The Rise of Log-Tech: The Next Phase of Logistics Evolution
The era of “Industry 4.0” is coming! Big transformations towards digitization and automation are happening across all industries, including the logistics industry. Known for its heavy use of manual processes, complicated paperwork and scattered files throughout the workflow, the logistics sector is probably one of the biggest industries that will profit most from the big wave of digital transformation. The existence of current advanced digital technologies, such as AI, blockchain, robotics and IoT, will progressively shape the future of the logistics industry.
This post aims to give an overview of the digital technology landscape within the logistics industry and the current developments of the log-tech start-up ecosystem. The basis of this post comes from the result of examining +1,000 log-tech start-ups worldwide and publicly available data sources such as Crunchbase, Pitchbook, etc.
The Current Log-Tech Landscape
In recent years, emerging new technologies have undeniably disrupted the logistics industry. The role of digital technology has dramatically shifted from being a complementary of marginal efficiency to a key driver of fundamental innovation. This phenomenon is also followed by new market trends and high customer expectations, forcing logistics companies to either embrace it or fall behind.
Many logistics technologies have come about in the logistics landscape; however, all are still much more than a twinkle in some technologist’s eye, but none are yet in widespread use. It’s just a matter of time until these technologies will be widely used and become the new standard for the industry.
What’s Next?
I believe that there are three main game-changing technologies that will rapidly change the strategies of the logistics industry.
#1 Warehouse automation and robotics
Warehouse-automation technology is developing at a furious pace and this technology is one of the trends that is predicted to sustain itself into the future. Wearable technology, driverless vehicles (like forklift trucks) or multifunctional robots can significantly improve the efficiency and speed of warehouse processes. As a concrete example, start-ups such as GreyOrange, Magazino and Locus Robotics have successfully integrated advanced robots with warehouse operations to ensure extreme accuracy and easy traceability throughout the whole process.
#2 Real-time supply chain visibility
Supply Chain Visibility (SCV) is a necessity for logistics companies, especially in the current situation when customers and carriers expect to have real-time data every minute and every hour. Consequently, logistics and supply chain companies need to focus on implementing cutting-edge SCV solutions into their operations in order to fulfil those expectations. Supply chain visibility start-ups like SensorTransport and Smartlane have started to provide technology that promotes quick response to change by allowing companies to use real-time data. Such data includes traffic patterns, weather or road conditions which are used to take action and reshape demand or redirect supply and optimize routes.
#3 On-demand last-mile delivery
With the increase in e-commerce trends, same-day service is becoming increasingly important for retailers and distributors. This service is no longer something that is “nice to have” but a “must-have”, as many online customers expect to receive their goods as fast as possible. Providing a same-day service is an expensive operation, but many last-mile start-ups such as DoorDash, GoJek and StarShip are working to streamline this process using the latest tech and methodology. These last-mile delivery start-ups are rethinking the last step in the supply chain to include advanced technologies like drones, electric vehicles, robots, driverless cars and so on. Smart solutions will soon show up on your doorstep.
It’s the Right Momentum for Log-Tech Start-ups to Take Off!
The presence of the Industry 4.0 is the perfect opportunity for log-tech start-ups to take off and play a significant role in the industry. According to the 2018 Global Logistics Report by Eye for Transport (EFT) and JDA Software Group Inc., more than 50% of Logistics Service Providers (LSPs) still maintain their traditional systems and admit that the biggest challenge they face now is digital transformation. Based on a technology and data driven approach, log-tech start-ups can fill the gap in the logistics industry to achieve successful transformation by becoming agents of digital transformation. Below is a simplified illustration of how current log-tech start-ups play their role in the logistics industry:
Growing Investment Activities in Log-Tech
Global supply chain & logistics start-up funding has grown exponentially over the last few years. Many VCs have started to realise that the supply chain & logistics tech sector has great potential for investment. In 2018, there were 520 deals and the amount of money going towards supply chain & logistics start-ups reached $ 13.6B. The supply chain and logistics tech sector also outperformed other tech sectors in terms of investment growth, growing at a CAGR of 89%! Those numbers prove that investors firmly believe that log-tech start-ups will keep growing and become the future of the logistics industry.
Success Story: Log-Tech Unicorn Start-ups
Several log-tech start-ups have proven that they can successfully build a “Billion-Dollar” global tech company.
Bottom Line
Logistics technologies have evolved faster than ever, while start-ups with even newer solutions and innovations continue appearing at a rapid rate. We are no longer living in the old-fashioned logistics anymore, instead we are on the way towards the future of logistics. I believe that this is the perfect time for us to see how the future of global logistics is crafted by upcoming logistic technologies and log-tech start-ups.
Let’s create an insightful discussion about the development of the tech-world.
Feel free to reach me out via email (rexichristopher.h@gmail.com) or LinkedIn. I’d be more than happy to hear any interesting opinions/ feedback from all of you.
Stay tuned for more interesting posts from me!
