The future of trade in 5 trends
Global trade is changing. It continues to grow at pace, but - more importantly - it is transforming rapidly to meet the rise of a new generation of consumers, who demand both personalized products and customized services. For retailers at scale, this requires a comprehensive retooling of their supply chains. For logistics at large, this means significant changes are on the way – driven by new technologies and concepts.
This is an industry that already is at the leading edge of innovation. The McKinsey Global Institute estimates that the transportation-and-warehousing industry already has the third-highest automation potential of any sector. And according to PWC, there is “no other industry where so many industry experts ascribe a high importance to data and analytics in the next five years than transportation and logistics – 90% … compared to an average of 83%.”
Here are five core technologies and trends that will shape trade and logistics in the 2020s:
1. Hyper personalization
E-commerce is driving a fundamental shift in how individuals consume and their expectations for when goods arrive. As a result logistics operations can’t continue to focus on delivering 20 perfectly wrapped pallets inside a 40-foot container and making sure they land on schedule at large retailers; instead, consumer demand now expects these goods to be delivered directly to their doorstep, at incredibly low freight rates and incredibly high speed. What was once a waybill for one container to one location, now has to cover thousands of individual parcels to thousands of locations as well as returned goods.
During the next decade, when consumers step into stores, they will demand increasingly customized, personalized offerings. For retailers and wholesalers, this means tighter lead times, more turns and much more sophistication in getting products from A to B. This means incredible control and visibility from Free on Board shipping point to the Port of Discharge – visibility that is already leaning heavily on Internet of Things capabilities.
2. New cargo technologies
Self-driving trucks, drones buzzing through the skies to deliver the latest e-commerce order, and big truckloads of freight zipping through vacuum tubes at close to the speed of flight may still feel like science fiction to some, but they are in fact workable new technologies that are set to transform global supply technologies which – 20 years from now - will seem indispensable.
One of the biggest technology trends right now is arguably autonomous transport for both long distance and last-mile deliveries. Some of the technology industry’s biggest names and hottest startups are investing heavily in the space. Google is not just betting large on its self-driving car subsidiary Waymo, but also works on self-driving lockers to securely deliver directly to customers. Tesla has promised semis that can drive themselves in autonomous convoys. Around the world, not least in China, a wave of startups is focusing on autonomous last-mile delivery. PWC estimates that $150 million of venture capital have been invested in early stage digital logistics startups since 2011.
Completely new forms of transport are also emerging, like the high-speed Hyperloop system and its logistics incarnation Cargospeed, which was created through a partnership between DP World and Virgin Hyperloop One. This next generation technology provides hyperloop-enabled cargo systems for fast, sustainable and efficient delivery of palletized cargo.
Sustainably powered through solar energy, pallets can move to central staging areas to be broken down for last-mile drone delivery, or directly to retailers and wholesalers for the increasingly customised future of demand.
3. Increased automation
Warehouses and ports, generally constrained in space, will face significantly higher demands in the very near future. The need to process and transfer exponentially more from the same footprint demands a rapid transition to automation.
For warehouses, McKinsey estimates that almost every task – from how pallets are constructed and deconstructed, to conveying freight through a warehouse and across the loading dock – will be automated. Something as seemingly simple as building a pallet requires a high degree of intelligence; specific patterns for specific goods, that becomes increasingly complex the more variance there is to be packed. And the stakes are high – an incorrectly packed pallet can come apart, damaging goods worth tens of thousands of dollars and creating a serious hazard for those handling freight on arrival.
Just as skyscrapers and elevators made it possible for city planners to get significantly more occupancy out of each square kilometer of land – so can new technologies help logistics providers and port operators to get significantly more out of each square meter of critical operational area.
Take BOXBAY, an innovative concept which is set to bring a new level of speed and efficiency to port level logistics. Similar to elevators in a sky scraper, the system is built around a new and intelligent High Bay Storage (HBS) - a rack structure that offers unique advantages, because containers are stored up to eleven stories high, delivering the capacity of a conventional terminal in a third of the surface area.
Fully automated, it has direct access to each container, eliminating unpaid and unproductive reshuffling. It also features significant gains in handling speed, energy efficiency, safety and a major reduction in operating costs.
4. Efficient marketplaces
Another key component in enabling trade and the movement of goods has to do with how markets are constructed around key logistics hubs. The Traders Market project by DP World is a leading example for this approach. Spanning about 800,000 square meters – with construction beginning this quarter – it’s the first smart Freezone marketplace in the Middle East for retail and wholesale industries and aims to serve the wider region with a population base of over two billion.
The market will allow traders to benefit from lower supply chain costs and greater efficiency by using the world-class multi-modal infrastructure available in Jebel Ali and Dubai. International traders will be able to procure bulk products in Dubai at wholesale prices with the shortest delivery times and will be able to service demand more efficiently.
5. Logistics gets a digital makeover
The industry at large is getting in on the broader trend of digital transformation, by using new platforms and technologies that significantly enhance supply chain visibility and – therefore – efficiency. Emergent IoT capabilities are enabling closer tracking of parcels in transit, which is especially useful for consolidated freight and smaller, more urgent shipments that are increasingly defining the on-demand economy. Then there are technologies like blockchain, which promise to help run of robust transaction ledgers that can be used for everything from tracking of packages, to recording business transactions and facilitating bank transfers.
While the benefits of new technologies seem obvious, it is impacting the skillset required from employees within the industry. This provides opportunities for employees to upskill through digital training.
IoT and blockchain are, of course, not specific to logistics – but reflect broader technology opportunities that stand to significantly benefit the industry at large in the next decade. For OEM suppliers, factories, distributors and freight partners in-between, these technologies can integrate incredibly complex systems into a single pane of glass for unprecedented visibility and control. At companies like DP World, many of those benefits are already being realised today.
“The future is exciting – and for more reasons than just getting your e-commerce order sooner,” says [DP World Spokesperson.] “Smarter trade drives global economic growth and social progress. It helps nations grow, supports businesses, creates jobs and raises living standards.”