A new direction for logistics: digitisation

Published: 05 / 02 / 2019

Despite the growth in container shipping trade and craft dimensions, the principles of the freight industry have remained largely the same since the 1950s: standard sized containers, cost-cutting through scale and paper-based tracking.

There are notable exceptions of course, such as the Munich Maersk. Kitted out with computer screens and staffed by a crew of just 28, she is an outstanding example of efficient freight shipping.

The shift towards digital transformation isn’t just about autonomy and efficiencies, but more about better data handling.

Barriers to change

Currently, businesses have two options to move goods through the supply chain: fast but pricey express delivery services or containerised freight – the preferred method for most companies. According to BCG, non-domestic cargo sees £1.9 trillion a year in revenue, with as much as 45% of the total delivery cost going to middlemen (i.e. customs clearances, insurance, transfers and other bureaucratic processes). However, there is little interest in updating the model.

Surprisingly, a large part of the shipping industry still communications via fax. As a result, delays are often incurred, not as a result of mechanical or meteorological issues, but through tardy paperwork. At least air cargo arrives with printed ‘bills of landing’.

The administrative impact runs into millions of pounds. According to the UN, if the paperwork in the Asia-Pacific region switched online there would be cost savings of 31% and an extra £189 billion in exports. With services such as Amazon Prime offering tracking, many are wondering why the same can’t be done with sea and air freight.

Regulation and poor communications are often cited as reasons. However, with mobile broadband and real-time tracking increasingly available on planes, ships and cargo containers, that’s no longer an acceptable excuse.

Moving towards digitisation

Data gathering and analytics will help reduce waiting times and speed up redirections, but what cargo businesses really need are insights into available shipping capacity. Apps designed to assign loads to specific truck drivers were the first move in the right direction.

It’s no surprise that Amazon is hoping to use data to take a piece of the logistics pie. Launching its own logistics division and cargo airline, and acting as its own freight forwarder, the company is hoping to switch from last-mile (getting goods from the warehouse to the customer) to every-mile. Though Amazon isn’t currently seen as a threat, as it acquires more and more information about its customers this could change. Logistics companies know next to nothing about their customers.

Maersk is one big name unafraid of digitisation. Its chief executive, Søren Skou, recently stated his wish to make the company ‘the DHL of the sea,’ by offering global door-to-door delivery. He also aired his plans to use blockchain technology to digitise lading bills and to standardise the shipping data format.

As Maersk and other big names in logistics adopt the responsive and flexible benefits of smart data management and data analytics, container delivery may become more suited for ecommerce.

The key to its success depends on knowing where the goods are and having control over where they’re going. With this in place, you wouldn’t need to wait for an order before you ship your goods. You would simply add more precise destination information to labels en route. Ultimately, ships could act as warehouses. Now, that would be a remarkable achievement.

Adare International regularly source and transport goods via air and sea for clients such as Coca Cola and Merlin. We recognise the importance of reliability in logistics and constantly work with our partners to be more responsive and flexible. If you would like to find out more about how we can help your business, get in touch with the team today: hello@adareinternational.com.

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