E-commerce is trending
By 2021, online sales are expected to hit $4+ trillion. We have seen an increase in mobile device sales & its technology adoption due to improved online buying experience. This is changing consumer behavior and in turn, has increased demand via online channels setting additional demand expectations in terms of shorter lead time.
We are seeing fierce competition that is leading to automation in logistics & warehouse management like automated fulfillment center, strategic realignment towards on-demand production and alternative logistic delivery modes.
- Ocado’s robotic warehouse processes 65 thousand grocery orders every week in the UK
- Engineers at Covariant.AI startup designed component sorting robots for a German warehouse that is now processing 200 orders an hour
- Robots are used for order picking in the food & beverage industry (Kuka delivers such robots for many industries)
- In the US, a shortage of truck drivers is a major problem as the majority of the freight is transported on the ground. This is driving drone delivery as an alternative mode of transport
- Sabrewing has developed cargo UAV that can carry 0,5 ton of weight over 1800 km at a speed of over 300 kph
- DHL has delivered medications using drones for emergencies and continues to capitalize on opportunities when needed
- This industry is now marked with the development of robotics technology for fulfillment systems like the ones produced by Swisslog automation, Mobile platform systems and next-gen vision guided robots.
The benefits of such technological advancement are in-numerous & are not limited to the below
- Accuracy in delivering orders to the right party with the right content will tend to increase due to lower human errors
- Increases cost-effectiveness as there is a scale
- Increases Inventory capacity & thereby better space management
- Efficient management of resources & costs will provide room for business growth
- About 7% of EU citizens will be benefitted by last-mile Drone delivery system which is a viable use case
The warehouse robotics market is expected to expand to 10 Billion dollars by 2027. In Europe alone, about 200 early-stage startups have been funded in 2019 which was more than half a billion Euros. Cargo drones that are already generating double-digit million revenue are expected to bump up to 2 billion by 2027.
Big Players
UPS the largest logistics company in the world intends to purchase 10,000 electric vehicles from U.K.-based startup Arrival heading to driverless & electric vehicles for its fleet.
Meanwhile, its closest competitor FedEx is busy getting its house in order with executive shakeup, severing ties with Amazon and reeling under the slowing global economy. Whilst the markets are in beast mode, FedEx was the bear of the day on 7th Feb. FedEx carries 99% of its cargo via Memphis and is busy with 1.5 billion transformations of its operations. If UPS is expanding its operations and Amazon is successful in launching its amazon air service from Memphis international airport then the implications of multifaceted economic turbulence for FedEx can be hypothesized.
If logistics companies like UPS can lower down their costs significantly by disrupting their own business, this can lead to fierce competition in this industry and benefit globally with cheaper freight charges for both consumers & businesses by substantially cutting down on in road shipping costs.
Summary
Customer demands have put more pressure on costs, short lead times coupled with the evolution of industry 4.0 technology capabilities the pressure on traditional logistic players to transform is increasing. The advent of new firms that are disrupting the market with innovative technology is adding further pressure. The transformation is currently underway and bound to change the environment sooner than you may think. If you are in the logistics industry then, what is your strategy to address these market developments?