provider, we have a mandate to create sustainable business processes, both internally, and for our clients.” – Blake Ferguson, chief operations officer at Barloworld Logistics
Increasingly, more and more companies are working together with Barloworld Logistics to strategise around sustainable transport solutions for the short and long-term. If you’d like to prepare your transport business for the future, you don’t have to necessarily collaborate with Barloworld Transport.
Why not strategise around these four trends that have been highlighted by DHL as potentially highly disruptive over the next ten years:
1. The rise and rise of anticipatory logistics
Telematics has already changed the way trucks are driven due to a fleet manager being able to monitor (in real-time) how an asset is being treated on the road. But DHL believes that telematics and the big data generated through it will be increasingly used in predictive algorithms by new ‘anticipatory logistics providers’ who could usurp you.
“To significantly boost process efficiency and service quality, big data can help shorten your delivery times by predicting demand before a request or order is even placed,” Heutger says.
Key developments and implications
DHL’s research shows that anticipatory logistics is driven by increasing customer (B2B and B2C) demand for shorter lead times – from order to delivery.
“First experiments are being made by retailers and transporters to anticipate demand. In a transport context, predictive maintenance will continue to become a key area of focus thanks to the Internet-of-Things which is enabling vehicles capable of predicting a logistics or maintenance need,” Heutger says.
Imagine if you could predict the number of loads a client will require in three-months? In the run up to seasonal sales periods, you can plan for retail customers stock to arrive in advance and service your trucks and trailers before your need to get them on the road to deliver.
A variety of uses for anticipatory logistics systems
Anticipatory logistics can be leveraged by online retailers who have analysed their customers’ purchasing behaviours to predict an order before it occurs. This can then be used to move goods to distribution centres that are closer to a customer who is likely to purchase the products.
“It can enable retailers to offer same-day or even one-hour deliveries. In future, prediction-based shipping will run alongside the traditional order-based delivery – the challenge for transport companies will be to integrate both methods in their operations,” Heutger adds.
The research also shows that in the next five years, real-time monitoring of smart assets (such as loading machines and trucks) will reduce downtime both for logistics providers and their customers. These intelligent assets can also anticipate spare parts logistics. For instance, the general wear of certain truck components could be predicted ahead of time so that your replacements can be delivered at the right time and to the right depot.
Related: 3 Elements to factor into your transport business’ growth plan
2. Greater demand for Grey Power logistics
DHL’s latest study shows that in five or more years’ time, the first wave of digital natives will enter the ‘aged population’ segment. “Grey power logistics – the logistics for an aging society – will offer new services (like home delivery of medicines) to answer to the resulting challenges of this demographic development.
As a transporter, you could strategise around integrating your logistics operations with medical and preventative care providers to deliver new services for digitally-savvy elderly people.
“The aging population is one of the key social challenges facing the logistics industry. Today, approximately one quarter of the population in Europe is above 60 years old and this will rise to more than one third by 2050,” Heutger illustrates. “This growing demographic segment alone will increase demand for new channels to access special medication, food, and care services within cities as well as in remote areas.”
He says that in future, you’ll need to provide specialised logistics services that cater to the needs of the aging society such as scheduled, temperature-controlled delivery of medicines to homes and preventative care supported by logistics.
Key developments & implications
As direct-to-patient healthcare services grow in popularity to support the everyday life of what DHL calls ‘silver surfers’ (who regularly use the Internet to access online services), today’s process of collecting a prescription and picking up the medicines at a local pharmacy could be entirely digitised in future.
“Authenticated online marketplaces for medical goods and pharmaceuticals will enable direct-to-patient deliveries,” Heutger says. “This will require increased cold-chain networks for the supply of medicines and other sensitive goods and specially trained delivery employees to ensure the integrity of these deliveries.”
He adds that new or refined value-added last-mile services that go beyond the delivery of traditional mail and parcel services, can be offered in parallel with the ‘classical’ delivery process to support the aging population.
A variety of uses for Grey Power logistics
DHL’s research shows that Grey Power services such as parcel pick-up, home delivery of groceries, conducting basic cleaning and transportation services, and even simple health checks – a concept which has already been piloted by DHL – can be considered as growth strategies.
“Grey Power workers – people who continue to work beyond their 60s – will also require new flexible HR conditions to cope with the upcoming worker and skills shortage (for instance, opportunities for part-time employment and flexible hours),” Heutger says.
In Europe already, a ‘Homecare Services’ project by transport and logistics firm Fraunhofer IML aims to explore new communication, order, and delivery services for an aging, digitally-savvy population. The transporters approach is simple: Provide a ‘seniors-only mall’ which gives the elderly online access to order products, and create a ‘control centre’ for allocation and route planning of this mall with a dedicated set of logistics resources for it.
3. An increasing number of logistics marketplaces
DHL’s report indicates a growing need for transparent, flexible and easily adjustable logistics services. This will foster the creation of disruptive digital ‘logistics brokerage platforms’ that match a variety of logistics demands with supply. It can be argued that these platforms will put an end to long-term logistics contracts.
Related: Trends affecting transport that every South African logistics business should prepare for
Key developments and implications
In recent years Cloud-driven marketplaces for a broad variety of services such as hotel bookings, insurance contracts, and car rentals have disrupted traditional ways of business. In logistics, freight exchange platforms already exist and, in future, these B2B marketplaces will evolve to potentially take over the traditional tendering and contract process for logistics services.
“These centralised marketplaces can provide visibility on the information, rates, and services of different logistics providers and enable customers and clients to choose the tailored logistics solutions they need,” Heutger says.
How can you react? DHL believes you can retaliate by actively driving or participating in these platforms – ensuring your services remain price competitive and as flexible as possible.
A variety of uses for logistics marketplaces
Logistics platforms will serve as two-sided online marketplaces that match the demand for and supply of logistics services through digital interfaces. All processes can be centrally managed by a brokerage platform. Any ‘customer’ will have the opportunity to find the right carrier for their logistics requirements by choosing from a wide range of large and small service providers.
“M2C (manufacturer-to-consumer) and B2C logistics marketplaces are developing due to growing consumer demand for cheap, reliable, company-independent courier and transportation services,” Heutger says. “Consumers can already compare quotes, book upfront, name their own prices, and receive auction-style bids from logistics providers ranging from independent owner-operators to the world’s largest freight carriers and brokers.”
To become a next-gen transporter, you could consider playing your part in freight exchange platforms and utilise the technology to provide real-time interaction between small to even the largest of logistics players. These platforms offer you a chance to find additional shipments or reduce empty runs – and find fast and efficient additional cargo capacity.
4. The Share Economy takes over
DHL says that a significant societal shift from ownership to asset sharing has been one of the most ground-breaking trends in recent years. “Everything from cars to parking spaces on driveways and home electronics can now be shared via dedicated platforms,” Heutger says.
“Besides facilitating these new peer-to-peer sharing networks, logistics providers can also share their existing corporate and private resources (such as containers and served routes) to be more cost- and time-efficient.”
Key developments and implications
While the trend of sharing assets was initiated by numerous start-ups that created unique peer-to-peer sharing platforms. These platforms gave way to new forms of collaborative consumption business models (Airbnb, Uber).
“Logistics can also participate in the sharing economy by sharing assets, warehousing capacities, and even truckloads. This can enable you to bridge efficiency gaps, avoid under- and over-capacities, reduce the cost of specialised freight services, and eventually foster horizontal collaboration in the sector,” Heutger adds.
DHL notes that even established companies have begun to embrace this approach (BMW DriveNow is one such example).
A variety of uses for the share economy
Picture how a peer-to-peer sharing network can facilitate your pick-up and delivery processes. DHL foresees that logistics operators could offer their depot or warehousing facilities to enable anyone in need of a logistics service to drop off goods for a small fee.
PepsiCo and Nestlé recently decided to bundle the warehousing, co-packing, and the outbound distribution of their fresh and chilled food products to retail stores.
“This lowers their costs, increases efficiency, and also reduces the carbon footprint of their supply chains,” Heutger explains. “Sharing of logistics assets and infrastructure with other logistics providers and businesses can increase capacity utilisation and reduce costs.”
Why not consider the sharing of forklifts with competitors or local businesses on weekends? Or offer warehouse space with an ‘on-demand’ approach? Why not lease you under-utilised trucks or trailers to other businesses or individuals for their special events?
The need to physically move goods is certainly not going away anytime soon, however the challenge is how you deliver returns in an ecosystem where innovation in services is set to generate more value than the transportation itself.“While volatility is here to stay, its pace is accelerating due to interconnectedness and interdependency. Navigating uncertainties and taking appropriate risk mitigation measures must become fundamental parts of your company’s value proposition.”– Global consulting firm, EY’s Randall Miller (global automotive and transport sector team leader)