9 November 2018

Smart Logistics: A New Reality

Smart Logistics: A New Reality
We are all aware of the important role that freight shipping plays in the maritime industry. The term ‘freight shipping’ refers to the manual process of transferring merchandise goods by land, sea or air. Though air transport is considered as the most expensive mode of freight transportation, ground transport proves to be far more expensive than sea transport in the majority of developing nations where the inland infrastructure is not very advanced. If we focus on freight shipping over the road, the common types refer to a truckload, less than truckload (LTL) or intermodal. Intermodal transport refers to the transfer of commodities that need several modes of transport in order to reach its final destination. Undoubtedly, trucking is now considered to be the leading mode of freight transportation throughout the world. In China, an approximate of 75% of cargo is moved via road while a figure of 70% is recorded in advanced countries like the United States and many European nations. The demand for freight shipping via trucking will increase day by day, without any fail. However, the transportation and logistics operators including the OEMs, now have to experience some serious changes with the arrival of digitalization, driverless trucks, electric motors and even, shortage of drivers. This has prompted the experts from Roland Berger to carry out an extensive research on the freight transport sector and summarize the current industry trends in a prominent study called “Shifting Up a Gear: Automation, Electrification, and Digitalization in the Trucking Industry”. The Partner at Roland Berger’s Automotive Competence Center, Mr Stephen Keese, has stated the fact that most trucking companies have to struggle to move forward with inefficient procedures and towering expenses even though trucking is the most successful sector in the world of freight transportation. As a direct consequence, the trucking companies are not able to explore further possibilities or even fully exploit their potential due to inadequate resources. Moreover, there is a great shortage of drivers especially for the long-distance routes across the United States of America and Europe, which also include the observation of rather strict emission standards. Therefore, the companies are trying their level best to tackle the problems and survive in this competitive scenario and drastically develop in digitalization, automated commercial vehicles and electrification, as well. It is being predicted that the scale of transformation will bring about a wave of obstacles for both the truck OEMs and the logistics service providers. Generally speaking, the trucking industry is pretty complicated due to its originally fragmented nature, which can be deciphered by the simultaneous existence of small companies supervising a few vehicles and big freight forwarders with large fleets of vehicles . Due to this sense of disorder in the trucking industry, the element of consolidation has a significant influence. Mr Walter Rentzsch, a Roland Berger expert in the US, believes that if companies fail to keep up with the current changes in the industry, it is inevitable that they will taste failure and will be eventually driven out of the competition. It is no wonder that autonomous driving can reduce operating costs by 25 to 40 per cent since the usage of driverless trucks is on the rise. As the testing procedures are being executed in the platooning scenarios, it can be seen how long-haul segments are been efficiently driven by the automated vehicles while the conventional trucks are allotted to the first and last mile. This has proven to be extremely beneficial for the logistics sector as the mileage expenses have been decreased by almost 40 per cent . Mr Keese is confident that fully automated trucks will rule the road by 2025-2030 if the proper infrastructure is soon installed. This will also require the necessary clarification of several legal questions, like who will be held responsible in case of an accident of an unfortunate event. Nowadays, electric motors are being preferred and understanding this need, both the developing start-ups and the well-settled OEMs have been incorporating it into their trucking services. In fact, numerous OEMs are planning to produce the electric-drive trucks in huge numbers. However, things are not that easy as the batteries are extremely expensive in the special electric-drive trucks. Even if there is a chance of a reduction in battery rates, in the long run, the present electric trucks do not have the potential to be operated over long distances. Speaking on this matter, Mr Rentzsch recommends the use of electric-drive trucks for trucks that transfer goods within a shorter range of 400km. If we talk about the main factors that influence these business decisions, the cost benefits and emission standards top the list. The significance of digitalization in the near future cannot be undermined as soon, trucks will be completely linked with their environment. Hence, the element of digitalization will be a key factor in boosting efficiency in the field of logistics. It has been found out that around 20 per cent of truck journeys occur without a payload in Europe and US. On the other hand, 40 per cent of the Chinese trucks are travelling empty today. Mr. Keese is confident that once process digitalization and artificial intelligence take over the trucking scenario, such hassles will be entirely eliminated and the services will go through a marked improvement. So, the logistics and transportation industry will witness a major advantage and survive all stakes in the ever-growing competition. According to the views shared by a press release, this current disturbance and state of turmoil prevalent in the trucking sector will eventually pave the path for stronger rivals and innovative business models. This will increase the level of competition by tenfold in the industry. Summarizing the pros and cons of the situation, Mr Keese highlighted the need for upgrading the vehicles to promote growth in the particular sector. Plus, the commercial vehicle OEMs and the logistics firms should immediately focus on defining their market strategies and face the upcoming challenges with the correct approach. Such a positive attitude is very much required to survive and flourish in this fast-changing, competitive industry.

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