By Glen Hilton
Innovation is self-reinforcing, creating new standards and fuelling growth, which in turn necessitates new and better solutions.
Nowhere is this virtuous cycle more evident than in the Asia-Pacific (APAC) region, where growing economies require increasingly sophisticated solutions, which in turn uncover more opportunities for growth.
I firmly believe APAC’s continued economic expansion will be the single biggest opportunity for us in the logistics industry. But the region’s logistics operators must match this dynamism by accelerating their adoption of new technology, both to capitalise on this growth and to help drive it.
There is simply no other way the industry will be able to handle the unprecedented volume of goods coming through Asian ports in the coming years. By 2027, 200,000 twenty-foot equivalent units (TEUs) will ship from APAC’s ports every year, with roughly half of them destined for other ports within the region.
The increasing complexity of global supply chains could also create difficulties for businesses that are slow to embrace an innovation mindset. Disruptions including the pandemic, ongoing China-Japan trade sanctions and geopolitical tensions have prompted many businesses to reevaluate their strategies, needing to balance resilience with efficiency. In some cases, this means supply chains are spread across more countries, as businesses seek to limit their risks by diversifying their suppliers. Better technology could be a viable solution for managing these changes.
Unfortunately, the logistics industry hasn’t always been known to keep up with the pace of innovation. Adoption of new technology has been sluggish at times and uneven across the sector for a number of reasons. For some businesses, the high cost of procuring and implementing new technological systems is the stumbling block. For others, existing technologies are, in their view, serving their customers well enough.
But it’s clear that the landscape is changing. DP World’s latest white paper Preparing supply chains for the future takes a closer look at the technologies that are likely to reshape the industry in the years to come, while also surveying industry leaders on the topic. It found that a majority of respondents within the industry expect artificial Intelligence (AI), better cybersecurity, robotics, cloud computing and the Internet of Things (IoT) to disrupt the industry over the coming years. Experts expect 45% of supply chains to be mostly autonomous by 2035 (for example, robots in warehouses and stores, driverless forklifts and lorries, delivery drones and fully automated planning).
A recent survey by S&P Market Intelligence also found that 67% of shipping and logistics firms globally say they have a digital transformation strategy in place, while almost all of the remainder say they are considering one. Even so, the quality and depth of these strategies vary. One report from Accenture found that the market leaders are outspending the so-called ‘laggards’ by 250%.
Businesses who don’t have an innovation strategy need to change course now. Otherwise, they will struggle against competitors who are willing to lead, as greater tech adoption becomes the norm within the industry.
Transforming the future of supply chain operations
New technologies are already dramatically altering the way logistics managers maintain their supply chains. For instance, IoT is transforming the global pharma cold chain industry, ensuring temperature-critical medicines are fit for purpose by better tracking products from manufacturer to patient. Within the automotive industry, AI can help with vehicle assembly and identification of defects and manufacturing issues.
Technology empowers companies to enter new markets. For example, DP World’s CARGOES and Searates platforms help cargo owners find the best routes and freight charges for global shipping, along with secure payment and advanced container tracking. The Digital Freight Alliance provides web-based tools to help freight forwarders promote their service offers to customers across the world.
Technology enables operational efficiency. For port operators, paperless digital supply chains (DSCs) will rise to the fore, enabling businesses to gather data from sensors and connected assets to drive actionable improvements. DP World uses tech-enabled solutions such as CARGOES TOS+, which deploys AI to digitally track every element of the terminal and identify inefficiencies.
BOXBAY, which will first be implemented at our Pusan Newport Company (PNC) Terminal in South Korea, completely changes the container stacking process, eliminating re-shuffling, saving unproductive moves each year and improving overall truck servicing time by 20%. For these reasons, it’s also a carbon-friendly solution.
Technology conveys safety benefits, in turn improving the bottom line for many businesses by removing liabilities and avoiding delays. Our seeing machine, for example, detects symptoms of fatigue in drivers and tries to alert them. Our unpinned cone detection system helps to prevent the risk of containers toppling. Both keep our workers safe at PNC.
Wider impact on the global economy
As an industry, logistics depends on a healthy trade ecosystem, but it is also partly responsible for driving it. Technologies such as AI, robotics, IoT and cloud computing could help to facilitate growth. One OECD report found that logistics costs account for up to 20% of the price of finished goods in some ASEAN member states. That’s twice the global average, and the additional cost is usually passed along to consumers. It’s a figure that underscores the pivotal role the logistics sector could have in driving economic growth.
DP World is committed to helping drive technological change. Globally, we have invested more than $10 billion in the logistics sector since 2012, and we have an unwavering commitment to innovation and technological excellence, helping to lead the industry into a new era of possibilities.
Glen Hilton is the CEO & MD, Asia-Pacific of DP World. DP World’s white paper ”Preparing supply chains for the future”can be downloaded here.