Carly Fiorina, the former CEO of Hewlett Packard, famously stated, “Everything that can be digitized will be digitized.” This statement has become the writing on the wall for entire industries, including transportation and logistics. This serves as an ominous warning to those who are too late in recognizing and adapting to technological developments—and may soon find they are no longer relevant to their markets.
The opportunities for digitized logistics are huge. The disruptions are so comprehensive and so complex that the exact implications are difficult to forecast, but the task for carriers, logistics service providers and all service providers in the industry must be to shape the changes in their field quickly and consistently to gain competitive advantage.
Don’t be deceived about the speed of change. The IT industry is extremely transient and innovations are being developed rapidly. Exponential increase in computing power and the development of software is producing solutions that would have been considered science fiction only a short time ago. The availability of information on the internet, satellite-based vehicle navigation, smartphones, big data, self-teaching systems and autonomous driving were all impossibly far in the future only twenty years ago, but are now reality.
New business models, opportunities for digitized logistics
Industry is well ahead of logistics in the field of digitalization. Bart de Muynck, the Gartner analyst responsible for the Magic Quadrant for Transportation Management Systems report, confirms it. “When I talk to supply chain managers in industry,” says de Muynck, “I see a real need for real-time end-to-end visibility for the supply chain.”
Industry is already thinking in greater dimensions in this field. What effect will the technical possibilities have on the way we manage processes today? What new business models, such as the recent development of 3D printing, are possible? Dr. Wolfgang Bernhard, head of Trucks & Buses at Daimler AG, foresees completely new business options in the networking and connection of trucks to the cloud and for all involved in the new era of digitized logistics — manufacturers, carriers, workshops or even government authorities. “The truck is a data gold mine and real-time data are essential for business success in logistics,” says Dr. Berhard. Completely new market opportunities are opening for logistics, such as spare parts supply as a link between manufacturer and user. UPS has already equipped the first stores in the U.S. with 3D printers.
The fact that shippers, manufacturers and trade industries are moving ahead with digitalization, and carriers and logistics service providers are following is primarily due to the nature of the different fields. Industry and commerce issue the orders, they determine processes and they set the framework conditions by their structures. LTL and FTL carriers have many different customers, an in-house fleet and subcontractors that add complexity to their operations, which can be viewed as a handicap. On the other hand, there is an immense potential for optimization and actual cash returns on investment.
Optimization by collaboration
If the carrier could access the data of a completely digitized fleet—not only for company vehicles, but also for all subcontractors and charter vehicles—and had the ability to process that data, the carrier’s profits and competitive position would be greatly improved, empty trips could be avoided, the positions of vehicles would be known at all times, and customer service would be more flexible and more efficient.
This requires collaboration. The optimization is implemented between the companies in the process. Industry, commerce and service providers must all cooperate to achieve this. They must be prepared to share data and establish transparency. Virtually everything is technically possible today, such as transportation management with end-to-end visibility, management of dock scheduling with real-time vehicle control, yard management, digital proof of delivery, invoicing, damage documentation, pallet handling, automated order assignment and more.
We will continue to show you the options already available and those we are developing for the future. As established service providers for the industry, we are concentrating on the areas with the greatest potential for market justification and increased efficiency. This includes communications between shipper and carrier with reference to empty miles, wait times and logistics costs in general.
In many cases, carriers have implemented a vast amount of changes—and the results are clear: A shipper who achieves faster throughput by digitized logistics methods such as dock scheduling will find that the project, in most cases, will pay for itself within a few weeks. Carriers profit from improved planning and the costs of investment in hardware—such as smartphones and ELDs, system implementation and training—are quickly repaid.