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Logistics Megatrend

A vie of a variety of factors that influence the evolution of logistics over the coming 10 years. On the right hand side technology factors, on the left hand side societal and business factors. These factors are positioned on the “radar” depeding on the time frame they are expected to have an impact on logistics and on the foreseen importance of the impact. Image credit: DHL

Logistics has made newspapers’ headlines in these last two years because it had problems. Most of us do not perceive logistics since, when it works smoothly, we don’t see it. Shelves are full of products, sometimes -ever more often- we order on-line and we get the box at our doorstep as expected … It is only when it does not work that we realise it “exists”.

Logistics is more than delivering a box. It is also about having the “stuff” to put in the box! We are experiencing the shortage of some raw materials, of electronic chips (particularly so in the automotive industry) and now also of wheat because of the Russia-Ukraine conflict.

Of course, the transportation of goods is a big part of logistics as we realised when the Coral Crystal container ship went aground blocking the Suez canal. Just one week of blockage disrupted several block chains with impact across the globe. First the goods in the millions of containers that were delayed could not reach their destination at the time they were supposed to (and the efficiency of the production chain is based on just in time arrival of goods, there is very little spare to back up) blocking assembly lines, then those container ships were delayed creating further delay in transport that was already scheduled, thirdly manufactures could not ship the output of production (because container ships were not available) and there was no place to store the goods produced so production had to stop and that created further disruption. A single glitch creates ripples across the globe affecting the whole value chain.

This events have been a call to arms to rethink the logistics: effectiveness is essential but so it is resilience, as made clear by the last two years events.

Logistics (a noun in the singular form but with an ending “s” possibly to highlight its nature of consisting of many components) is already relying on many technologies and in the coming years it will take advantage of -and rely on- the technology evolution even more.

Take a look at the graphic (created by DHL). On the right hand side you see a number of technologies placed in a way to create a sort of roadmap of their impact on logistics (I do not agree with some of the placement but nevertheless I found the graphic useful to highlight the complexity of the logistics landscape). On the left hand side societal and business trends are highlighted, here as well estimating their impact in this decade.

Some of the technologies, like IoT, AI, Blockchain, cloud, robotic automation, are already a reality today and the big logistics companies, like DHL, Fedex just would screech to a halt without them. AI is placed at the boundary of the 5 year horizon, but it is already here. Sure, we can expect even more impact in the coming years from AI as it will become an essential tool to increase flexibility and to foresee problems ahead.

Self-driving vehicles are placed in the 5-10 years timeframe. Although some are already in use, I concur that real impact is still way in the future. It is, however, interesting to notice that DHL expects autonomous vehicles to have a big impact in logistics.

In the long term they have placed quantum computing, I guess a possible application could be to solve the salesman problem (finding the best delivery route) but I am skeptical on the widespread application of QC in this area. It may be a nice-to-have, but it is unlikely to become a must-have.

The overall evolution can be considered to move in two ways:

  1. incremental-linear evolution with greater use of AI for fine tuning centralised orchestration of logistics, use of “super” digital twins mirroring the whole supply and delivery chain plus the overall business needs
  2. disruptive evolution towards self-regulating ecosystems. use of AI for distributed control, autonomous digital twins (possibly identified by DHL with SuperGrid Logistics)

In addition, and common to both evolution paths (that are not necessarily alternative one to the other) is the leverage on autonomous hubs, autonomous transportation, decentralised manufacturing, on site customisation.

All of this will happen beyond the scene, at least for most of us, yet it will have a huge impact on business and on our life.

About Roberto Saracco

Roberto Saracco fell in love with technology and its implications long time ago. His background is in math and computer science. Until April 2017 he led the EIT Digital Italian Node and then was head of the Industrial Doctoral School of EIT Digital up to September 2018. Previously, up to December 2011 he was the Director of the Telecom Italia Future Centre in Venice, looking at the interplay of technology evolution, economics and society. At the turn of the century he led a World Bank-Infodev project to stimulate entrepreneurship in Latin America. He is a senior member of IEEE where he leads the New Initiative Committee and co-chairs the Digital Reality Initiative. He is a member of the IEEE in 2050 Ad Hoc Committee. He teaches a Master course on Technology Forecasting and Market impact at the University of Trento. He has published over 100 papers in journals and magazines and 14 books.