After a long period of underinvestment, digital transformation spending in the Transport & Logistics (T&L) sector is forecast to expand at a CAGR of 10.7% between 2018 and 2026, reaching $95 billion.*

Why the sudden strong growth?

The T&L market is still at an early stage of digital transformation and has some catching up to do with other industry groups. Also, changing customer expectations and collaborative operating models are dramatically reshaping the market. We are seeing T&L providers respond by seeking smarter capabilities such as data analytics and cloud-based technologies that improve efficiencies and service offerings.

The investment is long overdue: 90% of T&L providers now view data & analytics as a key and necessary strategy over the next five years, and 50% acknowledge that the absence of a digital culture in their own organisation is the single biggest challenges they face.**

In a new development, Private Equity (PE) has become an important new investor in digital T&L: since 2011, more than 90% of reported investments have come from PE, suggesting that investors see attractive returns for new entrants disrupting established players.

Bottom line: Companies need to remain alert to how new technologies are realigning the market. Early adopters will benefit, and are already receiving the most investor and customer attention.

Implementing a digital plan…

1. Develop new business models and offerings:

• New digital platforms. Building new platforms reduces supply chain inefficiencies, optimizes utilization, improves demand-supply matching and increases visibility and connectivity.
• Advanced analytics. Using powerful data-driven solutions creates new analytics tools that can also be offered (or sold) to clients to help them optimize their own operations & efficiencies.
• Control tower. Boosts operational visibility and connectivity between previously siloed systems and crucially lets stakeholders connect to one another in the supply chain.

2. Digitalize core operations

• Advanced analytics. Similar to the benefits of analytics tools, a logistics business can optimize operations in pricing, routing, and partial-load shipments.
• Customer experience. A digital front-end automates manual processes, provides customers with a one-stop shop experience, and improves internal operational visibility.
• Process automation. Eases labour-intensive logistics operations such as digitizing procurement with e-auctions.
• Equipment data. Digitally monitoring equipment for effective predictive maintenance.
• Next-generation solutions. Robotics, artificial intelligence, and even augmented reality can elevate a logistical organization’s efficiencies in distribution, warehousing and picking & packing.

3. Build a robust internal digital foundation

• Talent. Smart digital talent is a must to compete and improve efficiencies – to grow into new areas and deliver customer value.
• Systems. Having digital connected throughout the organization rationalizes investments in technologies throughout the value chain.
• Agility. Need to be nimble in solution development to maintain the pace of digital and maximize its benefits.

*Source: Transparency Market Research (July 2018)

**Source: PwC, Shifting Patterns – the future of the logistics industry (2018).