Getting the right product to the right place in the right quantity and quality at the right time and at the right cost – that is the task of the logistics sector. As if that weren’t enough of a challenge, implementation is made even more difficult by ever-increasing requirements. These result from new technologies as well as political and social changes.
In order to meet the increasing demands of customers and at the same time comply with the highest possible sustainability standards, completely new solutions are required in some cases.
THE BEGINNINGS OF THE LOGISTICS INDUSTRY
Logistical challenges existed thousands of years ago. The result of the largest known ones can still be seen today: the Pyramid of Cheops not far from the Egyptian city of Giza.
More than 4,500 years ago, thousands of workers erected the monumental tomb, creating the only remaining one of the seven ancient wonders of the world. Scientists are still unable to explain beyond doubt how the Egyptians achieved this logistical masterpiece.
In the centuries and millennia that followed, logistics played an important role, especially in the military sector. In order to win wars, it was crucial to supply the armies with food, weapons and fresh fighters. The right supply strategy made the difference between victory and defeat, life and death.
From time to time, the population also benefited from developments in war logistics. For example, a new generation of warships, which were to help the Athenians to take over the entire Greek world after the sudden death of Alexander the Great, helped maritime trade to boom.
Medieval to modern
Logistics experienced its first major boom in Central Europe in the Middle Ages. The kingdoms grew closer together and the nobility had so much money that they were able to commission magnificent buildings such as palaces and cathedrals. It was not uncommon for rare and extremely expensive building materials to be used, which had to be transported over long distances.
The explosive growth in trade brought numerous resourceful businessmen a good income. Towards the middle of the 12th century, a small, wealthy class of people even emerged in the German Hanseatic cities: the so-called Hanseats. They founded the “German Hanseatic League”, an international trading network whose sphere of influence stretched from Flanders to the eastern side of the Gulf of Finland.
The next major milestone in the history of the logistics sector was the establishment of a uniform postal service for the whole of Europe around 1500. The invention of the steam engine and the construction of the railroad opened up even better opportunities for the transportation of goods. Further new modalities emerged with the truck and the airplane. The starting signal for global logistics was finally given in 1956 with the invention of the sea container.
THE BIGGEST CHANGES IN RECENT YEARS
The changes in the logistics sector extend across a wide range of areas. New technologies are among the triggers for change, as are political and social causes.
Globalization
The process of globalization accelerated with the abolition of the division between East and West in the 1990s. The free transfer of goods, services, people and capital strengthened world trade and opened up new development prospects for the economy.
At the same time, however, price pressure in the logistics sector also increased. The days when successful transportation and handling companies achieved high profit margins are over. Nevertheless, globalization has also led to a significant increase in demand for logistics services.
Digitalization and artificial intelligence
Digitalization is having a positive impact on the logistics industry in many ways, which is why more and more companies are taking advantage of big data and artificial intelligence. In recent years, more and more platforms have been established that intelligently link logistics companies, carriers and terminal operators, thereby ensuring greater efficiency and transparency.
Barcodes are now used to continuously monitor the transportation of goods. It is also possible to track in real time how quickly the goods are progressing on the road and other transport routes and whether they reach the loading station on time.
Progressive automation
Many logistics processes have been automated in recent years. The use of intelligent machines in warehouses and distribution centers speeds up processes and relieves the burden on human workers. In addition, promising tests with autonomous trucks have been underway for some time.
Thanks to machine learning and artificial intelligence, robots can now learn certain tasks independently and pick smaller parts in the warehouse without human assistance.
Corona pandemic
As a result of the coronavirus pandemic, the logistics industry was suddenly faced with completely new challenges in 2020. Some of the established supply chains and flows of goods could no longer be maintained, for example because production in China was shut down or entire plants were closed.
Many industries had problems sourcing their supplier parts and goods in the usual way. The automotive industry in particular, which relies on just-in-time deliveries, had to cut back production due to broken supply chains. In addition, border controls in most European countries led to traffic jams and delays.
At the same time, many consumers increasingly switched to online retail. The changes in supply chains and demand behavior led to a shift in modes of transport and other logistics services, which demanded a high degree of flexibility from logistics service providers.
Ukraine war
Corona had barely moved out of the headlines when the invasion of Ukraine by Russian troops resumed. Russia’s disconnection from existing logistics networks as a result of the sanctions and the withdrawal of logistics companies from the country forced the logistics industry to redirect and realign numerous supply chains and transport routes.
This affects rail and air transportation as well as maritime transport. Although freight transport by truck is less affected by the sanctions, it is suffering enormously from the high diesel prices.
New job profiles
The logistics sector is a diversified growth market. It offers diverse fields of work and career prospects that now go far beyond the jobs of drivers, dispatchers, warehouse staff and loaders.
Export managers for sea freight and key account managers for air freight are just as much in demand today as supply chain managers and process managers for warehousing fashion. In view of increasing digitalization, the demand for IT specialists is also on the rise.
WHAT DOES THE FUTURE HOLD FOR THE LOGISTICS SECTOR?
The future of logistics can be briefly described in three words:
- more efficient,
- more autonomous and
- greener.
In the long term, vehicles and machines will load and unload themselves on company premises, at freight stations, in postal distribution centers, at airports and container ports and take over delivery.
Self-learning algorithms interact with sensors to predict when which wearing part needs to be replaced and ensure that it is replaced in good time. In this scenario, humans are only responsible for planning and monitoring the processes.
For employees in the logistics sector, this will result in a change of routine in many areas. The jobs of the future will be very different from those of today. Jobs for unskilled workers will increasingly disappear, while the proportion of academics could increase by 50 to 60 percent in the next decade.
With governments and cities committing to reducing their carbon emissions and waste, sustainability is becoming a must for all companies in the logistics industry. There are already more than 90 national bans on single-use plastic items. In addition, bulky packaging leads to an average of 40 percent empty space in parcels. It is important to rethink here.
Sustainable solutions, the optimization of processes and materials, intelligent equipment and new drive technologies offer considerable potential for making the supply and replenishment system more environmentally friendly. Container solutions will also play an important role in the development of environmentally friendly logistics concepts for deliveries in cities with heavy traffic congestion.
WHAT SOLUTIONS DO YOU HAVE FOR THE BIGGEST CHALLENGES AT THE MOMENT?
In order to be able to create adaptable, agile logistics systems, it is essential to know exactly what the challenges and risks are. The most important of these include
Driver shortage
In late summer 2021, a shortage of truck drivers in the UK resulted in empty supermarket shelves. Even though Germany has so far been spared such consequences, there is currently a shortage of up to 80,000 drivers. Every year, 30,000 truck drivers retire, while the number of new recruits is only 13,000 to 17,000 per year.
Rising fuel and energy prices
The clients of logistics companies attach great importance to two things in particular:
- safe and reliable transportation and
- good, stable prices.
To avoid risking their customers’ satisfaction, logistics companies are often unable to pass on rising fuel and energy prices one-to-one. This reduces their own profit margin.
Government restrictions
Driving and rest times, working time regulations, environmental protection regulations – numerous legal regulations must be taken into account when planning routes. Unforeseeable developments such as Brexit or the coronavirus pandemic have shown that the rules can change rapidly. Logistics companies that are unable to adapt quickly enough quickly lose ground in competition.
Increasing demand for sustainable logistics processes
The topics of environmental and climate protection and sustainability are becoming increasingly important in the logistics sector. Both companies and end consumers are increasingly interested in resource-saving products and transport solutions.
The problem is that logistics is inherently not very ecological. Around 20 percent of carbon dioxide emissions in the EU can be traced back to the supply and replenishment sector.
Solution approaches
Whether it’s rising energy and delivery prices, driver shortages, government regulations or sustainability – the solution is digitalization, automation and networking:
- The automatic, optimized distribution of orders to the available vehicles means that they are better utilized. Expensive empty runs can thus be avoided and, thanks to optimized routes, not one kilometer too many is driven. This saves fuel and reduces carbon dioxide emissions.
- Optimization software helps to maximize the effectiveness of existing company fleets and their drivers. Software solutions support planners and dispatchers in making full use of available resources.
- Realistic and practicable route planning reduces stress and overtime for drivers. This increases their satisfaction, reduces the number of days lost and promotes long-term loyalty to the company.
- Automated solutions enable planners to incorporate new restrictions immediately and create route plans that meet both legal and environmental requirements.
- Optimized route plans also play an important role with regard to the sustainability of logistics processes. According to an estimate by the International Energy Agency, energy savings of 1 percent (overland journeys) and 5 to 10 percent (inner-city journeys) can be achieved through route optimization. This reduces fuel costs, which in turn increases profits.
CONCLUSION
In terms of the number of employees, the logistics sector is now the third largest economic sector in Germany. There is now hardly any area of life in which the supply and replenishment sector does not play a role. However, current and expected changes continue to present this industry with major challenges that call for new approaches.
Social developments such as demographic change, changes in customer expectations and behavior as well as increasingly demanding consumer requirements have an impact on the logistics industry, as do political regulations, international challenges and technical disruptions.
Companies that do not react quickly enough to this will sooner or later fall behind their competitors. However, solutions already exist to prevent this from happening.
Although some of these approaches still sound like dreams of the future: The first steps have already been taken. The digital transformation is already ensuring greater transparency in supply and shipping chains and thus guaranteeing better supply chain management. In addition, robotics and autonomous driving will help to make logistics processes more efficient and cost-effective in the future.
However, it is essential to future-proof personnel in the face of ever more technologically demanding processes. Even the most advanced Logistics 4.0 cannot function without people.
Image 1: stock.adobe.com © Wellnhofer Designs
Image 2: stock.adobe.com © AA+W
Image 3: stock.adobe.com © Tomasz Zajda
Image 4: stock.adobe.com © Parilov
Image 5: stock.adobe.com © Moab Republic
