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The Changing Face of the Logistics Industry Brings Opportunity and Risks


There are several disruptive areas set to impact the future of the logistics industry, according to a report released by consulting company PwC called Shifting Patterns: The Future of the Logistics Industry. Evolving customer expectations, technology breakthroughs, new entrants into the industry, and new ways to compete and collaborate are reshaping the industry.  Following is an overview of what’s happening, according to the report, as well as what’s to come:

Changing Customer Expectations: Individuals and businesses are demanding that goods be delivered faster and at lower costs while also expecting greater flexibility. For example, the manufacturing sector faces the need to deliver far greater efficiency and performance than ever before, with more rapid speed-to-market times, reduced defect rates and customized products. Industry 4.0, as it has been dubbed, and the Internet of Things (IoT) are enabling manufacturers to redefine everything from the way they interact with customers to how they structure supply chains. This, of course, will impact transportation and logistics service providers who will be expected to provide much better traceability and predictability all at a lower cost through the integration of data analytics and social supply chains and smart warehousing solutions.

Technology Breakthroughs: Technology is changing the way logistics companies do business, with ‘digital fitness’, says PwC, a prerequisite for success. Those who understand how to exploit the wide range of the new technologies available – from data analytics to automation, platform solutions, artificial intelligence, and cloud technology – will be the winners down the road in delivering lower costs, improving efficiency, and meeting customer expectations. However, digital remains a challenge for the industry, with transportation and logistics companies lagging behind other industries. A recent PwC Industry 4.0 study shows that only 28% of firms in the sector rate themselves as ‘advanced’ on digitization. The risk in not capitalizing on these advanced technologies is being left behind.

New Entrants to the Industry: Advanced platform technology has opened the opportunity for new business models, including from start-ups and sharing platforms. One example of new start-ups includes virtual freight forwarders that exploit digital technology to offer interactive benchmarking of freight rates, or match shippers with available capacity. According to the PwC, many new freight forwarders entrants are basing their offering on more agile pricing with some allowing carriers to bid on loads in order to fill up capacity. Some are providing faster quote turnaround and greater price transparency. In addition, there are new companies tapping into the sharing economy by matching available capacity with delivery needs. UberCargo and UberRush are two examples of what is going on in the logistics sector. Traditional logistics providers need to explore opportunities for new products and services to compete with these new entrants, which are unencumbered by traditional and even outmoded processes.

New Collaboration: With the advent of new technology, collaboration is set to increase whether through alliances, joint ventures or M&As, which will enable current market leaders to retain their dominance. For example, greater use of ‘Physical Internet’ solutions could increase cooperation between companies and across transportation modes for greater standardized shipment sizes, labeling, and systems to improve the movement of freight.  Other collaborative approaches include logistics companies sharing fleets and networks in order to leverage their assets more efficiently.

PwC predicts these four disrupters will result in complex competition for the logistics industry. As a leading provider of insurance for transportation and logistics service providers, Roanoke Trade continues to keep a close watch on how the sector is evolving and the impact technology and other changes will have on the insurance needs of our clients. For more information about our products and services, contact one of our Roanoke Trade professionals at 1-800- ROANOKE (800-762- 6653).

Source: PwC

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