The digitization of cargo transportation processes is an evolutionary step change, presenting new challenges and opportunities for freight forwarders. But one thing is clear: embarking on the digitization journey is no longer optional for international freight forwarders. These seven trends all have ramifications for shippers and will be worth watching during 2019.
IAG Cargo today shared the findings from a global survey of more than 400 freight forwarders in 47 countries on perceptions of the air cargo industry this year. The report, Cargo Next, identifies the key trends and expectations of freight forwarders within the next 12 months.
The findings indicate that freight forwarders are optimistic about the direction of the industry. Key findings include:
• 70% of freight forwarders surveyed are expecting the rate of technological change to increase in the year ahead, in comparison to one year ago, and 81% of forwarders believe technological innovation will have a positive impact on their business.
• 55% of survey participants identified increased automation and digitalisation as the most important trends in the air freight industry in the near future, followed by the growth of e-commerce (41%). Trade tensions came up third in importance for freight forwarders, with 29% of survey respondents listing trade tensions dampening growth as a very significant or significant trend.
• The most significant challenge identified by freight forwarders is talent attraction and retention, with 79% of respondents identifying talent as either a very significant or significant challenge.
Rise of Digital Consumer
The advent of e-commerce has empowered consumers, who can now source products from anywhere in the world or compare prices with just the swipe of a smartphone. The number of smartphone subscriptions is predicted to almost double to 4 billion by 2025, with nearly all of that growth coming from emerging markets.⁴ As consumers become more used to digital services, they expect to receive the same quality and flexibility of service in other industries. No longer is it enough for logistics firms to deliver a consignment on time, they now also need to offer a multiplatform service to both personal and business customers.
Technology Trends:
The Internet revolution has happened in three waves: first the desktop Internet in the 1990s, then the mobile Web in the 2000s and now we are entering the third age of the Internet. The most important technology trend of this new era has been the Internet of Things, a network of smart devices, sensors and the cloud that allows the physical world and computer systems to interact directly. The Internet of Things already consists of 7 billion devices – from fridges to thermostats to street lights – and is expected to grow to almost 50 billion objects by 2020.
Coupled with the proliferation of mobile sensors, the Internet of Things has the potential to improve the efficiency and reliability of the logistics industry – for instance, to automatically arrange freight on trucks and ships in as efficient a configuration as possible.
The Internet of Things has been underpinned by recent advances in cloud computing. Cheaper data storage and increased computational power mean that big data steams can be collected, stored and analyzed much more efficiently. This is enabling logistics providers and customers to conduct a real-time analysis of supply chain data.
Coupled with the proliferation of mobile sensors, the Internet of Things has the potential to improve the efficiency and reliability of the logistics industry – for instance, to automatically arrange freight on trucks and ships in as efficient a configuration as possible.
Rise of the platforms:
One of the biggest digital trends of recent years has been the emergence of giant Internet platforms such as eBay, Amazon and Alibaba. These platforms enable startups and small firms to operate in a global market from their first day of business. Customers, whether they are businesses or consumers, benefit from having a broad range of alternative suppliers to choose from.
3D printing and driverless vehicles:
Two other technologies have the potential to revolutionize logistics. There are potential applications for 3D printing, such as the printing of replacement parts or products on the spot, which could reduce the need for parts and goods to be shipped. There is still uncertainty, however, about the impact of 3D printing, and there may be opportunities for logistics players that specialize in printing and delivering products quickly and cheaply.⁷ Autonomous vehicles are another technology that could be transformational for logistics providers, by reducing operating costs while improving the reliability of deliveries. Mercedes is already pioneering digital trucks⁸ and Amazon is testing delivery drones.
Building on our analysis of these trends, we have identified five digital themes – information services, logistics services, delivery capabilities, circular economy and shared logistics capabilities – that we believe will be central to the digitization of logistics over the next decade.
