The logistics industry acts as the wheels of any economy. It, thus, has to keep pace with the demands of the economy, not only in terms of volume but also quality. The logistics sector must accommodate the changes and cope with the challenges that fast-changing technology brings. It also needs to consider the increasing complexity of operations, growing environmental concerns, stringent regulatory authorities, and the most important of all — increasing customer expectations for real-time solutions.
The year 2020, with the unprecedented global pandemic scenario, added a new dimension to the challenges and opportunities within the logistics industry. Retail and hospitality sectors along with other industries and services were hit hard by a nationwide lockdown leading to project delays. At the same time, 2020 saw a significant change in consumer behavior with a dramatic increase in online shopping. The models of e-commerce and home delivery witnessed rapid growth. E-commerce sales were up by more than 31% at the end of June 2020 according to a CNBC report. This led to more opportunities in warehousing and allied logistics support services. These trends are likely to continue well into 2021 as well and may increase manifold with the logistics support now required for the nationwide vaccine distribution process that started recently. Cold storage and warehousing will also see a similar spike in operations.
The industry, in the above scenario, has to find relevant logistics and supply chain solutions to effectively meet new challenges and make the best of upcoming opportunities.
Some of the new trends on the horizon and those likely to gain strength in the new year and beyond are listed here.
- Emerging business models: Backed by the internet revolution and digitization of operations, third-party logistics aggregators have emerged as important players in the game. For small sellers who wish to take their businesses online, these aggregators help in providing complete post-order services like packaging, warehousing, and last-mile delivery. In fact, they are also helping local mom-and-pop shops generate new revenue streams by bringing them online while enhancing customer satisfaction and loyalty.
- Adoption of digital technologies: Digitization is driving efficiency and performance in freight management and boosting operational efficiencies of several transportation modes. It has also led to advances in warehousing automation. Some of the technologies that are being adopted can be broadly classified as under:
- Blockchain technology: This helps locate goods accurately in real-time, record and store all transactions, and safeguard and handle documents. Since the data can be stored safely in an open ledger of transactions transparently, it can be shared with all that stakeholders without the fear of being hacked. This leads to a very high level of customer satisfaction.
- Advanced data analytics: This helps identify peak and lean periods, optimize routes, manage labour and identify supply shortages to make appropriate changes.
- Internet of Things and Artificial Intelligence: These technologies help in better equipment and employee monitoring, enhanced in-transit supervision, streamlined business automation, and reduced human errors, leading to efficient end-to-end customer service.
- Cloud computing: Cloud-based solutions help minimize the cost of maintaining IT infrastructure. They provide universal access to data for analyzing logistical processes and ensure secure data sharing with stakeholders.
- Driverless vehicles and robotics: These technologies have opened up new avenues for the logistics industry. With these technologies, operations such as loading/unloading of trucks, palletization, and movement of boxes/containers can be automated. This technology will tremendously improve the speed and accuracy of warehousing operations offering easy traceability.
- New competition: The rapid rise of e-commerce businesses has seen technology companies like Uber enter the last-mile delivery space offering low prices to capture the market. This is likely to cut the margins of traditional freight brokers.
- Private-public partnership on vaccine administration
The Federation of Indian Chambers of Commerce and Industry (FICCI) has submitted a detailed plan outlining the support the private sector can provide during vaccine administration. According to the report, the private sector can help improve logistics and cold chain infrastructure along with other healthcare services. This is likely to open a new chapter of public-private participation in the logistics space.
These fast-growing, upcoming trends in the logistics industry will lead to more transparency, greater cost-effectiveness, increased efficiency, and better real-time solutions. These endeavours, in turn, will increase customer delight and loyalty.