TECHNOLOGY IN LOGISTICS

THEMES AND CUSTOMER EXPECTATIONS

By Philip Wyllie

Founder of FreightPartner

Supply Chain Digital www.JOC.com

Our talk today…

❑ Digital disruption

❑ Is FF undergoing disruption?

❑ Exploring key technological innovation

❑ Forces of digital change on the Air Freight

Forwarding sector

❑ The Industry Actors

❑ And what about the customer

❑ What does this all mean?

10 Industries On The Cusp Of Technological

Disruption

Forbes Technical Council Feb 5 2019

Of 10 Sectors, identified

Freight Forwarding

did not feature….

…but is that surprising?

What is Industry Disruption?

❑ Smaller (new) companies

❑ Overlooked segments

❑ Neglect

❑ Better value, price

❑ Elevated customers

❑ Holding performance

and value

❑ Mass adoption

❑ Disruption!

Freight Forwarding?

❑ Is there a disruption opportunity within

Freight Forwarding?

https://medium.com/@pratyush.choudhury.bme16/the-disruption-framework

https://www.christenseninstitute.org/disruptive-innovations/

Only 60% of carriers

and F Forwarders allow

online registration!

Per McKinsey and Company

Borrowing from the PWC CE Transport and

Logistics Trend Book 2019

The Five Forces Transforming Transport and Logistics

Ranking ‘Time to Entry’ as well as ‘Expected impact’ and ‘State of maturity.

Digitilisation

+ 1 year!

Changes in Markets’ domestic

commerce

+ 2 years

Software driven process changes

+ 3 years

Shifts in International

Trade

+ 4 years

Machine Driven Process

+ 5 years

With Acknowledgement to PWC

Technological Innovations that are shaping

Logistics - Systems

http://www.ivedha.com/solutions/systems-engineering/

Blockchain

Distributed Ledgers

Low uptake due to regulatory

uncertainty and levels of trust in

users

PWC - Technological Innovations that are

shaping Logistics - Systems

EDUCBA.com

Forbes sourcing Hacker Moon

RPA

Robotic Process Automation

The systems that drive the Robots

Big Data

Uncover information

ID Hidden patterns, unknown

correlations, market trends and

customer preferences…

…that can help make better

decisions. searchbusinessanalytics.

Artificial Intelligence

Cognitive and

Machine Learning

Collaboration

“Traditional

Forwarders

still have

time to

address the

competitive

threat posed

by digital

platforms.

Example:

DB Schenker

partnered

with U-Ship

for carrier

bookings

www.Logistics

managamenet Top

25. 2018.9.05

Robotics

Low uptake due to cost

Does not suit all markets

Scope – broad!!

PWC Technological Innovations that are

shaping Logistics - Resources

www.Electrek.co

www.electrek.com

The IoT

Increasing linkage of inter related

resources including robotics with

UID’s and ability to transfer

information.

Electric Vehicles

Set to grow CAGR 16,38%

between 2018/24.

United States:

800 in 2020 to

10 400 in 2030

motorintelligence.

Drones

Last mile to consumer

Interco Transfers

Largest payload: 101 Kgs 2018.12

Unamanned China aircraft 1,5T

Futureoflife

www.water and finance

No. 1 most Transformative Force in Transport

and Logistics (PWC)

https://logisticsmgepsupv.wordpress.com/2016/04/26/privalia-logistics-and-more/

Digitalization

❑ Present within 1year – but already with us.

❑ Major impact

❑ DHL to spend E2Bn over 5 years Lloyds Loading List Oct 1st

2019

The Forces of Change on the Airfreight

Forwarding Industry

McKinsey and Company, Baumi, Hausman Feb 18

Digitilisation

Specialists focus on

1 or 2 elements:

Booking platforms

e.g.

▪ 300 Cubits

▪ Qwyk

Digital replication with

increased

transparency and

automation

• Flexport

• Amazon

Increasing

digitilisation

and

automation

▪ Maersk,

▪ CMA CGM

▪ Lufthansa

Digital Forwarding Specialists

Carriers

Dig

ital

Fr

eigh

tFo

rwar

der

s

Digitilisation of Traditional

F Forwarders Core and VAS

Freightbro

Freightbro

Technology Driving Airfreight

Forwarding : Impact

McKinsey and Company, Baumi, Hausman Feb 18

❑ Bundling of

volumes

❑ Capacity and

Routing visibility

❑ Tracking

❑ Physical

Consolidation

❑ Reduction of

complexity

Digital bundling of volumes

e.g.Kontainers, CargoMatic,

❑ Reduction of value sources for customers.

❑ Key limiting factor – physical assets, problems.

Mc Kinsey and Company Feb ‘18

Freightbro

Freightbro

❑ Value Added

Services

Digital partnering with carriers

e.g. Xeneta, Freightos

Digitised vertical specialists

e.g.Port of Antwerp - Data Cloud community

Match supply and demand of available capacity

through digital linkage, optimise MT re-position.

Digitisation reduces some complexity e.g on-line

booking. E.g. CargoBase link air,road

The Industry Actors actively digitilising

their front and back offices…

Revisit McKinsey Company’s forces of change

The Three Forces…

Technology Driving Airfreight

Forwarding

McKinsey and Company, Baumi, Hausman Feb 18

Digital Forwarding Specialists

Carriers

Dig

ital

Fr

eigh

tFo

rwar

der

s

Digitilisation of Traditional

F Forwarders Core and VAS

Freightbro

Freightbro

Maersk Line and Damco

Merge to "end-to-end logistic solutions for

cargo owners,"

3000 staff in Technology team

‘…the integrator path is the best response

to the commodification of ocean

shipping’.

www.JOC.com August 21st

2019

Twill: Book, Manage and Monitor

shipments online.

www.twilllogistocs

Recent Developments – Vertical Integration

CMA CGM purchased CEVA Logistics

Contract Logistics

Freight Forwarding

A rise in volumes from its shortsea

operations and lower costs boosted CMA

CGM’s earnings. But the ongoing

integration of CEVA weighed on group

profits. LloydsList maritime Intelligence Sep 6th 19

Technology Driving Airfreight

Forwarding

McKinsey and Company, Baumi, Hausman Feb 18

But these technologies will also disrupt air- (and sea) freight forwarding

profoundly over time.

Mc Kinsey and Company Feb ‘18

Digital Forwarding Specialists

Carriers

Dig

ital

Fr

eigh

tFo

rwar

der

s

Digitilisation of Traditional

F Forwarders Core and VAS

Freightbro

Freightbro

Technology Driving Airfreight

Forwarding

McKinsey and Company, Baumi, Hausman Feb 18

Digital Forwarding Specialists

Carriers

Dig

ital

Fr

eigh

tFo

rwar

der

s

Digitilisation of Traditional

F Forwarders Core and VAS

Freightbro

Freightbro

The Digital Freight Forwarder

Pros Cons

Young, entrepreneurial,

devoid of Risk!

More effective in sea, due to

extended transit and

complexity

Single entry of data Most effective in door-to-door

where BCO has not

disintermediated

No legacy systems to impede VAS such as buyer

consolidation a challenge but

that is changing

Attract and pay for best tech

talent

Track and Trace equally

available from likes of Cargo

Wise and INTTRA

Non traditional investors PE

investors,

High developmental costs

recoverable from FF margins?

Marketing savvy ‘Stuff’ happens and a digital

response is not always ideal

Some examples:

❑ Flexport

❑ FreightHub

❑ Zen Cargo

Adjacent table Paraphrases an

article by Dan Gardner of Trade

Facilitators Inc. Nov 15th 2017.

Source:Gardner

Zen Cargo, Freight Hub

2016 Established

2018 Revenues of USD471m

2019 Debt Note of USD 1Billion

2019 Estimated Valuation: USD3,2Bn

Flexport

www.flexport.com

Freight Forwarding

‘As ancient as mankind’

Forbes 2019, Feb21

Flexport aims to

bring transaparency to a black box industry

I did’nt learn what the term (Freight

Forwarding) meant until a year into starting the

business

www.Techcrunch 2016

The Flexport Operating System for Global Trade:

Technology and analytics, logistics infrastructure,

and hands-on supply chain expertise,

highly-available and secure cloud software platform

Forbes April 9 2019

Industry Response?

Global Platforms

https://www.descartes.com/solutions/global-logistics-network-services

Well, what about the Customer?

www.salesforce.com

In My experience:

❑ A solution that works – easily – cost effectively.

❑ A clear view of what is coming and

❑ A large rear view mirror to look behind.

Always about price?

Customer Needs

Digitilisation Future per Forbes Tech Council:

❑ Terms set by Buyer

❑ Co-creating products and services with customers.

❑ Enhance organizational agility.

Key Needs per McKinsey survey:

❑ What about communicating information on errors?

❑ and resolving them?

❑ work of a knowledgeable and caring staff.

So, what does this all mean?

❑ The Freight Forwarder has more data than most in the supply

chain

❑ New systems simplify work and reduce costs

❑ The industry is ripe for disruption but existing players are well

resourced and will respond- internally or with partners.

❑ Customer needs remain the same but the way they can be served

can change

References

https://www.forbes.com/sites/forbestechcouncil/2019/02/05/10-industries-on-the-cusp-of-technological-disruption/#373029895d47https://hbr.org/2015/12/what-is-disruptive-innovation December 2015https://techcrunch.com/2016/06/07/flexport/ June 7th 2016Forbes.com April9 and Feb 21st

https://medium.com/@pratyush.choudhury.bme16/the-disruption-framework-understanding-what-drives-it-2fcebc895709https://www.poclain-technicast.com/know-how/worldwide-logistics-platform/World imagehttp://www.ivedha.com/solutions/systems-engineering/ September 19th 2019https://searchbusinessanalytics.techtarget.com/definition/big-data-analytics September 19th 2019PWC Transport Logistics Trend Book 2019TechTarget 2011https://www.mckinsey.com/industries/travel-transport-and-logistics/our-insights/air-freight-forwarders-move-forward-into-a-digital-futureMcKinsey and Company, Baumi, Hausman Feb 18Qwyk: Sam Wheelan, The Loadstar July30th 2019http://ifc8.network/2017/07/07/is-freight-forwarding-at-a-crossroads-due-to-new-technology/IMAGEhttps://www.unmannedsystemstechnology.com/2018/12/new-world-record-set-for-heaviest-load-carried-by-drone/https://www.mordorintelligence.com/industry-reports/electric-truck-market

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