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AI in Logistics: A Sea of Potential Amidst Waves of Change

Eytan Buchman

The Superconductivity Prelude

Late in July 2023, South Korean researchers made headlines with a potential discovery – now mostly debunked –  of a material that enabled superconductivity at room temperature. This teased a future that could make energy cheaper, levitate trains and solve algebra problems. 

I dove in too.

X, the platform formally known as Twitter, became instantly charged. In one example, an employee of Varda, a SpaceX-like company, began to publicly attempt to replicate the study and had over 10,000 people tuning in to watch a live stream of rocks in a furnace.

The science community is increasingly pessimistic that room temperature superconductivity was achieved. 

But this isn’t about Cooper Pairs or diamagnetism. 

It’s about the fact that for a week or two, the world sat at the edge of its seat, contemplating a radical paradigm shift; a force that would reshape Everything As We Know It. Bombastic, right?

But there’s another shift that’s out there – and it’s slightly less geeky. Artificial Intelligence appears to be ticking that same box…with more bonafides. 

Bill Gates on AI

“The development of AI is as fundamental as the creation of the microprocessor, the personal computer, the Internet, and the mobile phone. It will change the way people work, learn, travel, get health care, and communicate with each other. Entire industries will reorient around it. Businesses will distinguish themselves by how well they use it.” (Source)

Global freight, with its blend of structured processes, unpredictable variables and high frequency, is perhaps the most fertile playground for the AI revolution. Over half of all importers and exporters juggle shipments on spreadsheets. And that’s exactly where AI thrives.

Are we there yet?

However, amidst the buzz, despite what ChatGPT tells you, and as a check on my excitement, we need to separate the wheat from the chaff. We’ve been here before with Blockchain and Tradelens, which launched in 2018 and was done by the end of Q1 2023 – a good example of hype waves.

So, where does AI stand among logistics professionals?

So instead of talking about it, we decided to ask about it. Specifically, we asked about 60 supply chain professionals, including a range of providers and shippers from companies large and small. The goal? Do logistics professionals see the same AI revolution that Gates does? And if so, when and how?

First off, AI is gradually making its mark, and the buzz isn’t just empty noise. The expectations are absolutely there. A full 96% believe the industry will be changed by AI technology (and when was the last time you saw such consensus from both shippers and forwarders?

That said, while many tech companies may have been using AI for years, from a logistics practitioners perspective, we’re clearly at Day 1.

Only 14% have either adopted (7%) or are currently piloting (7%) AI-driven solutions. When it comes to how they are using it, there is also a clear trend, with 75% deploying AI for pricing (like freight rate management) and another half tapping it for shipping operations, while others are branching into sales or customer support with AI.

Down the line, companies anticipate similar use cases, with the primary areas of interest pricing (64%), customer service (56%), operations (51%), sales (35%), and software engineering (24%).

Download the full survey results

The Motorboats vs Container Liners

AI adoption trajectories diverge when comparing SMBs to larger enterprises. The first divergence is on implementation. Much like one would expect for small and nimble companies (or companies with younger and more malleable stacks), SMBs – companies with fewer than 250 employees – are ahead of the curve: 37% of them already have concrete AI strategies, compared to 21% of their larger counterparts. 

Larger enterprises are forecasting a wider AI scope, particularly in pricing (71% vs. 56% for SMBs), shipping operations (64% vs. 37%), and engineering (32% vs. 15%). However, SMBs see a brighter AI future in sales automation (41% vs. 29% for big businesses). 

What’s Coming Next?

AI is almost certainly not hype. Interestingly enough, no enterprise respondent said it was hype and just 5% of SMBs did. Over half envision a game-changing impact from AI while 43% predict a more measured transformation.

But improvements don’t happen in a vacuum and some significant challenges may loom. A significant share (84%) believe AI might trim the workforce. Specifically, 53% anticipate a limited reduction, while 31% foresee substantial cuts. Enterprises, more than SMBs, sense this looming change, with 38% vs. 26% bracing for significant reductions. Notably, a handful of SMBs (7%) harbor hopes of AI birthing new roles, a sentiment echoed by only 3% of the larger entities.

Time To Connect

Circling back to Bill Gates here. 

Picture two logistics companies: one using the internet and the other not. It’s pretty clear who will come out ahead. The people at the company make the magic happen but it’s a whole lot easier with connectivity and software. 

When it comes to AI, that’s exactly the parallel Gates drew. 

While Mick Jagger might not trust ChatGPT to ship his guitar, it’s clear that the winners in logistics won’t be humans or AI. It’ll be humans amplified by AI.

This is difficult. Today, AI is a blank slate. Opening up ChatGPT just gives users the same blinking cursor and blank white text box. But companies must experiment – carefully – and embrace the tools that help them move…so that they can move goods for their customers.

Download the full survey results

Eytan Buchman

CMO, Freightos Group

Eytan Buchman loves freight so much he shouts out container sizes while he walks around. He’s obsessed with marketing, data storytelling (it’s a thing!) and bakes really good cookies. He’s the Chief Marketing Officer at the Freightos Group, which runs Freightos, the world’s leading online freight marketplace, and WebCargo, the digital network connecting logistics providers with airlines and ocean liners. When he’s not thinking about pallets, he hosts the Marketers in Capes podcast, and consults to a number of startups and nonprofits. He still likes Minidisc players and has never skied. Ever.

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