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Updated 20 Oct 2020


The future of transport: Key disruptions and how you can prepare for them

It’s time to adapt to changing markets and adopt proactive thinking if you’re going to come out triumphant in the transport sector in the years to come.


26 December 2017  Share  0 comments  Print


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According to PwC’sShifting Patterns: The Future of the Logistics Industry,the transport and logistics sector is standing at a precipice – facing immense change. “And like all change, this brings both risk and opportunity. New technology, new market entrants, new customer expectations, and new business models,” the report suggests.

As part of global consulting firm PwC’s Future Insight Series, the report highlights numerous ways that transport and logistics businesses could rise up to meet the disruptive challenges they face. 

“In our report, we discuss four key areas of disruption that logistics companies need to focus on now. Transport businesses are facing an era of unprecedented change as digitisation takes hold and customer expectations evolve. New technologies are enabling greater efficiency and more collaborative operating models; they’re also re-shaping the marketplace in ways that are only just beginning to become apparent.”– Andrew Tipping and Peter Kauschke, PwC

Related: Trends affecting transport that every South African logistics business should prepare for

PwC’s research shows that new entrants into the transport industry, whether they be start-ups or the industry’s own customers and suppliers, are shaking up the sector. The firm highlights four key areas of disruption that might concern you as an established transporter:

Disruption 1: Sharing of the (PI)e

PwC states that one of the dominant themes emerging as a disruptive scenario in the logistics sector is one where collaborative operations gain tremendous momentum. “This can allow the current market leaders to retain their dominance if they make better use of ‘Physical Internet’ (or ‘PI’) solutions to communicate and collaborate on shipments,” the report says. 

How does it affect transporters?

Growing penetration of on-demand services and platforms that can accommodate real-time logistics delivery will empower consumers in both the B2B and B2C realm to question why they have to wait for their products. As an established transporter, you must strategise around how you can use the Physical Internet and the solutions that come with it to become a more collaborative business.

To prepare for a future where increased collaboration is expected, you need to have digital platforms in place that accommodate streamlined communication between you and your transport customers. Using telematics systems and online reporting systems, you can increase the visibility of your business to clients, ensuring they aren’t chasing you up for deliveries.

Disruption 2: Dealing with new entrants

Another disruptive scenario that established transporters must factor into their tactics for the future is the rise of the transport start-up. “In this scenario new entrants in the form of start-ups can make a big impact in the sector,” PwC’s report says.

How does it affect transporters?

When it comes down to the challenging and costly ‘last-mile’ leg of delivery in particular, there’s an opportunity for start-up businesses that leverage technology to usurp established distribution businesses. Already, companies like Otto that are powered by Uber software are making headlines in the USA for meeting on-demand logistics. Otto is even looking at self-drive trucks for their fleets, as an even more disruptive element for established transporters with big fleets and a large payroll of drivers to deal with.

As digital technology penetrates the sector further, PwC believes that exploiting new solutions like crowd-sharing platforms will be the ideal way to deal with new entrants. You should consider how your business model can evolve to accommodate the services clients are going to be offered by start-ups – or you’ll lose revenue to them in the years to come. It’s reasoned that you could partner with a start-up, collaborate with them and complement each other’s services.


F&S ON THE FUTURE OF TRANSPORT AND LOGISTICS

Business consulting specialists, Frost & Sullivan runs a global commercial vehicle programme that’s aimed at providing clarity for business owners to make strategic decisions in the logistics sector. The firm works closely with leading original equipment manufacturers (OEMS), Tier one suppliers, governments, regulators, and financial services providers to deliver prescriptive research and advisory services. 

“By 2030, a little over a decade from now, truck platoons, fully-autonomous trucks and autonomous ships will carry cargo, which is going to lead to major savings for transporters in the form of reduced fuel consumption alone. Almost 20% of fuel used by long-haul road transporters can be reduced through platooning alone. Models such as ‘Uber for Trucks’ will drive established companies towards web- and mobile-based freight brokerage.”  


Related: 4 Game-changing digital trends revolutionising the transport industry

Disruption 3: Competing in an evolving landscape

Evolving -landscape

As collaboration between transport and logistics companies (driven by technology) increases in the years to come and more start-ups look to topple established businesses, the competitive landscape is expected to evolve. Trucking companies will be going head-to-head with tech-driven firms that might not even run their own fleets or own any warehousing space. Added to this, some of your customers might even opt to launch their own in-house transport businesses.

How does it affect transporters?

“Here the competitive set progresses in a different direction, as large industrial or retail customers and suppliers become players in the logistics market themselves, not just managing their own logistics but turning that expertise into a profitable business model,” the report says.

If your largest customers decide to leverage crowdsourced logistics models that don’t require signing long-term contracts, you might find it challenging to maintain cash flow in your business. It’s advised that established transport and logistics companies look at ways in which they can partake of the evolving competitive landscape – offering on-demand services to compete with emerging businesses to ensure revenues and profits.

Disruption 4: Scaling the business through innovation

In the past, growing a transport business meant buying more of your own trucks and trailers, building new depots around the country and hiring more people. However, now and in the future more transporters will have to turn to creative ways of growing their businesses because of asset sharing, collaborative operations and crowd-sourcing.

How does it affect transporters?

“In this scenario, the current leaders in the field will compete for a dominant market position by acquiring smaller players, achieving scale through consolidation, and innovation through the acquisition,” PwC’s report says. You biggest competitors might already have an acquisition strategy, one that’s focused on buying up-and-coming transport business players to gain access to technologies, people or processes.

Related: 3 Elements to factor into your transport business’ growth plan

Innovative ways to scale your company can come in the form an acquisition of a start-up that brings with it the fresh technology you need to improve operations. You could also look at asset sharing; instead of building depots and warehouses on your own, you can partner with a transporter similar to you and invest in infrastructure together. Keeping the cost of scaling as low as possible is essential to success in the future, according to PwC.

“Customer expectations are increasing greatly. Both individuals and businesses expect to get goods faster, more flexibly, and – in the case of consumers – at low or no delivery cost. Manufacturing is becoming more and more customised, which is good for customers but hard work for the logistics industry. Add it all up and the sector is under acute and growing pressure to deliver a better service at lower cost,” PwC says. 


If you’re uncertain of the disruptions on the horizon, why not contact Standard Bank’s transport sector specialists? We can help you scale and innovate through an array of financial solutions and digital banking technologies such as Business Online.

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