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5 Technologies that are Reshaping the Future of T&L Technology

5 Technologies that are Reshaping the Future of T&L Technology

Digital transformation affects every industry across the globe, and transportation and logistics industry (T&L) is no exception. According to a recent Forbes Insights survey, 65% of senior transportation-focused executives think tectonic shifts in this industry are driving an era of profound transformation.

The pace of change is relentless, and a lot of T&L businesses are having a hard time keeping up. Nearly two-thirds of T&L executives say it’s becoming increasingly difficult to keep up with the advances in technology, demographics and the competitive environment.1 And it’s no wonder, considering new technologies are appearing every other day.

Early adopters of technological advances are gaining a competitive edge, and top-level management is taking notice. Studies show that over half of T&L executives fear their competitors are already moving significantly faster amid disruption in T&L.2 IoT, artificial intelligence and machine learning, among others, are hailed as the transformational forces behind the transition from T&L’s traditional mode of operation to the modern, automated way. These technologies are making good on the promise of delivering a dynamic and integrated demand forecast and fully optimized order fulfillment.

The “Amazon Effect”, rising customer expectations and the move toward digitally connected supply chains are also reshaping the way T&Ls are operating, and will play a significant role in the future of the industry.1

 The “Amazon Effect” and Rising Customer Expectations

Competition between brick and mortar businesses and internet-based competitors continues to grow and raise the stakes.

The “Amazon Effect” describes the disruption of the retail market due to the increase in e-commerce, in large part due to the influence of Amazon. Amazon's vast selection of goods, fast shipping, free returns and low prices have become a standard customer by which retailers much compete. Amazon has transformed the market, changing the way that customers think about choice, convenience and price. With the proliferation of e-commerce, consumers are able to find whatever they want, whenever they want, and to place their order and then receive it in a one- or two-day period.

“The effect of Amazon is heightened expectations. Next week is no longer good enough. It’s got to be on its way now and arrive at the destination within a day or two,” opined C. John Langley, Clinical Professor of Supply Chain Management and Director of Development for the Center for Supply Chain Research, Penn State Smeal College of Business.3

Moreover, Amazon is setting the bar for fast delivery at discounted rates or for free. A retail study found that nine out of 10 consumers say free shipping is the #1 incentive to shop online.4

The “Amazon Effect” is also redefining the final mile in delivery. In the past, loads saw a maximum of four touches before the goods reached the end-consumer. Today, getting goods to consumers in record time means seven, eight or nine touches moving the freight to a network of warehouses and forward positions.5 Consequently, T&L companies need to be able to manage a much more complex route in shorter lengths of time.

Additionally, access to a diverse menu of products available online and visibility of order fulfillment have become important features for customers. This includes knowing if a product is in stock, tracking, returns and even being able to interact with the delivery on the last mile, all of which were unheard of just over a decade ago.

Supply Chain Trends and Top Transformation Technologies

Digitalization in T&L has become such a widespread phenomenon that it’s almost impossible not to notice its effects. Fifty percent of respondents in a recent study claim that advancements in technologies are exerting a strong impact on their company’s logistics, supply chain and transportation operations.6

The massive proliferation of business data extracted from IoT and further enhanced by machine learning and artificial intelligence is opening new dimensions for data analysis.

Other factors of change include advances in drones, driver safety technology, driverless vehicles and blockchain. “Digital fitness” will become a prerequisite for the success of logistic organizations: the winners will be those who understand how to exploit a whole range of new technologies.

Let’s take a closer look at five of the leading technologies.

IoT: The Internet of Things

With IoT, the ability to capture information and filter it all back to your database provides you with the visibility you need in real time to make smarter, faster, data-driven decisions. Mobile technologies helping harness IoT data for T&L businesses include RFID tags, readers, handheld devices, scanners and mobile computers that are working together to maximize supply chain efficiency.7

Big data will become a defining force in the future of logistics, but the benefits of big data are already being felt.

When implemented at the enterprise level, big data is known to deliver: 11

  • Better shipping options
  • Reduced operational costs
  • Predictive operations
  • Fewer errors in delivery and pickup
  • When leveraged, IoT could impact the supply chain
  • in significant areas such as:
  • Real-time route optimization
  • Crowd-based pickup and delivery
  • Customer loyalty management
  • Environmental intelligence
  • Address verification
  • Risk evaluation and resilience planning

The future of IOT and T&L in numbers looks like this

  • 4 out of 5 industry professionals believe the greatest value from digitization will be in fleet management, especially in routing optimization
  • 86 percent of companies will significantly increase their IoT budget in the next 1-2 years.9
  • By 2026 is only expected to increase10 the IoT and Telematics market is expected to be $10.9 billion, with software representing nearly $8.7 billion8
  • 23.14 billion IoT-connected devices are currently online, a number which is only expected to increase10

Artificial Intelligence and Machine Learning

Artificial intelligence and machine learning enable leaders in logistics, supply chain and transportation to focus IoT and other data feeds across their enterprise, using them to make more effective decisions.

Leading T&L companies are already harnessing the power of artificial intelligence and machine learning to inform and fine-tune core strategies like warehouse locations, and to enhance real-time decision making.12 The transportation industry has been capturing data for years, but these technologies encourage making data-driven decisions on issues like availability, costs, inventories, carriers, vehicles and personnel.

Optimal carrier selection — combing through thousands of possible candidates, routes and schedules —can take four to five minutes to reach a conclusion. With AI and ML tools, companies can narrow the selections to just two or three within a matter of seconds, then allow human intuition to make the best decision, saving valuable time and money.13 Predictive analytics helps sales teams understand when customers will be ready to reorder and help determine when a vehicle might need preventative maintenance — avoiding breakdowns and reducing the risk of failing to meet customer needs and expectations.

Autonomous Vehicles and Drones

Regulations that limit drivers' hours on the road are no longer a concern when talking about autonomous vehicles and drones. Instead, concerns focus on fuel efficiency and range capability, since trucks will be able to embark on longer journeys14 and drive continuously at all hours.

New market entrants are already testing long-haul robotic trucks in U.S. states like Arizona, California, Florida and Texas.

These autonomous vehicles will need logistics and service nodes that best capture their new efficiencies. As they become more and more electric and “green,” unmanned trucks will require servicing stations that provide rapid recharging facilities as well as service and maintenance.15

Meanwhile, Amazon has already demonstrated its first actual drone delivery. According to the “Washington Post”, CEO Jeff Bezos tweeted that “the box arrived 13 minutes after the order was placed.”

Drone use in manufacturing, warehousing and distribution facilities is expected to rise in the next five years, aiding the work-in-process inventory stage of supply chain management. Drones are expected to enhance safety and security, as well as promote overall efficiency.

For example, inside of warehouses and facilities, drones could:

  • Perform safety inspections
  • Carry out maintenance and repair functions, such as fixing a leaky roof
  • Fly across a campus to retrieve a forgotten tool
  • Track inventory anonymously using RFID or QR codes®
  • Move small items quickly, reducing the need for forklift and conveyor systems

Automated drone activities could potentially reduce work hours and eliminate the need for employees to perform repetitive tasks.

Outside of the warehouse, drones can also be used for supply-chain deliveries. Drones could be used to ship inventory between production facilities and distribution centers, potentially expediting order fulfillment.16 These technological marvels evolve every day; their developers insist that they carry the potential to broadly automate transportation in the very near future.17

Block Chain Technology

Blockchain is a technology ideally suited to the T&L industry that has the potential to become transformational. In addition to being a ledger, blockchain allows shippers and carriers to work together with smart contracts. The use of smart contracts enables faster and more efficient approvals and customs clearance, reducing processing times for goods at custom checkpoints.17

Having trustworthy data across the entire transportation and logistics ecosystem — since the entire network contributes to data validation— is another important Blockchain feature that is highly beneficial to the T&L industry.

Traditional tracking technologies are hard to scale, and this is becoming a problem because of the rising demand for same-day delivery. Blockchain technology might become a viable alternative, as it provides a scalable, immediate solution for order tracking and authentication.18

Businesses such as Walmart are investing in solutions designed to shore up food safety standards. Walmart's solution will mean that anyone involved in the supply of products will be able to trace each item back to the farm where it was grown, using a tamper-proof distributed database. Amazon has announced two blockchain initiatives for this year that aim to enable its AWS customers to take advantage of distributed ledger technology in their own projects. Forbes predicts we will see more mature endeavors in the blockchain arena in the near future.

Additionally, the trend of using blockchain technology to secure data and devices in the internet of things is expected to grow this year. As the number of connected devices continues to grow, experts predict that blockchains will increasingly be used to log and monitor these communications and transactions.19

It is predicated that Blockchain as a Service (BaaS) will increase adoption across businesses in the next year. BaaS is an offering that allows customers to leverage cloud-based solutions to build, host and use their own blockchain apps, smart contracts and functions on the blockchain. A cloud-based service provider manages all the necessary tasks and activities to keep the infrastructure agile and operational.20

The Future of T&L Technology

The global population is expected to increase from 7.4 billion to 10.6 billion by 2050 21. One of the first areas that will be impacted by these numbers is the shipping industry, where the volume of goods shipped will quadruple by 2050.27

But it’s not just the population increase that’s driving this surge. The increase in the volume of goods is also driven by urbanization, increases in disposable income and internet penetration, and ease of access to new technologies.22

To keep up with these changes, established companies and a host of new entrants are shifting their business model by harnessing the latest technology innovations. Integration across the value chain, both horizontal and vertical, and networks that are real-time optimized will become the norm.

Things are already starting to move in that direction. Today’s supply chains, for example, are more digitally interlinked than ever before. IoT-connected devices, RFID chips, GPS tracking and other innovations are just a few of the technological advances connecting supply chains.

Organizations need to be in permanent contact with their trading partner networks to achieve greater supply-chain visibility and efficiency. Mobile devices will continue to play an important role in the digital transformation of the entire supply chain — providing an instant line of communication at every intersection between the workers and the goods they are moving.

And this is just the beginning. In the near future, companies will also need to prepare for experimental technologies like augmented or virtual reality, 3-D printing, robotics, etc.23

Honeywell: The Right Partner for Success

For the transportation & logistics industry, this is an era of profound transformation. Those who manage transportation needs must begin to rethink everything: warehouse locations, logistics technologies, and fleet and carrier strategies.

Advancements in technology can be overwhelming, but Honeywell is the partner to help you make sense of it all. We’ll help you make smart decisions, based on facts, not intuition, and find the best solutions to fit your organization’s needs.

To navigate this complex landscape, you need a business partner with deep domain expertise and the ability to connect data and insights to solve problems and develop better outcomes.

Contact a Honeywell Solutions Expert today!  Call 1-800-934-3163.

1, 2 http://info.forbes.com/rs/790-SNV-353/images/Penske_REPORT-FINAL-DIGITAL.pdf
3 https://www.shipware.com/what-the-amazon-effect-means-for-the-shipping-industry/
4  http://info.forbes.com/rs/790-SNV-353/images/Penske_REPORT-FINAL-DIGITAL.pdf 
5 http://info.forbes.com/rs/790-SNV-353/images/Penske_REPORT-FINAL-DIGITAL.pdf
6 http://info.forbes.com/rs/790-SNV-353/images/Penske_REPORT-FINAL-DIGITAL.pdf
7 https://www.abr.com/iot-tl/
8 http://info.forbes.com/rs/790-SNV-353/images/Penske_REPORT-FINAL-DIGITAL.pdf
9 https://www.abr.com/iot-transform-supply-chain/#_ftn1
10 https://www.statista.com/statistics/471264/iot-number-of-connected-devices-worldwide/
11 https://cerasis.com/big-data-in-the-transportation/
12 https://www.forbes.com/sites/insights-penske/2018/09/04/how-artificial-intelligence-and-machine-learning-arerevolutionizing-logistics-supply-chain-and-transportation/#4ba2331558f5
13 http://info.forbes.com/rs/790-SNV-353/images/Penske_REPORT-FINAL-DIGITAL.pdf
14, 15 https://www.roanoketrade.com/drones-disrupt-supply-chain/
16 https://www.americanexpress.com/us/foreign-exchange/articles/drones-impact-supply-chain-management/
17, 18 https://assets.website-files.com/5891efd0cc115cf202136da4/5c01b149f51059400ebdbb8b_winnesota_blockchain_infographic.png
19 https://thefintechtimes.com/blockchain-trends-2019/
20 https://www.forbes.com/sites/bernardmarr/2019/01/28/5-blockchain-trends-everyone-should-know-about/#2ca3f79c3bb9)
21, 22, 23 https://www.ey.com/en_gl/automotive-transportation/how-transportation-and-logistics-can-position-itself-in-a-new-world

Barry J. Ewell
SPS BLOG EDITOR

Barry J. Ewell is a Senior Content Marketing Communications Specialist for Honeywell Safety and Productivity Solutions. He has been researching and writing on supply chain topics since 1991.