By Kushal Nahata
2017 was the year when digitalisation finally reinvented logistics. What does this 'new normal' mean for businesses on the ground?
Like most industries today, the logistics industry is going through the digital transformation wave, which is primarily driven by the proliferation of innovative technology.
In 2017, smart logistics technologies including tracking solutions for estimated time of arrival (ETA), route optimisation, and electronic feedback from customers enabled logistics companies to meet the ever-evolving consumer expectations.
With 2018 around the corner, changes in the logistics industry have again become a point of discussion for the logistics as well as technology companies. Logistics companies are looking for ‘reinvention’ or ‘game-changers’ to propel their business in the new year. It is time to look back on how logistics industry has shaped up in 2017, and how to take it ahead from here.
The future gets faster
FarEye foresees 2018 as a year of great change, so logistics companies need to fundamentally evolve the way they do business to avoid becoming obsolete or lose market share. Turning to ‘digital logistics’ is the way forward for logistics players to champion operational efficiency and deliver superior customer experience.
Technological advancements in the $8.1 trillion global logistics industry came by an industry-wide digitalisation of services that now enable the leading logistics and express courier companies to provide seamless customer delivery.
Digitalisation of operations will be a key driver in 2018 and the size of logistics industry is expected nearly double by 2024 to be worth a staggering $15.5 trillion.
Digital logistics have transformed the way logistics companies operate. DHL, Blue Dart, and Century Express among others, are a clear example. Automation and digitalisation have helped manual tasks to become real-time dynamic processes using mobility and geo-intelligence.
Web and mobile-based enterprise logistics applications that enable collaboration and optimisation of business processes provide both operational excellence and live visibility, much in the same way as consumers can track the status of their orders on Amazon.
Meanwhile, big data engines along with artificial intelligence (AI) capabilities learns about route and customer behaviour, which helps build customer-focussed logistics.
The significant enhancements in architecture for cloud-based computing also influences the logistics industry. For years, other technologies have provided huge amounts of data that can be used, but companies were rarely able to capture and organise that data, let alone harness its value.
The sophistication of software now allows all the data to be manipulated to generate a detailed status of activities, process flow, and predictive advice to proactively improve operations and prevent problems before they occur. The use of cloud-based platforms will become the core aspect of any logistics firm’s strategy to grow its customer base. The cloud is the fundamental resource that makes working on mobile-based devices and rapid data processing and analysis through the Internet of Things (IoT) possible and cost-effective.
Dubai Customs recently launched the new virtual freight and logistics corridor, which has streamlined the process of transferring cargo between shipping operators and handling authorities. The corridor automates customs procedures, allowing cargo to be moved in hours rather than days or weeks, with very little administration. Technological approaches like this need vision and commitment at a very senior level of government – and Dubai is taking great steps to drive forward more customer-focussed approaches to logistics, constantly strengthening its position as a global hub and port.
Bringing in the experts
For companies in the private sector, especially start-ups and SMEs, this digitalisation revolution in logistics can also come with its burdens – both technologically and financially. Having said that, we do see the rise of outsourcing supply chain logistics for companies to take the hassle of delivery, as well as to reduce costs and risks.
With such high expectations of clients, as well as internal pressures of cost combined with risk averse owners and investors, the digitalisation revolution in logistics is resulting in strong business for the global logistics outsourcers – such as DHL Supply Chain.
In August, the firm increased its Middle East revenues by 18 percent year-to-date, citing strong growth for the outsourcing of supply chains, with country economies under pressure and large private as well as public sector organisations “looking to drive increased efficiencies and focus on their core business activities”.
A recent example of this was Etihad Airways Engineering, which is outsourcing its entire internal logistics functions to them.
Taking it to the world
The new normal of global logistics has a vital economic and social knock-on-effect. Surprisingly, it receives little acknowledgement. Regardless of their industry – from manufacturing to retail to e-commerce, businesses can move up from local to national and international by leveraging smart logistics. Recent research by MAGNiTT showed that UAE hopes to achieve 50 percent of the MENA region’s top funded start-ups.
While the UAE is without a doubt a global hub for business, the way it is embracing digitalisation of logistics will mean that international companies operating in the country as well as home-grown Emirati businesses will be in prime position to trade efficiently in the region as well as globally. Working with technology partners who have proved their mettle globally will be the key driver of growth for logistics companies.