Key Trends Shaping Logistics Market in 2018
18 Oct 2018 • by Natalie Aster
LONDON – In the wake of the surging e-commerce sector along with the constantly rising level of digital literacy amid consumers, the world’s logistics market has demonstrated torrid growth during the past few years and is poised to continue expanding at a swift rate. Factors such as the increasing number of dual-income households, rising disposable incomes, and ongoing rapid urbanisation have given a boost to the development of the logistics industry in both emerging and developed countries. Different companies have started engaging with providers of logistics services in order to cater to customised demands of modern consumers. Furthermore, the robust development of retail channels and, thus, the escalating demand for efficient inventory and warehousing management solutions also add to an upturn of the logistics sector. The world’s logistics market is predicted to keep to an upward trajectory in the next 5 years, registering a CAGR of above 7%.
Here are the most prominent and influential trends transforming the landscape of the logistics market in the year 2018:
- Ongoing Digitalisation
Digitalisation is a booming trend that is shaping almost all industries worldwide, and logistics is no exception. On the back of the rising awareness among consumers across the globe about the use of various online platforms for making purchases, the digitalization of the logistics sector has emerged as the prominent trend gathering utmost momentum. The integration of digital channels allows logistics market players to make their services more transparent for customers and optimise solutions to increase efficiency and safety. Further penetration of digital technologies in the logistics industry is further anticipated to considerably reduce procurement and supply chain costs whilst giving an impressive boost to the overall revenues.
- Emergence of Connected Logistics
Another trend that has been gaining traction in the logistics market during the recent years is the increasing automation spurred by rising adoption of Internet-of-Things (IoT). The integration of IoT in the logistics sector has allowed to successfully overcome various shortcomings like operator errors, transportation delays, outdated IT failures, poor cargo monitoring, thefts, amid others. Besides, IoT is projected to be leveraged for obtaining real-time automated insights, for example, to foresee equipment failures and mitigate derailment risks by the use of IoT-based systems and visual and acoustic sensors. The ongoing automation of the logistics sector and growing adoption of IoT has encouraged the emergence of connected logistics.
- Introduction of 3PL and 5PL
In 2017, third-party logistics (3PL) contributed the biggest share to the world’s logistics market. It is responsible for encompassing a wide spectrum of end-to-end logistics needs comprising transportation of goods, maintenance of travel insurance andinventory logs, and protection from property loss. 3PL has emerged as an important breakthrough in supply chain outsourcing, as it helps to reduce procurement expenses as well as shorten delivery times. The increasing complexities in the global logistics sector are further ensuring the adoption of fifth-party logistics (5PL). The proliferation of 3PL and 5PL is forecast to spur further growth in the world’s logistics market in the years ahead.
- Increasing Penetration of Big Data and Data Analytics
The rising use of Data Analytics and Big Data in the logistics sector allows stakeholders engaged in the business to take informed purchase decisions. Today, many companies use Big Data to foreknow busy periods, anticipate future supply shortages and receive other insights necessary for making the right strategic decisions to strengthen their market position and gain a competitive edge over rivals. The majority of shippers and 3PL firms consider that data-driven decision-making is of paramount importance in supply chain activities, because Big Data helps to improve performance and quality by offering effective demand and supply forecast, route optimization, inventory management, and efficient labor management, thus, propelling an upswing in the global logistics market.
- Adoption of Blockchain Technology
The penetration of blockchain technology has enabled the logistics market players to failsafe digital contracts: this technology allows various stakeholders engaged in the logistics industry (e.g, suppliers, manufacturers, customers, warehouse managers, auditors, etc.) to create an efficient and at the same time transparent system for recording different transactions, managing all documents, and tracking assets. The penetration of blockchain technology in the logistics sector is gaining traction at a rapid pace due to its undeniable benefits; it is predicted to have a positive impact on every sector of the logistics industry from warehousing to delivery in the years ahead.
- Increasing Concerns about Logistics Security
The rising connectivity to the Internet has resulted in enhancing concerns amid companies regarding cybersecurity and logistics safety. Moreover, the increasing number of hacks into e-commerce websites have identified potential cybersecurity threats and, thus, encouraged logistics providers to make a greater focus on the security of their services. Besides, the protection of consumers’ personal data is another important concern emphasizing the safety of logistics solutions as one of the key priorities. Nowadays, companies involved in the logistics industry use various modern technologies, for instance, automatic identification and data capture (AIDC), to monitor shipments in real-time.
- Rising Implementation of Chatbots and Cobots
The usage of voice-controlled chatbots for communication with customers at various purchase stages in a supply chain (e.g., ordering, shopping, picking, etc.) is projected to continue gathering momentum in the global logistics industry in the near future. Moreover, the logistics sector is set to see the increasing adoption of robots to perform a range of functions in warehouses (e.g., picking, storing, packaging, etc.). Many market players also implement collaborative robots (cobots) which assist workers to fulfill multiple warehousing and delivery operations, and this trend is slated to continue in the years ahead. Furthermore, a new robotic business model, Robotics-as-a-Service (RaaS), is on the rise; it has already penetrated the logistics sector allowing 3PL firms, e-commerce sites, and retailers to use robots to cater to their fulfillment needs and is predicted to spur growth in the world’s logistics market in the offing.
- Integration of Drones and Smart Glasses
The deepening penetration of drones in the logistics industry helps to improve the speed and flexibility of delivery, thus, primarily impacting the development of the last mile logistics sector. A great number of autonomous and self-driving vehicles and trucks are used worldwide to maintain same-day and high-reliability deliveries in urban as well as rural areas. Furthermore, the adoption of smart glasses integrated with augmented reality in the logistics industry allows to make deliveries much easier, error-free, and personalised. Besides, this innovation will help to boost the operational efficiency of the last and first mile logistics and also improve the speed and flexibility of deliveries.
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