The World Economic Forum Report - Digital Transformation
- Charles Barrett
- Dec 31, 2019
- 3 min read
Updated: Mar 18, 2020
Extract from report :
Our analysis indicates that there is $1.5 trillion1 of value at stake for logistics players and a further $2.4 trillion worth of societal benefits as a result of digital transformation of the industry up until 2025. In other words, industry stakeholders should take notice and come together to prioritize digital transformation initiatives given the potential for significantly higher value to be created for society than for industry.
Over the past two decades, as the Internet revolution swept the world, our day-to-day lives have become increasingly digital. With email eclipsing ‘snail mail’ and digital downloads replacing physical products, this could well have dealt a devastating blow to the logistics industry. In fact, something remarkable has happened: more packages than ever before are now being shipped. On any single day, a staggering 85 million packages and documents are delivered around the world.
But logistics businesses cannot afford to rest easy and enjoy the fruits of this global boom in shipments. Logistics has introduced digital innovations at a slower pace than some other industries. This slower rate of digital adoption brings enormous risks that, if ignored, could be potentially catastrophic for even the biggest established players in the business. As other industries with close links to logistics, such as retail, are revolutionized by digital technology, the chances of digital disruption engulfing the logistics industry increase – for instance, the rise of e-commerce has led to new digital entrants in the last-mile delivery market.
More significantly, digital platforms will become increasingly important in the logistics industry, allowing small companies to have a global reach and compete with the sector’s established giants. Over the next few years, the race to build a dominant global platform will transform the customer’s experience of logistics and will be the central issue in determining which enterprises will be the winners and losers in a truly digital logistics industry.
With the logistics industry suffering from some very significant inefficiencies – for instance, 50% of trucks travel empty on their return journey after making a delivery – digital transformation can also bring important social and environmental benefits, by increasing efficiency and cutting down energy consumption and emissions.
This report identifies five themes that are central to the digital transformation of the logistics industry over the next decade:
• Digitally enabled information services will put data at the heart of a logistics business through initiatives such as logistics control towers and analytics as a service, and help in reducing operating costs while improving efficiency of operations.
• Digitally enabled logistics services will help in trade growth through the creation of digitally enhanced cross-border platforms. It will also allow logistics companies to satisfy the growing need of customers for faster same-day deliveries, and promote the concept of city logistics, which will allow firms to operate in ‘megacities’.
• New delivery capabilities will allow logistics to harness technologies such as autonomous trucks and drones to find more efficient ways to deliver shipments, while 3D printing and crowdsourcing offer new ways to think of manufacturing and logistics processes. • Circular economy will foster a more sustainable product life cycle, helping to lessen the logistics industry's environmental footprint by reducing carbon dioxide (CO2) emissions, air pollution and waste material.
• Shared logistics capabilities, through shared warehouse and shared transport capabilities, are expected to increase asset utilization in the near future.
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