JAMES FRANCIS investigates how digital technologies are impacting – and changing – the transport logistics industry.
Few things express the convenience of our digital society as well as Uber. Customers can quickly order a car to take them exactly where they need to be, through one app. What started as a company where you could order limousine rides quickly became revolutionary. It radically cut the costs of taking a taxi and removed the ambiguity of hailing one in a foreign country – no more elaborate detours or uncertain destinations.
Logistics activities account for 12-13 per cent of global GDP, according to the World Bank. In South Africa, the transport, storage and communications sector contributes around 9 per cent of GDP, according to the Department of Transport.
Uber is effectively in the business of transport logistics: it moves people from place to place. Similarly, many goods logistics companies have also started to use digital systems to increase convenience. You can track a package across the globe via a courier service. Delivery people get their orders through apps, and it’s now common to sign a digital pad or snap a photo of a delivered parcel.
Yet the above examples are quite simple relative to the complex nature of the heavier transport logistics industry, explains Naude Rademan, CEO of logistics platform Linebooker. “A lot of the transport industry is still very manual and not really transparent. You can make five phone calls for the same load on the same truck on the same site, but get a 40 per cent spread in price. There is a lot of paperwork and a lot of phone calls.”
Increasingly, services such as Linebooker are changing that situation, but the pandemic has provided the most significant impetus for logistics to become more efficient and visible. KPMG notes in its paper, Six key trends impacting global supply chains in 2022: “The major logistics disruptions create a ripple effect across global supply chains that ultimately causes goods to pile up in storage, impacting those ships on their way to ports through diversion or being slowed
down as they arrive at major transit hubs, thereby restricting global trade flows and limiting access for businesses to import products and refill their stocks of inventory.”
Even though digital technology has been a part of logistics for some time (some of IBM’s earliest products focused on logistics and warehouse management), bottlenecks created by the pandemic have led to a massive cultural rethink and investment in digital logistics.
E-commerce steps up
Are such changes translating into the “Uber-fication” of transport logistics? That depends on which part of the logistics world we observe. The most visible example of a digitised logistics value chain is in e-commerce.
“Apps such as Uber and the Checkers Sixty60 are just a few examples of mobile logistics applications that bring your desired groceries to your doorstep,” says Markus Nieuwoudt, director of Nieuforrest freight forwarding services and a chartered member of the Chartered Institute of Logistics and Transport: South Africa. “Consider the multitude of online e-retailers such as Loot, Bidorbuy and so many more – these applications and businesses are nothing but logistics at your fingertips. There are plenty of enterprise resource planning (ERP) systems in the industry that are used in every dynamic of the supply chain.”
Shoprite Holdings, owner of retail outlets such as Checkers, Usave, OK and Shoprite, is one company investing deeply in modern logistics. Most notable is its warehouse complex in Cilmor, Cape Town, a sprawling site that distributes goods to its stores across the Western Cape region. Highly integrated with the company’s central ERP platform, the site manages goods from more than 600 suppliers, stockpiling countless products on tens of thousands of pallets and shelves. Relying on computerised planning and voice-command technologies, its operations run smoothly for such a massive site.
This type of digitised logistics infrastructure makes products such as Checkers’ Sixty60 delivery service possible. More examples of such next-generation logistics are coming online every day. The best known is Amazon’s sprawling, technology-driven transport network and its experiments with robotic shelves and drone deliveries. Yet
logistics companies don’t have to go that far; for most, it’s visibility and access to data that bring the biggest changes.
“Today, in a world of just-in-time supply chains, global trade and growing e-commerce, speed, flexibility, and knowledge mean everything,” says Kami Viswanathan, vice president of marketing for FedEx Asia-Pacific, Middle East and Africa. “Our transformation has been accelerated by external circumstances, but also enhanced by new capabilities at our disposal.” We are leveraging the power of data science and machine learning and we are generating more insights to help unlock greater visibility into a shipment’s journey. These insights, powered by the information about the package and distilled by cutting-edge artificial intelligence and machine learning, help inform decision- making for, and with, our customers.”
Logistics in the platform economy
Though e-commerce shows the value of digital logistics, it’s not always that straightforward. Shoprite and Amazon have invested millions in software platforms that connect all the dots, but not many transport companies and customers can do the same. This has prompted demand for logistics service platforms.
Linebooker is a home-grown example of this new service model. Rather than run a transport company or warehouse, Linebooker has created a software platform that provides users with access to a broader market of transport providers, along with transparency in pricing and other matters.
“We built the first platform version just to give customers the ability to interact with lots of transport companies on a transparent basis and request either fixed or variable pricing,” explains Rademan. Using Linebooker, both transportation companies and customers can find each other, bid with their best offer, and gain other advantages such as preferential cash flow. These all extend from one platform, creating a centralised software system that can scale and add services as needed.
Platforms are the unsung heroes of digital logistics. Linebooker started with an ambition to create market transparency around transport costs, but could expand
into a multi-service marketplace for logistics providers and customers. Other services, such as Fastlane by AGS Transact, use platforms to manage fuel for transport trucks. Among those examples, the use of apps to streamline logistics is becoming prolific.
A long way to go
Yet for all the new-found convenience, the logistics world still has a long way to go, explains Charles Dey, training consultant for International Supply Chain and Logistics Management, and fellow of the Chartered Institute of Logistics and Transport: South Africa. “If the word ‘logistics’ means ‘the local movement of goods’, then the digitisation of the processes involved is relatively simple. However, if ‘logistics’ relates to the international movement of goods, then this is a far more complex matter involving interlocking contracts, coordination of processes and procedures carried out by independent service providers, and compliance with increasingly complex regulatory measures.”
Moving goods internationally remains difficult and ensnared in manual processes. Besides the pandemic bottlenecks, there are concerns over environmental impact and conflicting customs regimes. But that may be the next big opportunity, especially for Africa and the newly established African Continental Free Trade Area.
According to the Brookings Institution, only 16 per cent of African trade happens within the continent, as opposed to Europe (67 per cent), Asia (60 per cent) and the Americas (46 per cent). Much of that has to do with sovereign red tape and costly logistics, but digital logistics could represent a leapfrog moment for the continent. Maybe the Uber-fication of transport logistics will become the continent’s next success story.
A BRIEF HISTORY OF LOGISTICS
- 3000 BCE: The Mesopotamian kingdom of Uruk seals clay tokens inside fired clay balls to act as delivery contracts.
- 130 BCE: The Han Dynasty in China makes the Silk Road official, connecting trade with the Middle East and Europe.
- 14 CE: Rome establishes a state-run postal service.
- 900 CE: Trade caravans moving across North Africa, the Middle East and Far East enter their golden age.
- 1602 CE: The Netherlands establishes the Dutch East India Company to protect its trade routes and help fund its fight for independence against Spain.
- 1698 CE: Thomas Savery invents the first commercially used steam engine, opening the doors for industrialisation and trains.
- 1852: The first private courier company, Wells Fargo, opens its doors.
- 1939 CE: Industrial-scale logistics management becomes a key focus during World War II.
- 1956 CE: Malcolm McLean invents the first standardised shipping containers.
- 1963 CE: IBM develops a computerised forecasting and inventory management system.
- 1982 CE: British logistician Keith Oliver coins the term “supply chain management”.
- 1994 CE: Amazon is established.
- <2009: Uber is established, soon leading to the app-ification of transport.
Linebooker has revolutionised transport and logistics, offering customers and transporters a digital solution that is simple and transparent. For more information, contact Linebooker at +27212016969 or send an email to firstname.lastname@example.org.
Click here to register as a transporter.
Click here to register as a customer.