Comment: The future of logistics
Never before has the logistics sector been in such a state of divergence. From a service perspective, consumers are demanding shorter lead times and greater transparency. At the same time, the environmental imperative has never been so great, with the transport sector being responsible for 24% of global carbon emissions as well as being heralded as the main perpetrator of the poor air quality experienced in major cities across the world. Rising fuel costs and driver shortages have increased the cost of doing business, meaning that financial investment to overcome the service and environmental demand is limited for the large 3PL’s and practically impossible for smaller logistics service providers.
Whist this would appear to be a bleak picture, there are indications that the recent advancements in technology may hold the answer to the contemporary challenges facing the sector, however, these solutions may be different from those receiving all the attention at the moment.
Even a cursory exploration of trade press and corporate press statements indicates that the sector is investing in technology in four main areas: Electric vehicles, platooning, automation and driverless vehicles. There is concern, however, that these developments will truly address the environmental concerns associated with the sector.
A recent Bloomberg report indicates that whilst electric vehicle adoption will be quite high for private cars and light commercial vehicles, adoption in the heavy goods vehicle market is predicted to only reach 19% be 2040. Coupled to this, the rise in adoption of electric vehicles will drive a phenomenal demand for lithium, the mining of which is strongly associated with child labour and extremely dangerous working conditions.
Platooning is the use of technology to “link” typically three trucks in a convoy, reducing the effect of aerodynamic drag and increasing fuel economy. Whilst the theory of this initiative sounds good, early adopters have suggested that the application and benefit of this practice is limited, as it is difficult to coordinate, and the fuel advantage is only realised on the middle vehicle.
The developments in automation and driverless vehicles are also interesting. The adoption of automated warehousing is gaining momentum as automated solutions become smarter and more reliable, increasing productivity and capacity of distribution centres. The advent of 5G connectivity is likely to see driverless vehicle technology develop to the point where driverless vehicles are able to operate safely and efficiently across the world. These last two developments certainly make logistics more efficient and address the concerns associated with labour and skills shortages; however, their primary benefit is not environmental.
The solutions to the sector’s challenges are likely to come from the technology evolution referred to as Supply Chain 4.0. Based on the pillars of Industry 4.0, Supply Chain 4.0 is the adoption of technology such as additive manufacturing, cloud computing, the Industrial Internet of Things, Simulation, and Blockchain to enable vertical and horizontal collaboration in the supply chain. The future is a trusted and transparent supply chain, where simple components are printed rather than shipped, where inventory is pulled by real-time demand and not shipped and held “just-in-case”. Blockchain technology means that every stakeholder in the supply chain can see every transaction, and freeing up the movement of goods and simulation means that errors are made in the virtual world and things are done right first time in the physical world.
There is, and always will be, a carbon cost to doing business. However technology - the right technology - implemented in the right way, with the desire to collaborate, can change the nature of the sector to support an environmentally sustainable global supply chain.