Key trends for Asia's logistics sector in 2019

Amid a climate of industry disruption, the call for automation and new technologies to drive productivity in logistics is stronger than ever.

THE logistics sector has seen its fair share of disruption in the recent decade. The call for automation and new technologies to drive productivity in logistics is stronger than ever. In response to this call, the industry has been adapting more quickly and more strategically to the current era of change. Asia retains its status as the world's fastest-growing region, and its involvement in the global value chain continues to be extensive.

As 2018 comes to a close, we take a look at notable trends that have emerged and will continue to be key as we usher in 2019.

ECONOMY OF TOMORROW

The sharing economy, otherwise known as the access economy and on-demand economy, is best defined as the economic activity of digital platforms that facilitate transactions where users are given temporary access to a service provider's asset or skill. Companies that best exemplify this new business model include Grab and Airbnb.

Albeit new, the sharing economy looks set to stay and will continue to experience dramatic growth. According to PricewaterhouseCoopers, the five key sharing sectors (travel, car-sharing, finance, staffing and music/video streaming) will likely increase global revenues from US$15 billion in 2014 to an estimated US$335 billion by 2025.

This phenomenon is already changing the fundamentals of the current operational model of the logistics sector. The result? Businesses stand to achieve greater cost-effectiveness, while consumers benefit from faster deliveries of their purchases. Here's how:

OPTIMISING LAST-MILE DELIVERY AND RESOURCING

One distinct characteristic of the sharing economy is the harnessing of insights from Big Data analytics in real-time to optimise resources and performance. For logistics providers, such insights could greatly help towards the planning of pick-up and delivery times. The collation of environmental intelligence, such as optimal traffic patterns, can help logistics providers fulfil increased customer expectations for delivery.

A sharing economy can also alleviate staff crunch in this industry where labour is a perennial issue. Think crowd delivery - a concept that isn't foreign to anyone who has used a ride-sharing app. Similar to how consumers are comfortable with hitching a ride with a driver whom they don't know, consumers are also easing themselves into the idea of having a regular person in the street pick up and deliver their packages to their doorsteps.

This surfaces a significant opportunity to inject trust and transparency in crowd delivery - and established logistics providers can be the right catalyst to push it forward. By validating a flexible workforce of ordinary people to service last-mile deliveries and leveraging a sharing platform to match them with delivery assignments, there is now a readily available pool of couriers that enterprises can tap on.

This asset-light approach gives the added benefit of access to people who may be seeking project-based work and are willing to use their personal assets for the job. From the optimisation of delivery routes to the alleviation of staff crunch, the boons extend beyond the logistics of the business to yield real benefits for businesses, freelance work seekers and consumers alike.

GREATER NEED FOR PERSONALISATION

The "me" factor is especially pertinent in this day and age. The general trend of personalisation has been on the rise - brought on by the advent of both new manufacturing technologies and digital channels - and the modern consumer expects highly tailored experiences.

Research from Deloitte shows that 40 per cent of consumers have bought something more expensive simply because their experience was personalised. But yet, businesses are not capitalising on this desire - in the same study, 71 per cent of consumers find that such desires are not properly met.

For logistics businesses, this means greater complexity in the way they offer solutions to customers. The ability to deliver exceptional customer experiences entails delivery options too. Research from a 2017 MetaPack report found that half of all shoppers will abandon their shopping cart should the delivery options be deemed unsatisfactory. In terms of delivery options, more consumers are now also welcoming self-collection lockers that eliminate the hassle of missed deliveries.

To better cater to consumer demands for greater speed, flexibility and accessibility of delivery options, DHL Express has been continually enhancing last-mile and digital capabilities within its network.

For example, its recent partnership with SingPost sees over 160 POPStations added to its locker network, thereby boosting the number of parcel pick-up points to 408 nationwide. It has also added user registration to its On Demand Delivery service to offer more convenience and delivery options for consumers.

Given the emphasis placed on delivery options, businesses that can provide this alongside quick responses and short delivery times stand a good chance of delivering memorable shopping experiences, thereby retaining customer loyalty.

DIGITALISATION IN LOGISTICS

We are in the midst of Industry 4.0, where growth is at an exponential pace and affects nearly all industries. Building on the digital transformation of the third industrial revolution, Industry 4.0 is the union of Technology and Operational Technology with the digital industry, the marriage of which is catalysed by innovation accelerators such as Internet of Things (IoT), artificial intelligence and cyber-physical systems.

The demand for innovation accelerators is significant here - a recent study by IDC and Lenovo reported that the Asia-Pacific excluding Japan will become the largest market for innovation accelerators in 2020 with an expected value of more than US$600 billion. There will be relatively strong rates of adoption of new technologies among companies in Asia too.

One of the most popular innovation accelerators is IoT, and at the heart of it lies asset optimisation. It is a broad spectrum of technology but ultimately, IoT improves warehouse operational efficiency, increases safety and security, and enhances customer experience.

For example, DHL's South Asia Hub (SAH) at Changi Airfreight Centre has seen a dramatic growth in its efficiency with its automated system and multidimensional tunnel scanners that accelerate barcode reading. Smart security systems at SAH also enable retrieval of shipment-specific footages in mere seconds, greatly enhancing traceability. By connecting the previously unconnected, IoT creates immense potential for businesses to improve the speed and accuracy of decisions through the analysis and application of digital information.

Ultimately, the managers of tomorrow's supply chains will need to outpace rising costs without compromising service and one way to do that is to use automation for repetitive tasks to free up workers for higher-value work, thus increasing their productivity.

FUTURE-PROOFING OPERATIONS

The advent of new technologies is sweeping the world by storm, and no company should expect to be exempted from it. But while change is uncertain, it need not be uncomfortable if we learn to plan ahead. To prepare themselves, businesses should start future-proofing their operations by exploring the application of new business models, customer solutions and new technologies - all to ensure greater efficiency and relevance with the rapidly changing times.

  • The writer is managing director for DHL Express Singapore.