Market trends are driving growth in logistics while technological advances are opening up new ways for the industry to meet that increased demand.
An orphaned polar bear cub. Half a million bottles of vintage French wine. Organs for life-saving transplant operations. The logistics industry transports almost anything you can imagine to almost anywhere on earth.¹ The industry itself is also very diverse, encompassing everything from air freight to container shipping, from courier companies to port operators.
Our analysis has identified several major market trends and technological advances that have contributed to the growing demand for logistics and will underpin the digital transformation of the industry.
1. A growing customer base. The world’s population is growing and expected to reach 9 billion people in 2050.² With an ever-larger global middle class and expanded Internet access, increased demand for e-commerce will require logistics providers to deliver to remote locations in emerging economies for the first time. Air freight in emerging markets is predicted to increase by more than 1 million metric tons by 2018, with the fastest growth on routes between the Middle East and Asia.³
The logistics industry will also be affected by another demographic shift. Two thirds of the world population will be living in cities by 2050, up from just over half at present.
By 2030, it has been predicted that there will be 41 ‘megacities’ with populations of more than 10 million people. Megacities will provide a stiff challenge for firms tasked with making deliveries swiftly in a gridlocked metropolis.
2. Rise of the digital consumer. The advent of e-commerce has empowered consumers, who can now source products from anywhere in the world or compare prices with just the swipe of a smartphone. The number of smartphone subscriptions is predicted to almost double to 4 billion by 2025, with nearly all of that growth coming from emerging markets.⁴ As consumers become more used to digital services, they expect to receive the same quality and flexibility of service in other industries. No longer is it enough for logistics firms to deliver a consignment on time, they now also need to offer a multiplatform service to both personal and business customers.
3. Political and economic developments. Like any industry with operations based all over the world, the logistics industry is affected by geopolitical and economic developments. The three most significant are the price of oil, trade harmonization and growing concern about the environment.
The recent slump in the price of oil has improved profit margins for logistics businesses, although the logistics industry remains vulnerable to increases in the price of oil, which are expected when OPEC decides to regulate production more strictly in the future.⁵ Economic unions, such as NAFTA, the EU and ASEAN, have made progress toward trade harmonization within their borders. These free-trade areas have reduced the expense of processing trade documentation but increased the cost of complying with a growing body of regulations. Finally, society’s deepening environmental concerns are affecting the logistics industry. Companies will have to look at ways to use greener methods of transportation, reduce their emissions and cut down on packaging waste in order to offer sustainable logistics operations.⁶
4. Performance of the logistics industry since the 2008 financial crisis. The financial crisis of 2008 had a negative impact on the profitability on the logistics industry, with the market capitalization of the biggest players falling from around $700 billion to approximately $400 billion – the same level it had been in 2004. But the sector has recovered since 2008, with the market capitalization of the top logistics companies growing at an average of 15% annually over the six years to 2014.
The picture for revenues across the different segments of the industry has been mixed (see Figure 1). Boosted by an increase in demand for all forms of transport, transport support services recorded the highest average annual growth in revenues (6.5%) between 2008 and 2014. Rail freight also performed strongly, with annual revenue growth of 5.2%, thanks in part to the demand for rail from the crude oil industries in North America. Trucking revenues expanded at 2.5% a year, with this growth driven by an increase in freight volumes in emerging economies – the Indian e-commerce industry, for instance, has grown by 34% a year for the past five years. At the other end of the scale, marine shipping – the part of the logistics industry that was worst affected by the financial crisis – has seen its revenues continue to decline by an average of 1.6% each year.
5. The third age of the Internet. The Internet revolution has happened in three waves: first the desktop Internet in the 1990s, then the mobile Web in the 2000s and now we are entering the third age of the Internet. The most important technology trend of this new era has been the Internet of Things, a network of smart devices, sensors and the cloud that allows the physical world and computer systems to interact directly. The Internet of Things already consists of 7 billion devices – from fridges to thermostats to street lights – and is expected to grow to almost 50 billion objects by 2020.
Coupled with the proliferation of mobile sensors, the Internet of Things has the potential to improve the efficiency and reliability of the logistics industry – for instance, to automatically arrange freight on trucks and ships in as efficient a configuration as possible.
The Internet of Things has been underpinned by recent advances in cloud computing. Cheaper data storage and increased computational power mean that big data steams can be collected, stored and analyzed much more efficiently. This is enabling logistics providers and customers to conduct a real-time analysis of supply chain data.
6. Rise of the platforms. One of the biggest digital trends of recent years has been the emergence of giant Internet platforms such as eBay, Amazon and Alibaba. These platforms enable startups and small firms to operate in a global market from their first day of business. Customers, whether they are businesses or consumers, benefit from having a broad range of alternative suppliers to choose from.
7. 3D printing and driverless vehicles. Two other technologies have the potential to revolutionize logistics. There are potential applications for 3D printing, such as the printing of replacement parts or products on the spot, which could reduce the need for parts and goods to be shipped. There is still uncertainty, however, about the impact of 3D printing, and there may be opportunities for logistics players that specialize in printing and delivering products quickly and cheaply.⁷ Autonomous vehicles are another technology that could be transformational for logistics providers, by reducing operating costs while improving the reliability of deliveries. Mercedes is already pioneering digital trucks⁸ and Amazon is testing delivery drones.⁹
Building on our analysis of these trends, we have identified five digital themes – information services, logistics services, delivery capabilities, circular economy and shared logistics capabilities – that we believe will be central to the digitization of logistics over the next decade.
1. http://about.van.fedex.com/blog/orphaned-polar-bear-cub/ http://www.fedex.com/ae/enews/2014/may-june/weird.html / http://quick.aero/quickintl/
2. UN, 2014
3. AINonline, “IATA Forecast Shows Improved Outlook for Air Cargo”, http://www.ainonline.com/aviation-news/2014-10-24/iata-forecast-shows-improved-outlook-air-cargo.
4. Burt, David, et al. Cyberspace 2025, 2014, p. 9, https://www.microsoft.com/security/cybersecurity/cyberspace2025/#chapter-1
5. Tipping 2015; Deutsche Post AG, 2010
6. Deutsche Post AG, 2010
7. John Manners-Bell, 2014
8. Newcomb, 2015
9. BBC, 2015
Publicado originalmente en reports.weforum.org