11 Ways Tech Will Change Logistics in 2017

Zvi-Schreiber_S

By Zvi Schreiber, CEO of Freightos

In 2016, LEGO and Old Navy chose supply chain professionals to lead their organizations. There are precedents for tapping supply chain professionals as CEOs, such as Apple choosing Tim Cook after Steve Jobs.

This year, supply chains reached Silicon Valley (and not just in the form of logistics startups). Tracking Freightos’ LogTech summaries showed one overarching trend: logistics companies are eyeing tech solutions; tech companies are eyeing logistics markets.

We’re wrapping up 2016 with a recap of eleven logistics technology trends that shaped the year; and will change how goods are produced, shipped and consumed in 2017.

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1. Trucks Drive Themselves

Tech companies, not logistics companies, are making driverless trucks a reality. Google’s driverless car – Waymo – has driven over 2 million miles, Tesla self-driving technology is in cars across the US and Uber’s $680 million dollar acquisition of Otto resulted in a 100 mile truck delivery of beer in Ohio sans driver. All of which is fantastic, barring the fact that the White House estimates that 2.5 million US jobs may be rendered obsolete by trucking automation.

2. Uber For Trucking

Reducing excess capacity and making trucking more efficient has been a hot topic. A baker’s dozen of Uber-for-Trucking startups were joined this year by Uber itself. Less than month later, news broke about Amazon on-demand trucking aspirations. This isn’t just a drive-by-night business; Convoy’s landing Unilever as a client, proves that the big boys are listening up.

3. Drone Delivery

The FAA moved shockingly fast to establish aerial drone testing regulations. Amazon, 7-Eleven, Google’s Project Wing (RIP…ish), Maersk, Zipline and others made commercial drone delivery firsts this year. And ground delivery bots may be swarming the streets if Starship Technologies has its way.

4. Freight Booking Is (Slowly) Going Online

For years, online freight was limited to US domestic trucking. In 2016, it landed in Europe with a uShip/DB Schenker partnership. International freight quoting is moving online too, with major progress by enterprise providers, like Kuehne + Nagel, and startups (like the Freightos Marketplace). Partnerships between top tier logistics companies and tech counterparts are growing, mimicking a pattern playing out across other industries.

5. Everything’s Digital

For decades, freight was about bigger ships. Today, there’s global recognition that digital freight is the future. From Maersk (“We want to digitize more”) to DHL Global Forwarding’s CEO (“What is clearly needed here is a unified global technology platform”) and on to freight rate calculators, everything’s going online. Digitalization begets digitalization; logistics API aggregators Project 44 and 10-4 recently announced they were going into a strategic partnership as well.

 “What is clearly needed here is a unified global technology platform that can help deliver online quotation and booking … Everyone is moving in that direction, and logistics managers will come to expect it from all forwarders—regardless of size.”

Tim Scharwath, CEO of DHL Global Forwarding

6. Track It

International ocean shipping has long been a black box, devoid of more granular courier-style tracking. That’s also changing. MSC and CMA CGM (who collectively own 25% of the global container capacity) both invested in TRAXENS, a global container tracking solution. And the founder of Weft, which specializes in supply chain intelligence, launched a startup for global pallet tracking. On the port side, the Port of Los Angeles and GE teamed up to improve tracking and unloading.

7. Shaping Countries

It’s difficult to find the efficiency of US logistics networks replicated around the world. But in 2013, Alibaba set out with a 5-8 year plan to invest $16 billion in improving China’s logistics network, co-establishing Cainiao (last valued at $7 billion dollars). The goal according to Jack Ma:

build an IT-driven network capable of delivering packages to the doorsteps of consumers anywhere in the country within 24 hours.

8. Build Your Own Fulfillment

Back in the 90’s, Amazon focused on online sales before shifting into online payments, warehousing and then third-party inventory management. With massive shipping spend ($2.9 billion in Q3 alone), an effort to move into logistics is underway. From leased airplanes to freight forwarder licenses, and from drones to private truck fleets, no aspect of shipping is untouched.

 9. Money Down

CB Insights reported that an estimated $5 billion were invested in LogTech in 2016. Major fundings of logistics companies characterized 2016, like ZTO and Best Logistics (which picked up investments from Alibaba) and BlueGrace, which raised $255 million from Warburg Pincus. Warburg Pincus has made a habit of logistics investments, with big pickups in companies like Coyote (acquired by UPS) and New Breed Logistics (acquired by XPO).

10. Fast Fashion

Logistics is about enabling global supply chains. Nowhere is this better embodied than in fast fashion. Combining rapid design iterations with agile freight shipping enabled Zara to get a coat from design to store-window in under a month. Flexible supply chains, shifting sourcing, and RFID all play a role in this success story; while efforts to make it more environmentally-friendly are ongoing.

11. Customer’s (Time) Is King

Fulfillment is speeding up. After owning two day shipping, Amazon launched one hour Prime Now delivery, expanding in 2016 to 20 cities … and are creating the potential to drop that hour commitment further still, with drone delivery. Walmart followed suit with its two day ShippingPass program and in January 2016, Uber launched UberRUSH, a third-party fulfillment program.

Compare, book and manage shipments on the international online freight marketplace.