Megatrends in logistics – digital, connected and sustainable

Logistics, more than most other industries, is in a constant state of transformation. It must adapt its supply chains to the global and fast-moving market. Added to this are the increased demand for sustainability and the changed labour market. In this interview, Dr. Roland Keil, Managing Partner of Detecon and Head of the Market Sector for Travel, Transport & Logistics, provides an overview of the most important trends in the logistics industry and their influence on the developments of today and tomorrow.

Which trends are of particular importance for logistics?

For supply chain, the topic of sustainability is particularly relevant. In addition, the trend toward digitization of processes and workflows is becoming increasingly significant. The goal here is an end-to-end digitized supply chain. Hyperconnectivity, overall linked devices and human processes, is also an important trend for logistics.

In addition, the trend of autonomous driving is becoming increasingly relevant. I see great potential especially for yard logistics, the traffic flows in company depots, as a link between internal and external supply chains.

Logistics has a systemically relevant function, but despite its high economic importance, there is a shortage of truck drivers. Currently, we are missing over 50,000 professional drivers in this country. Events such as the Ukraine conflict exacerbate this problem, as there less drivers from Eastern Europe.

What developments will there be in transportation routes?

I assume that there will be no dramatic change in the modes of transport in the short term. The current logistics routes – road, rail, water, and air – will continue to be steadily expanded. Rail transport is increasingly relying on intermodality, i.e., connecting different modes of transport. At the same time, efforts are being made to further reduce CO₂ emissions from trucks. This is because the political plan to significantly increase the share of freight transport by rail is currently still failing due to the inadequate infrastructure. The necessary expansion will certainly take another ten to twenty years.

The issue of propulsion, i.e., electric trucks or hydrogen drives, are important aspects that should be kept in mind; however, they will not fundamentally change logistics. I consider the overarching use of drones to be unrealistic for practical reasons. Drones are more likely to provide relief in specific niches, for example for the regional transport of urgent items such as medicines or blood samples.

How can the current modes of transport be strengthened in a targeted manner?

I consider the development towards a platform approach to be particularly essential. Currently, the logistics market is fragmented, and each player is trying to serve its market. The various competitors, especially the smaller ones, know little about each other. This leads to avoidable empty runs and unnecessary CO₂ emissions. The countertrend is the development and implementation of platforms. In this way, capacities can be better utilized, i.e., outward and return trips can be planned, and drivers can be deployed more efficiently.

Another possibility is the use of partial routes. In this case, company's trucks only transport sections of a total route and hand over the vehicle or trailer to drivers who can continue the transport on the way back without taking a break or driving empty. This approach also requires cross-company cooperation with the aim of reducing pollutant emissions, increasing efficiency and delivering goods more quickly.

How can cross-company communication be established?

Communication is increasingly supported by tools. To accomplish this, a technology or communication platform must first be established on which processes are subsequently mapped in an automated manner. The basic concept is the sharing of data across companies. The prerequisite for this is the willingness to network with other market participants. Various platforms enable cross-company networking, especially for small and medium-sized enterprises.

Through which innovations is sustainability in logistics most likely to occur?  

I see great sustainability potential in the modular separation and reuse of load carriers. Examples include vegetable crates in retail, the replacement of clothes hangers in the fashion industry, or even the europallet. Logistics has already developed such reuse strategies for many industries. For example, there are specific stands for transporting car rims in a space-saving way.

A particular challenge of sustainability lies in its measurability. Companies should be able to answer questions about sustainability precisely: In which areas are we active? Is it a question of pollutant emissions – and if so, which ones? What is the current level of emissions in relation to the projected level? This is not about a management approach, but about facts.

How can companies ensure the know-how of their staff?

The role and functioning of logistics has changed. In the past, the focus was on transportation from A to B. Today, we know about the importance of information about goods as well as its data management in supply chains or networks. Increasing international flows of commodities require this more than ever. However, this requires complex capabilities not every company is able to provide internally. For this, too, I think it makes sense to join forces via a third party – this could be associations, government institutions or even research institutes. Small companies with limited resources could receive support this way instead of building their own systems.

What is needed to meet growing customer demands such as same-day delivery, on-demand logistics and subscription services?

We see the rise of more intermediate warehouses. The classic route of just-in-time delivery is becoming increasingly difficult and often no longer practicable. Too many influences are disrupting the supply chain, so buffers are being built up. During Corona we already saw a significant increase in demand for warehouses.

What can ensure and strengthen the further development of logistics?

The further development of logistics will be characterized by technological and socio-economic trends. Economic and social developments trigger the need for new technologies, which will only be successful in a business context.

The basic rule is that if an existing problem can be solved thanks to a new technology, that technology will prevail. The aforementioned shortage of drivers will drive the development of (partially) autonomous driving. The vehicles adapted to the specific areas of application will be developed in collaboration between vehicle developers and manufacturers. This is a cross-industry trend that can be observed, not only in logistics.

In the future, however, the further development of logistics will also be strengthened by cooperation in so-called ecosystems. This refers to platforms and networks that bundle the interests of many market players and thus lead to more efficient results. The current challenges require a holistic view of the factual issue, the environment, efficiency, and the impact on people. It therefore seems sensible to combine the capabilities of established logistics companies with innovative ideas of young companies and start-ups.

Origin of the interview

The interview was conducted by Robin Herrmann and Christian Henning as part of a project at the Heilbronn University Graduate School (HUGS).

 

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Contact: robin.herrmann97@t-online.de; christian.henning27@gmx.de