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Key logistics innovations of the future to impact warehouse, shipping costs

Friday, July 14, 2017 - 07:00
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Customer demands for expedited delivery and e-commerce capabilities have put new pressures on the supply chain. Shippers have to be able to provide rapid (often same-day) delivery of goods with a high level of visibility for customers.

At the same time, new technologies are making it easier for logistics providers to provide these services. Competition and price pressures are further complicating delivery.

“Firms are getting smarter in terms of how they manage expenses related to warehousing,” says Vijay Narayanan, Senior Research Analyst, Visionary Innovation Group at Frost & Sullivan. “But consumers are more demanding, especially when you are talking about the user experience and instant deliveries. These are going to be critical factors in the future. They have forced service providers to deliver more customized, unique solutions that address broader concerns and new types of value-added services.”

According to Frost & Sullivan, the rapid proliferation of connectivity and the increase in start-ups is creating new types of services based on on-demand, real-time and last-mile delivery solutions. This is opening new growth opportunities. The analyst firm recently provided an overview of new research that indicates predictive analytics and other technologies will enable anticipatory delivery – shippers will be able to put goods in motion in advance of an order. Big data and other technologies will also make it easier and more cost effective to control brokerage services, improve routing and accelerate product flow.

According to the company’s forecast, global logistics spending is expected to grow from $8.06 trillion in 2015 to 10.6 trillion in 2020, with a compound annual growth rate of 5.63 percent. Much of that spending is being driven by demand for new types of value-added services, as well as transportation expenses and increasing congestion.

In fact, while warehousing costs will fall from 25 percent of overall logistics spending to just 15 percent, transportation costs will increase from 60 percent of spend to 70 percent by 2020.

Frost & Sullivan has identified four key innovations that will transform future logistics operations. They are:

Autonomous Fleets. Both the shipping and trucking industries are investigating how autonomous vehicles can be used for delivery. In addition, warehouses are already investing in robotic forklifts and other types of machine-guided systems. “As we move beyond 2025, we’ll see movement toward long-haul transportation autonomy,” Narayanan says. “Autonomous cargo ships will launch by 2030.”

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