Holistic changes needed for the logistics industry to thrive

Over the past few years, e-commerce’s popularity has soared tremendously, as restrictions on mobility drove more and more people to shop online.

In fact, e-commerce values in Singapore alone skyrocketed by 87% in 2020 compared to the year before, according to a recent report by Google, Temasek, and Bain Southeast Asia.

Driven by the e-commerce boom, the logistics industry has started to feel the impact of digitally discerning consumers, as the average consumer becomes more digitally savvy because of the pandemic. Consumers now demand an online shopping experience that is efficient, accurate, and responsive to their needs and more are expecting multiple delivery options and the ability to track and trace their parcels.

As more businesses scale up and expand their presence online, there is also an increase in demand for fulfillment and warehousing services by businesses of all sizes. With more consumers now shopping globally online, there is also an increasing demand for cross-border shipping in the post-pandemic world. 

As a result of changing consumer and business demands, it is no longer enough for logistics companies to focus their business on a sole aspect of the supply chain, but also demonstrate the necessary resources, expertise, and know-how across every aspect of the logistical process. With that, what lies in the horizon for the industry is that it will be imperative as we enter into 2022 and beyond for logistics companies to consider big changes, and this includes delivering a holistic suite of services across the supply chain in order to adequately meet the evolving needs of consumers and businesses.

 Building bigger, better, and stronger

In order for the industry to move towards a more holistic business model, the first order of business for any logistics firm is to diversify one’s offerings. The ability to provide one-stop e-commerce solutions – from the set-up of an online store, order and inventory management, to logistics operations – is no longer just about achieving a competitive edge over other players. It will simply become the norm in the next few years.

Beyond expanding the breadth and depth of one’s core offerings, the need for more comprehensive, reliable supply chain networks has never been more apparent in the new normal. The supply chain disruptions experienced during the height of the pandemic – of which is still felt in some parts of the world – have brought to light some of the unseen vulnerabilities and demonstrated that enterprises need to make their supply chains more resilient, collaborative, and networked.

As countries move towards recovery, we are seeing demand for cross-border shipping picking up pace again, with more consumers shopping globally online to enjoy greater options, and businesses looking to expand beyond Singapore to other markets. This in turn led to the need for networks to be extensive.

The future is digital and autonomous

The pandemic has undeniably accelerated digital transformation for every industry, and the supply chain is no exception. Technology such as automation, big data, and the Internet of Things (IoT) will continue to play a huge role in meeting changing consumer and business demands. According to management consulting firm Mckinsey, automation will be among the top agenda for the logistics industry due to the increasing demand from online retailers, a growing shortage of labour, and technological advances. Hence, it will be crucial to continuously invest in technology and automation to deliver more efficient and quality services.

Currently, in the industry, innovations such as automated parcel sorting systems can provide valuable efficiencies and insight. Not only can it help to sort incoming parcels automatically, it also allows for additional data to be captured such as their weight and dimensions to help cut down on human error, increase the team’s efficiency, and allow manpower to be shifted to more skilled areas where needed.

Digitalisation also needs to exist beyond the warehouse floor. At its most cutting-edge, logistics companies will also need to look at enabling application programming interfaces (API) integration to provide their e-commerce sellers with a seamless process from the capturing of orders and fulfillment to last-mile delivery by allowing integration with major e-commerce marketplaces and platforms like Shopify, WooCommerce, and more. APIs have positively impacted a number of industries as they connect traditionally siloed sources of data, opening a door to improved processes, better communication, and more efficiencies.

Big Data will also continue to play a big role in helping logistics companies reduce inefficiencies and make better-informed decisions, whether it is optimising delivery routes for greater efficiency and maximise profits, or even forecasting demand with greater accuracy for the deployment of resources and manpower. On the other hand, IoT will be able to help logistics companies increase operational efficiency, increase security, and enable real-time tracking of the parcel to ensure peace of mind for both sellers and consumers.

Green logistics taking root in the industry

The final piece to the puzzle of achieving a holistic approach in the industry is embracing sustainability. All the strategic advancements and innovations discussed above will only sustain success for the short term if we do not strive to protect the environment and ensure a future for all. Our present choices and actions have huge long-term impacts on future generations, and both businesses and consumers are recognising this in where they put their dollar towards.

In fact, logistics companies have already started to adopt environmentally friendly practices to cut carbon emissions and contribute to sustainability. Small steps such as recycling the used warehouse resources and materials, and leveraging innovative software to calculate and reduce their carbon footprint can make a significant difference in the long run.

Since the COP26 in Glasgow, ​the drive to create a more sustainable logistics industry has gained more traction than ever before. Moving forward, for green logistics to truly take root and grow, greater collaboration and joint efforts across the industry will be required to truly achieve the sustainability goals.

Looking ahead

The aftermath of COVID-19 has been pivotal in fuelling the growth of e-commerce and the logistics industry. As the backbone of every economy, the logistics industry is expected to continue growing in size and significance in the coming years. As we step into a new year, confronting new changes is inevitable, whether it is new technology, new market entrants, new customer expectations, or even new business models. The key is to remain ever agile and open to opportunities in order to remain relevant in the fast-changing global economy.