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Reports Indicate Strong Growth Ahead for Logistics
September 25, 2019      

Being able to demonstrate an array of logistics capabilities to customers and prospects was one of the driving forces behind the money that DHL invested into its new Americas Innovation Center. The 28,000-square-foot center, located in northwest suburban Chicago, opened earlier this month.

DHL said it sees logistics as the underlying foundation of its businesses towards digitization. “Innovation will be more important than ever, as digitization drives the biggest transformation we’ve seen in the industry, Katja Bush, DHL chief commercial officer says in the DHL Logistics Trend Radar report.

According to the report, delivery speed, convenience, frictionless returns and transparency is driving the trend to omni-channel logistics, which DHL predicts will be a major trend in retail and beyond to provide customers with a seamless experience from purchase through delivery, and, if necessary, returns.

To meet the demands of the growing online market, driven primarily by business-to-business retail commerce, companies will need to have innovative logistics, according to PwC in its whitepaper, Shifting Patterns: The future of the logistics industry. The firm said it expects continued development of flexible fulfillment networks, inventory transparency solutions, new cost models for shipping, as well as evolving last-mile capabilities.

“Most of the new entrants to the logistics sector are start-ups, and many of these are looking to use new technology to enter the industry,” PwC said in its report. “To date, most of these are in ‘asset light’ parts of the value chain; for example, virtual freight forwarders. These asset-less or asset-light businesses exploit digital technology to offer interactive benchmarking of freight rates, or match shippers with available capacity.”

PwC adds that other new logistics competition could come from the autonomous vehicle and other industries that are tangentially involved in logistics. As an example, PwC points to Amazon’s purchase of a warehouse automation specialist, now part of its Amazon Robotics business unit.

Growth in online grocery orders will create specialized logistics challenges in the future.

Impact of Grocery Growth

While growing common retail goods are expected to dominate the growth in logistics, there will also be a growing need for specialized logistics as well, as shipments increase for fresh foods, medicines and other temperature-sensitive goods, according to PwC.

According to German online grocery site AllyouneedFresh, online grocery sales will grow 10 times faster than online sales over the next 10 years. While some of those items will be canned goods and items with long shelf lives, like cereal, other items like some fruits, meats, fish, etc., are very temperature sensitive.

Growth will also be pushed by consumer technology, according to PwC, pointing to the growth of connected devices like Amazon Echo and Google Home, which make ordering from home easier than ever before.

Though a nascent market, there are also smart refrigerators that can sense what’s inside and predictions that in the near future, a consumer could buy a refrigerator that would not only sense what’s inside, but could also automatically order when an item runs out or is low, such as milk.

Impact of New Technologies

Similarly, sensor technology is changing how logistics is handled. Industry 4.0, still in its early stages, is based in part on sensors and predictive analytics that will forecast parts failures and provide other insight. Automated ordering of replacement parts when needed (rather than on a regular periodic basis) is only a step away.

In total, DHL predicts that Internet of Things (IoT) technology will represent nearly a $2 billion opportunity for the logistics industry, with smart warehousing, real-time transport and predictive delivery all part of the mix.

Additionally, next generation wireless solutions, including evolving Wi-Fi and Bluetooth as well as wide-area 5G connections, will greatly increase online access to further support e-commerce and other logistics users. This means higher demand as well as higher user expectations for speed, transparency and convenience, DHL adds.

Blockchain, still in its early stages, could help improve the transparency, according to DHL. Blockchain enables all participants in a supply chain or other transaction to have “a single version of the truth.” The company said it also expects artificial intelligence to become ubiquitous in logistics as well as in other industries.

“To stand still is to go backwards – that’s why we need to bring technology into our supply chains, proactively and in a collaborative approach with our partners,” said Dave Sheldon, head of global supply chain development for Nestle, in the DHL report. “New ecosystems need to be developed to foster the next generation of solutions.”

Those new ecosystems will rely heavily on robotics, as DHL points out, citing Fetch Robotics CEO Melonee Wise: “Robots will one day be a common site in logistics, doing the heavy lifting and traveling the long distances to let people do more meaningful tasks. What will success look like? When robots empower people and enable those who know nothing about computers or robots to operate them.”

Although robots are becoming easier to operate as is other automation technology, the labor demand in logistics is shifting to more technical jobs, including programmers and mangers of robotic fleets, according to DHL: “Innovative new models of work will be needed for recruitment and retention of the increasing segments of millennial and Gen Z talent in logistics. Tools such as virtual reality can support operations by enabling workers to use technology for efficient onboarding, training and remote collaboration.”

Long, Strong Future

Other forecasts also foresee strong continued growth for logistics for some time, citing many of the same factors as in the DHL report.

For example, AT Kearney analysts predict strong continued logistics growth in the Council of Supply Chain Management’s 2019 State of Logistics Report due to:

  • Continued expected economic growth – the current administration is determined to sustain growth, and the Federal Reserve has reversed course from increasing interest rates to reduce them (the most recent cut of 25 basis points was on Sept. 18).
  • Shippers that continue legacy practices are falling behind those that are adopting new logistics approaches. “The rewards will go to those that seek bold new solutions.”