The logistics and transportation industry has changed rapidly during the past few years – almost everything requires logistical support and transportation. Whether it be manufactured goods, or items stocked at your local retailers – every time of necessity ranging from pharmaceutical goods, clothing, toiletries to foodstuff requires some aspect of transportation and logistics in order to reach the final consumer. Given the boom of e-commerce and online shopping, the need for efficiency and upgradation in the logistics environment is more pressing than ever, and almost every other person is thinking of starting a trucking company. Consumers have fueled the need for efficient logistic and transport systems for companies by demanding same day delivery and easier returns.
Gap in the logistics industry
The logistics industry, and all its subsequent players, are in fact compromising their golden future by limiting their chances for collaboration, hence reducing their incentives in the run. Within the logistics industry, certain players are as digital as they could be, while others still run on traditional forms using pen, paper and stick-on labels to identify packages and deliver them to their destinations. This gap between certain players leading the chain with all digital and modernized operations while others with century-old techniques is likely to create a hollow in the logistics industry which will ultimately affect all players in the coming decade.
Importance of the logistics industry
The underlying fact why logistics matter so much is because almost all aspects of consumerism require some form of logistical support. A hospital or a school being built in your locality? They need logistical support to successfully plan and execute the construction process making sure all required material arrives at site whenever it is needed. Your morning run to your favorite coffee shop? Chances are that the coffee beans that went into your morning coffee witnessed logistic chains in multiple countries and over months to finally arrive in your cup. Other than the obvious arrival aspect of logistics, they also deal with when and how much is to arrive to ensure that there isn’t a wastage nor a shortage of required materials.
How are logistics going to change
In order to continue the progress of already established logistics and transport companies such as Amazon, and in order to bring other players into the market to promote healthy competition, the logistics industry must look towards vertical integration. An example of this would be Amazon, a company which has leased airplanes for their operations in order to have more control over their already booming logistical operations. If a business cannot afford leasing planes – which is a bit of an extreme measure – it is recommended that they look towards AI and data analysis technologies in order to harness the power of digitization to gain control over their logistical operations.
Digitization of these processes would also enable other logistic and transport companies to collaborate amongst themselves in order for each player to benefit from their niche. For instance, if a logistic company operating in Colorado receives an order for Washington DC, they could simply sublet it to a company who specializes in this work in the capital. This way, companies can create economies of scale and use digital help in order to gain control and information about their orders at all times.
The main idea being digitization is transparency and for companies to easily understand the position, location and other details about all their packages and shipments. For instance, for any given parcel travelling from one city to another, the company should be able to identify its relative location, the number of the truck it is inside, the driver of the vehicle, and estimated time to delivery. Instead of having to make multiple calls and estimate where a parcel or shipment is likely to be, companies should be able to efficiently track the exact position of each parcel every single time. This is a step necessary to build faith and trust amongst customers who entrust their valuables with transport companies.
Additionally, the use of AI would enable logistics companies to predict demand certain times during the year and hence they would be able to prepare their fleet in a better manner. For instance, during Christmas, almost all logistic and transport companies face a heavy load of orders which often results in delays. However, if companies are able to prepare themselves for the Christmas season, they would be able to manage all orders in an efficient manner.
Founder Dinis Guarda
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