HomeNewsChange in logistics sector after large-scale technology adoption

Change in logistics sector after large-scale technology adoption

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The global economy has been adversely affected by multiple geopolitical concerns, including the aftermath of COVID-19 and supply chain disruptions arising from various ongoing conflicts. Every sector, including logistics, has faced the brunt of the economic imbalance.

In response, sectors are focusing on deploying technology to improve efficiencies, build resilience, and ensure sustainability. A major shift in approach is the widespread utilization of technology for the digitalization of logistics operations to minimize cost and reduce errors rather than maximizing the throughput.

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COVID-19 has accelerated technology adoption in the logistics sector. While technology advancement and adoption in the logistics sector have been ongoing, the sector had a conservative approach to innovation. This was further highlighted during the pandemic-induced disruptions, when organizations started deploying digital solutions such as data analytics for long-term forecasting as well as logistics planning for route optimization, capacity utilization, etc.

Ecommerce has been one of the key drivers of technology in the logistics space. While the pandemic served as a catalyst to the ‘delivered-to-home’ culture in the B2C environment, the natural progression to the B2-B environment is expected to impact the logistics operations of many organizations.

The shift from traditional electronic data interchange to application program interfaces with cloud integration has enabled logistics companies to connect with eCommerce marketplace platforms. It allows logistics providers to gain real-time information such as location data as well as to use automated billing solutions for logistics cost simulation.

For example, Project44, a real-time logistics visualization company, has helped a leading 3PL company save over $4 million by minimizing quote-to-invoice discrepancies and automating the documentation process.

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Technology trends such as AI, big data, IoT, automation, and robotics are considered essential tools for digital transformation across the sector, with a few use case examples being:

• AI usage for predictive logistics with a focus on capacity planning, network optimization, and last-mile delivery optimization. As an example, GE has developed an AI/ML tool, which utilizes digital twin technology to simulate the logistics process; it claims this would reduce the cost of logistics by 10%.

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• Deployment of AI and automation/robotics in freight (autonomous trucks), along with intelligent warehousing (e.g., machine vision, automated guided vehicles), is the foundation of a fully automated supply chain.

• Big data and analytics are utilized for real-time tracking and tracing integrated with logistics visualization solutions, among others.
Based on ongoing developments, blockchain has been a strategic focus for the industry, particularly when considering data and identity security aspects related to logistics data. This is evident from the industry-wide pilot projects executed by logistics companies.

A few examples are noted below:

• Maersk and IBM’s TradeLens ecosystem allows real-time freight tracking and automation in shipping logistics documentation. Since its inception in 2018, TradeLens’ ecosystem now constitutes over 1,000 companies and has tracked more than 55 million containers.

• Kuehne + Nagel’s blockchain-based logistics portal (2018) is used for logistics data storage and exchange, supply chain management, and digital bills of lading.

• CargoX, a startup utilizing blockchain technology for ocean freight, issues digital bills of lading thereby reducing the documentation cost by 85% as compared to the traditional document courier service.
Sectoral investments provide a perspective on technology developments.

As per a report by the World Economic Forum, titled The digital transformation of logistics: Threat and opportunity, the total opportunity for digital transformation in the logistics sector is greater than $4 trillion (2025). The forum divides digital transformation in the sector into five key categories.

Investments in last-mile delivery solutions, as well as platforms for information solutions and logistics services, have been focus areas for investors in recent years, with total sectoral funding in 2021 alone standing at over $20 billion.

While investments highlight the logistics sector’s improving sentiment on technology, another key trend to be noted is consolidation among technology providers to provide an end-to-end customer experience, for example, acquisitions made by Project44 in 2021.

These acquisitions include ClearMetal, an AI/ML-based solution provider; Ocean Insights, an ocean freight intelligence provider; Convey, a last-mile solutions provider; and Synfioo (acquired in 2022), a European rail freight information and visibility provider.

Increasing investment, a growing ecosystem of technology providers, and a push by organizations to improve logistics operations are driving large-scale technology transformation in the sector, while platform solutions based on a SaaS business model are expected to play a vital role in widespread adoption.

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Avishek Sarkar
Avishek Sarkarhttp://aranca.com
Avishek Sarkar, Assistant Manager - Growth Advisory, Aranca
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