Automation is expected to be transformative for entire industries, however the logistics industry is perhaps poised to feel the most changes.
Expected to reach a global worth of $15.5 trillion dollars, logistics is big money. Thanks to e-commerce and the rise of online consumers, the industry has seen massive growth and expansion.
The internet has changed the way we purchase goods, and now both individual consumers and industrial customers want real-time tracking, faster delivery and of course, lower costs. Experts predict automated delivery vehicles will become the norm over the next 10 years, allowing companies to meet consumer demands by providing longer delivery shifts.
Previously there were some technological barriers which made it difficult for many businesses to incorporate automation into their supply chain, but steady advances in robotics, sustainable energy and artificial intelligence have made 2017 a pivotal year for the industries experiments with automation.
This year global mega-retailer Amazon began testing an in-house automated delivery service, and Chinese e-commerce giant Alibaba announced it will invest $15 billion dollars over the next five years to build a global logistics network, to aid its expansion into foreign markets like Indonesia and Thailand.
Tesla have ambitious plans to continue disrupting the transport industry. Their electric semi-trailer is fully automated will have its first test drive later this month. The company already has both heavy-duty trucks and passenger buses in early development.
But Tesla aren’t the only ones with plans to shake things up in the logistics industry. Chinese based start-up TuSimple also have their sights set on trucking. They’ve been developing driverless technology since 2015, and plan to test their first electric, automated fleet of trucks in Arizona next year.
Autonomous commercial trucking could lower logistics costs by up to 40 percent in the USA and around 25 percent in China. This is thanks to both increased fuel efficiency and the ability to cut down some of the human costs currently required, such as food and rest. The benefits they could provide to safety are also worth considering. There are also obvious benefits to safety, it’s estimated around 3,500 people die in the USA each year due to truck-related accidents. In China that figure jumps to 25,000. With many these accidents the result of human error or fatigue, driverless vehicles may provide the key to lowering fatalities.
Many logistics providers, especially those dealing with B2C (Business to Consumer), have also begun experimenting with drone delivery. Drone delivery offers clear benefits in the form of cheaper, faster shipping. This could accelerate the growth of online retail sales as free and fast shipping are the most enticing factors drawing consumers to shop online more often.
Right now, exploration is centered on two main forms of drone delivery. The first is home delivery with drones, which has received the lion’s share of the public’s attention. Drone home delivery is becoming a competitive offering for retailers worldwide, with Chinese retailers JD recently announcing plans to develop drones able to carry over a ton for long distance deliveries.
The second form of drone delivery being explored is supply chain delivery. Employing drones within the supply chain provides new opportunities to increase efficiency and streamline fulfillment processes. For example, moving to the use of drones to aid with the dreaded ‘last mile’ delivery. Often considered one of the most difficult and expensive portions of the e-commerce supply chain, using drones to transport goods from warehouses to delivery vans is a small change that could save companies big bucks.
There are also the effects the sharing economy is having on transportation services to consider when looking at how automation is changing the industry. Ride sharing has revolutionized the taxi industry, with services like Uber and Lyft causing huge disruption to traditional service models. Now we’re seeing this trend move over towards the logistical side of transport, with trucking companies in the USA offering services modeled on the ride sharing platform. Apps like DashHaul and Transfix allow shippers to book a truck in their local area with just one click. Allowing private truck owners to manage their own delivery business, eliminating the need for a middle man.
There is no doubt that the workforce is going to see some shift as more and more automated technologies are adopted by businesses. Although there are concerns about the effect that rising automation will have on employment within the industry, it isn’t all doom and gloom. Right now, most driverless truck concepts function using three level autonomy, meaning they still require a human present in the vehicle. While drones may begin to assist with some of the highly repetitive, picking and packing roles, they will never be able to replace the necessary human skills needed to implement them such as problem solving and creative thinking. Right now, one of the major hurdles the logistics industry faces on its path to full automation is re-training employees to successfully manage and implement these new technologies.
There’s still more disruption to come, and companies need to anticipate how they will need to change to reap the benefits. The developments this year have been promising, but looking ahead, the industry should commit to preparing processes and infrastructure to embrace automation technologies. Developing services and solutions that will create demand, instead of just following behind. The successful businesses of the future will be those willing to adapt to the accelerated changes that we’re seeing today.
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