Sunday 18th Nov, 2018

INDUSTRY OPINION: Will logistics tackle the challenges it’s facing?

Image: Shutterstock
Image: Shutterstock

By Molly Connell

THE logistics industry plays an important role in the Australian economy. According to ACIL Allen, in 2013 over 1.2 people were employed in the sector which accounted for 8.6% of the nation’s GDP. Countless other industries rely on it, 1% improvement in the efficiency of this industry can generate $2 billion of gains to the economy each year. And there is definitely a need for improvement.

Along with the global increase in shipping demand, both Australian imports and exports have increased in the past 10 years and the Australian parcel market is estimated to grow 9 to 12% from 2017 to 2021. The only way the logistics service providers can keep up with this growth is by implementing innovative automated, digital solutions. The automation and digitalisation of the industry opens up unprecedented opportunities to enter new markets and restructure existing business models and this is what the retailer giant, Amazon and the most valuable startup in the world, Uber are taking advantage of.

Uberisation of delivery solutions
One of the key trends in 2017 was the disappearance of brokers, companies are working on directly connecting clients with service providers. UberRush is built on the same concept. In some cities in the U.S., through the app shippers can connect with carriers who are freelance drivers.

Amazon is also contracting private carriers in its Amazon Flex program to deliver its packages to customers. Last mile delivery can make up 30% of shipping costs, so reducing costs in this sector can make a significant difference. This model doesn’t only exist in last mile delivery, though.

Uber Freight, the company’s app for trucking, has received a lot of media attention. Not only are they applying their successful ride-hailing model to freight forwarding but they have been testing autonomous trucks and cars in Arizona until recently, when one of their driverless cars caused a fatal accident after which the testing was paused.

Startups around the world have been trying to improve the trucking sector’s efficiency, the Australian app Channel 40 among them, and are proving that there’s a remedy for the shortfalls of current industry practices and existing load shifting sites.

The rise of networked logistics
With sufficient data, all sector of logistics can be improved. Nowadays tires can be equipped with IoT sensors to improve gas mileage and to prevent accidents by tire blowouts and groceries can be ordered by scanning the empty containers at home. Amazon recently bought Ring, the smart doorbell company to install systems in its customers’ houses that lets the delivery person leave the packages in a safe place but still give the owners control through a camera system.

The retailer is also known for its chaotic storage which is based on a complex barcode system that allows items to be stored in a random order. The sign outside the first Australian Amazon warehouse say “Welcome Amazonians. It’s still day one! Are you ready to make a difference?” and Amazon is most definitely planning on making a difference. Its systems which make use of data collection and smart solutions allow never-before-seen solutions to issues which were making the logistics industry so cumbersome.

Where will all this lead? Can an online retailer and a ride-hailing app really have a major impact on such a major industry’s development? Take a look at the following infographic which summarizes what Amazon and Uber have been up to in the logistics sector, their expansion is definitely worth paying attention to.

* Molly Connell covers topics on industrial machinery, technology, and business trends. She is also responsible for Online Marketing at TradeMachines.com, a Berlinbased search engine of used industrial machinery. An earlier version of this article was published in a print edition of Daily Cargo News.



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