Q&A with…. Frank Appel, CEO Deutsche Post DHL
What trends do you see in the next 5 years that could change the logistics landscape?
We at DHL have developed a “Logistics Trend Radar” which systematically scans for new technology, social and business trends impacting the logistics industry over the next 5 years.
From monitoring the developments in the radar, it is clear that moving forward new technologies will help logistics even more than in the past to be an enabler of connecting people and societies and facilitating international trade. Some of the technology trends that we see impacting logistics in a significant way are:
- Robotics & Automation: While today most robots are expensive and inflexible we see key changes in the world of robotics that will eventually lead to more effective robots across all aspects of the supply chain. Collaborative robots will enable that machines can work next to humans in a much more flexible way.
- Internet of Things (IoT): IoT presents a unique technology transition that will have huge implications on logistics. Moving from 15 to some 50 billion connected devices by 2020 will transform how goods are stored, monitored, routed and delivered to customers.
- Big Data: With everything being connected and millions of shipments being moved every day there is a vast amount of data with a huge untapped potential. Big Data and Data Analytics technologies can help us to exploit this potential to improve operational efficiency and customer experience and even create new business models.
The current initiatives that we undertake to bring new technologies to our industry demonstrate that in many use cases it is not about replacing people with machines but it is rather about using technology to help our workers to do their job in a safer, less stressful and more efficient way.
Next to technologies we also see social and business trends affecting the way we do business in the upcoming years. While we are sometimes hyped by technologies these trends need to be acknowledged in the same way.
- Fair & Responsible Logistics: While everybody is aware of the major impulse of change driven by technology, another transformation is also underway that will impact the way we do business in the future: a responsibility transformation where profits are generated through placing fairness and sustainability at the core of logistics organizations.
- Omni-Channel Logistics: The modern shopper’s journey cuts across different channels including offline and online options. Logistics as a backbone of retail needs to react to this trend offering solutions that ensure the customer’s demand for personalized and flexible fulfillment options are met cost-effectively.
- On-demand Logistics: new business strategies such as on-demand and crowd-sourced first and last mile deliveries that integrate individuals into professional logistics processes. This can offer new opportunities for logistics providers or even be disruptive by new competitors entering the logistics landscape.
How will the trend of Digitization impact logistics in the future?
Digital transformation has been disruptive to some industries such as the music and entertainment business and will also have a significant influence on the logistics industry. Also being a postal provider we have been exposed to this trend in an extensive way with mail being substituted by e-mail, and we have reacted by offering new digital services such as our E-Post service portfolio.
Looking at our core logistics business we also evaluated how the digitization of products with the use of additive manufacturing technology – better known as 3D printing – will impact our global supply chains. While 3D printing will evolve and market share will grow, existing manufacturing technologies will not go away. In segments where 3D printing will get applied, it will have a significant impact on logistics. 3D printing allows for a more decentralized production, close to where consumers and customers are. Hence we could see a shift from intercontinental to more regional/local distribution. At the same time, supply chains will get more complex due to higher individualization and shorter lifetime of products.
While we see 3D printing only being disruptive for certain product categories the trend of digitization could have a more disruptive potential in a way that overlying business models are digitized and marketplaces for logistic services evolve – in the same way Air B&B has revolutionized the hotel booking industry or UBER has disrupted the taxi industry.
Digitization and underlying technologies will also be a key enabler to make logistics processes and interaction with customers more efficient. Augmented Reality (AR) with the use of smart glasses for picking processes is one good example how we can increase efficiency, quality and safety using additional digital information guiding workers in a warehouse.
How will “Industry 4.0” transform logistics supply chains?
‘Industry 4.0’ – often used as a synonym for the Industrial Internet of Things – will have a tremendous impact on the logistics industry from creating more last mile delivery options for customers to more efficient warehousing operations and freight transportation. The logistics industry could unlock higher levels of operational efficiency as the IoT connects in real time millions of shipments being moved, tracked and stowed each day. In warehousing, connected pallets and items will be a driver for smarter inventory management. In freight transportation, tracking and tracing of goods becomes faster, more accurate, predictive and secure while analytics of a connected fleet can help to predict asset failure and to schedule maintenance checks automatically. Finally, connecting delivery men with surrounding vehicles and people can become a way of monetizing and optimizing the return trip to improve efficiency and service in last mile delivery. For customers, this means we can provide an even faster, more reliable and cost-effective service.
According to a study DPDHL Group conducted jointly with CISCO the IoT represents $1.9T in value at stake for the logistics industry over the next ten years, and the logistics industry has already been embracing IoT for a number of years albeit admittedly on a smaller scale. For instance, we were among the first to implement RFID technologies more than a decade ago. Sensor technologies are used on shipment level to monitor the transport of highly sensitive shipments. This includes measurement of humidity, shocks, brightness or location. And our containers, trucks and delivery vehicles are already embedded with many sensors that support real time asset and fleet management. Now we observe that with the consumerization of IT and the rise of new connection technologies, there is a lot more we can do in regards to IoT in the future.
Looking at the global markets, what challenges and opportunities do you foresee for the logistics industry?
Global economic uncertainties continue, and concerns about a global recession have slightly risen with some key economies currently in a recession (e.g. Brazil, Russia), conflicts in the Middle East strengthening and China`s transformation to a service- and consumer-oriented economy accelerating. Nevertheless, long-term economic fundamentals remain solid, and the transformation bears many opportunities for logistics.
Emerging markets continue to outgrow mature markets, with Asia still being the absolute growth driver. Even though China will not regain the peak growth rates of the 2000s, growth will remain above all major key economies, and the transition requires new, more complex logistics solutions.
Furthermore the increasing middle-class population is fuelling highly dynamic growth markets like e-commerce, supporting in particular the parcel and express segment.
The logistics industry will also continue to benefit from low oil prices and subsequent reduced transportation cost and more consumer spending.