Lux Research: $300B global transport & logistics industry badly needs digitalization
BOSTON: The global transportation and logistics (T&L) industry now valued at more than $300 billion badly needs digitalization to remain agile, sustainable and competitive, according to a leading tech research firm in the US.
Lux Research said the industry has three major challenges – agility, sustainability, and visibility – and companies see digital transformation as the answer to these.
In its latest report titled “The Digital Transformation of Transportation and Logistics,” Lux Research highlights the most compelling use cases for digital transformation within transportation and logistics and shows where maturation is still needed.
“Trade globalization, digital consumers, and low oil prices have all driven growth in the T&L industry while imposing new challenges,” explains Harshit Sharma, Lux Research Analyst and lead author of the report.
“For example, there is growing consumer demand for agility through the rapid delivery of products: Air cargo is the best means to achieve this but decreases sustainability significantly due to air freight’s high carbon intensity, not to mention that rapid delivery can also mean often engaging with new vendors, creating visibility challenges. We need to innovate to find better all-around solutions to address these challenges without exacerbating others.”
Global trade has also created supply chain visibility issues for companies due to complex supplier networks, leading to greater risk, shipping delays, and even lack of supplier accountability, the report added.
Lux recommends that logistics companies look at digital as a connected system, as opposed to disconnected pieces, and build foundational use cases, such as asset monitoring, first before delving further into advanced applications like autonomy and AI. These systems should first focus on the area of greatest importance to your organization, whether it be agility, sustainability, or visibility, but as stand-alone elements, use cases will not produce their best value proposition.
As digital transformation scales in the industry, Lux forecasts traditional logistics companies will look toward new business models and go assetless. And as e-commerce continues to rapidly grow, and competition in this space escalates, major players may look to consolidate and invest in the logistics vertical to build a competitive advantage and drive competition out of regional markets.