The word logistics derived from the French term ‘logistique’ originated around 1830 in the military and is referred to as the movement of supplies and equipment in the war field.
In layman’s terms, logistics is the overall process of managing how resources such as equipment, inventory, food, liquids, materials and people are acquired, stored and transported to their final destination.
The logistics industry which was valued at $7,641.2 billion in 2017 plummeted to $5,200 billion in 2020. The COVID-19 pandemic was mainly responsible for this massive slowing of logistics activities across the world.
While some industries struggled badly during the pandemic, many industries such as the daily essential goods industry, e-commerce, healthcare and pharmaceuticals affected the logistics industry positively. With the COVID situation easing gradually and the world getting back on track, the logistics industry is projected to reach $12,975.64 billion by 2027.
In the year 2022, the logistics industry is predicted a bright outlook and several new trends are expected to dominate the industry. Let us discuss some of the top trends that will determine what is in store for the logistics industry in 2022.
Micro Warehouses and Last Mile Logistics
More micro warehouses are likely to be the trend in 2022. Micro warehouses are dedicated small warehouse spaces focused on moving inventory closer to the customer, especially in densely populated urban areas. It results in faster and efficient last-mile logistics to cater to the increasing demand for same-day and next-day deliveries.
Micro warehouses may not be well suited for products that need to be kept in a climate-controlled environment such as food, beverage and pharmaceutical products. But for common consumer goods and apparel that require minimum special handling, micro warehouses are a great fit.
Increased demand for 3PL and 4PL services
Due to the phenomenal rise of e-commerce, increased demand for 3PL (Third-Party-Logistics) and 4PL (Fourth-Party-Logistics) services are expected.
According to a report by Allied Market Research, the global 3PL market is expected to reach $1.1 trillion over the next six years. 3PL companies that provide warehouses in multiple locations will be more in demand as that would result in efficient last-mile logistics.
3PL and 4PL offer numerous advantages such as being a cost-effective, faster and responsive model. It does have a few disadvantages too, such as lack of direct control and increased dependency of the manufacturer on the logistics provider. In case of any discrepancy, the blame will be on the company and not the logistics provider.
But the advantages outweigh the disadvantages and 3PL and 4PL services are expected to be increasingly in demand.
Big Data and IoT
In these times when excessive data can mind-boggle us, Big Data by its sophisticated and predictive analytic methods uses this complex set of information and forecasts the likelihood of possible events.
Some of the immense benefits of Big Data to the logistics industry are:
-Reducing inefficiencies and helping to make informed decisions
-Predicting things such as, which mode of transportation and carrier to use to maximize profits and meet delivery schedules
-Forecasting demand with more accuracy by understanding customer buying cycles
IoT (Internet of Things) is interconnecting devices and physical objects with embedded sensors, to allow a continuous exchange of data over the internet.
IoT will be increasingly used by the logistics industry to offer innovative solutions to their numerous challenges. Some of the benefits are:
-Increased operational efficiency
-Enhanced visibility into assets such as the location of vehicles and condition of cargo
-Increased security and real-time notification of missing or stolen assets
-Ability to predict the exact time of delivery leading to enhanced customer satisfaction
While the advantages are plenty, the application of Big Data and IoT in logistics can be intimidating for traditional players, prove costly in its initial deployment and may need additional training of personnel.
But as the technology will mature, it will gain more traction and such technologies will become commodified. Business owners of all sizes can then easily adopt and reap its benefits.
Automation and Technology
Automation according to the management consulting firm McKinsey, will be among the top agenda for the logistics industry, owing to three factors: increasing demand from online retailers, a growing shortage of labor mainly in the US, and intriguing technological advances.
Fully automated high-rack warehouses with autonomous vehicles patrolling the aisles would be more commonplace. Managers equipped with AR (Augmented Reality) glasses would ensure full visibility of the entire operations and coordination between robots and humans.
By 2030 it is estimated that most logistics operations could be automated with AI taking over the repetitive and simple tasks performed by humans earlier.
The skillset required by people to work in the logistics industry will change dramatically. 2022, will demand staff well aware of the latest technologies.
Some of the most sought-after profiles will be of experts in areas such as process automation, big data and AI. Those who could develop intelligent environments with the use of IoT would be highly valued.
The globalization of the workforce is another trend since the majority of manufacturers will have multi-country operations. Due to the lack of labor in many countries such as the US, outsourcing logistics jobs could be very well a trend.
Environmentally responsible practices are the need of the hour for all industries including logistics. Green logistics is one such trend that will be increasingly adopted by the industry.
The ways by which logistic companies can adopt green logistics are:
-Eco-friendly warehouses that use timers to gauge and monitor the usage of resources such as electricity, heat, water and gas in their facilities
-Electric and solar-powered vehicles
-Using software to calculate the carbon footprint
Blockchain is the much-talked-about method of storing and transferring information in which the record of the transaction is maintained across several computers that are interlinked.
The logistics industry, by using blockchain can integrate all the components into a single platform. This would enhance visibility as logistics providers, carriers, shipping lines and others in the value chain can use the same platform. Payments and invoicing can also be made from the same system.
The benefits include: updating customers and companies of the product journey, identifying problems before they occur and unparalleled data protection.
Robotics continue to be used increasingly in the logistics industry and is expected to remain among the top trends in the future as well.
Many companies are increasingly using drones to make deliveries of smaller products. Driverless vehicles are also likely to become more and more common.
Robotics can improve the productivity of the logistics industry drastically by speeding up monotonous and labor-intensive tasks. It does not intend to replace humans but by delegating repetitive tasks to machines, humans can focus on other higher-value tasks.
The future of the logistics industry looks buoyant, given the phenomenal rise of eCommerce and the increasing trend of online shopping. The aftermath of COVID-19 has also been instrumental to fuel the growth of logistics and international shipping.
The logistics market by end-use is projected to be lucrative for most segments and Healthcare is expected to top the charts.
To remain competitive and efficient, the industry players need to continuously upgrade in terms of processes and technology. The adoption of trends that are expected to dominate the industry in the future, such as the ones we discussed will become necessary for the industry players to sustain and flourish.
Tim Robinson is Digital Marketing Manager at PACK & SEND, a 25+ years old and respected brand in ecommerce, logistics, and freight delivery solutions. Tim has 20 years of combined experience in sales and marketing. Logistics, D2C, franchising, business planning, and operations management are his core expertise. Connect with Tim on LinkedIn.