9 Logistics Industry Trends and Innovations in 2023
From supply chain automation to robotics, learn the latest innovations in the logistics industry, including new technologies like autonomous vehicles.
Improve last-mile delivery with route optimization from Circuit for Teams.
In the United States, the retail logistics market was valued at over $43 billion in 2021.
But that success comes with its share of challenges.
Labor and shipping shortages can make it hard to keep up with demand, managing complex systems can sometimes lead to efficiency falling through the cracks, and rising freight costs can impact your profits.
Domestic shipping rates for moving goods by rail and road in the US rose 23 percent from 2020 to 2021.
How do you keep up with rising costs, meet the increased demand, and still manage to run an efficient operation?
You might look to innovations in the logistics industry to help you do your job better, faster, and cheaper.
Let’s take one example (there will be more where this came from). The industrial robot market is expected to grow 175 percent over the next ten years.
Why? Because robots are solving manufacturing problems like labor shortages.
If you own a logistics business or transport or deliver products, staying on top of the latest trends and innovations can help inspire new ideas for improving your business.
In this post, I’ll explore nine trends and innovations in the logistics industry in 2023.
9 logistics industry trends and innovations
Logistics is an ever-evolving industry driven by advances in technology and new strategies for optimizing supply chain operations.
Logistics companies can fill many roles.
Order processing, inventory management, warehousing, packaging, and transportation are all logistics services.
Staying on top of the latest logistics innovations isn’t about being trendy or having bragging rights.
It’s about better business.
If there are ways to cut costs, streamline business processes, do things faster, and make more profit, who wouldn’t want to know about it?
The following trends and innovations touch on some of the many logistics services and aim to improve how they work:
Warehouse automation is the process of making operations more efficient and reducing manual labor.
Let’s circle back to our example of industrial robotics.
DHL partnered with a robotics company to start using 2,000 assisted-picking robots in DHL facilities around the globe.
This automation is expected to improve efficiency and productivity in the company’s order fulfillment process by speeding up picking and decreasing rates of failure.
The robots used in the process are collaborative — built to work with their human co-workers and do tasks they don’t have time to do, like navigating massive industrial plants quickly.
The biggest warehouse in the US is over 10 million square feet. Imagine the time it could take to find what you need.
If robots can help find, collect, and process items faster, you can ship orders faster, take more orders, and make more money.
In fact, best-in-class warehouse operations have a picking accuracy of over 98 percent.
High picking accuracy is the key to fast and error-free orders, happy customers, and fewer returns.
Warehouse automation technologies include:
- Robotic picking arms: Pick-and-place robot arms lift objects and place them elsewhere. Some robots can move up to 300 items per hour. A few applications are dropping items into packaging, moving parts on an assembly line, and sorting parts.
- Automated guided vehicles (AGVs): The global AGV market is projected to grow from $2.17 billion in 2022 to $4.11 billion by 2029. AGVs are computer-controlled vehicles that don’t need a driver. They use software and sensors to transport raw materials and finished goods around the warehouse.
- Automated conveyor systems: Automated conveyor systems exist for many applications. At their simplest, they transport products. They can be customized with infeeds and gripper systems to palletize products and handle high volumes.
- Autonomous mobile robots (AMRs): AMRs are similar to AGVs, except AGVs move on predefined paths and AMRs don’t. They rely on sensors, AI, machine learning, and software to navigate the space and accomplish their tasks.
- Automated storage and retrieval systems (ASRS): ASRS have a lot of storage to free up floor space. They use computer-controlled systems to place and retrieve loads.
The global last-mile delivery market was valued at over $40 billion in 2021.
Last-mile delivery is the process of delivering goods from the warehouse or store to the customer’s doorstep — in other words, it’s the last step in the supply chain.
Between traffic delays stretching delivery times and failed deliveries costing time and money, this step of the logistics process faces many challenges.
One of the biggest is cost.
Last-mile delivery is the most expensive part of the shipping process.
Last-mile delivery accounts for 53 percent of all shipping costs.
A single failed delivery costs $17.78, on average.
As customers demand faster delivery times, companies are turning to technology to help manage the last mile.
One way your company can optimize your last-mile delivery and save money is through route optimization.
Route optimization software like Circuit for Teams uses algorithms to suggest the most efficient delivery routes so drivers spend less time on the road and more time making deliveries.
In fact, Circuit for Teams can help your business reduce delivery costs by 20 percent.
You can also use our tool to get proof of delivery, send automatic customer updates, and track your drivers in real-time.
Artificial intelligence (AI)
Artificial intelligence (AI) is a blanket term for computer systems that can replicate human intelligence.
There are specific applications for logistics technologies — like AGVs using AI to navigate massive warehouses or robot picking arms inspecting goods for quality control.
AI is revolutionizing the logistics industry, from warehouse automation (which we covered above) to predictive analytics.
Predictive analytics uses historical data to forecast future trends. It helps logistics companies better understand demand and plan for potential events or disruptions.
For example, healthcare used this same tech to help combat the COVID-19 pandemic.
For logistics, specifically, AI can have a big impact on the supply chain — 93 percent of shippers and 98 percent of third-party logistics (3PL) providers feel that data-driven decision-making is crucial to supply chain activities.
AI forecasting can help anticipate changes in supply and demand so your business can weather the storm.
It’s no secret that the COVID-19 pandemic had a big impact on the logistics industry.
Delays in land transportation, difficulty sourcing critical supplies, and capacity problems in air transportation were just some of the struggles.
Uncertainties and risks are always around us, but AI can help you anticipate market changes, inefficiencies, and even global pandemics.
Big data analytics is the process of using big data and numbers to uncover patterns, correlations, and anticipate market trends.
But AI is also practical. Use it in fleet management to improve dispatching, measure driver behavior, and improve driver safety.
For example, AI dashcams can capture information like engine diagnostics, fuel usage, dangerous driving events, and driver hours.
Electronic logging devices (ELDs) are one type of AI tech you might be familiar with as a fleet manager. Check out our list of the seven best ELDs on the market.
On-demand warehousing lets shippers access short-term warehousing on an as-needed basis, giving them more flexibility and control over their storage needs.
There are 4 billion square feet of unused space inside existing warehouses in the US.
On-demand warehousing offers an opportunity for companies to quickly access additional storage space without a long-term commitment.
During the pandemic, on-demand warehousing saw greater interest when Amazon stated it was suspending product intake at many of its fulfillment centers used by sellers.
The Fulfillment by Amazon (FBA) business model was key for many eCommerce businesses.
(FBA allows eCommerce businesses to sell their products on Amazon and — instead of packing and shipping products themselves — Amazon stores, picks, packs, and ships the orders for them.)
With FBA only accepting essential inventory, sellers who depended on the service had to scramble to find alternate fulfillment solutions.
On-demand warehousing offers a quick solution for companies that need storage but don’t want to manage a warehouse.
It’s essentially warehousing for rent. You can use it when you need it and stop when you don’t. Read more about how it can benefit your business.
There are more than $50 billion in losses every year from mislabeled packages, failed deliveries, and stolen cargo.
(Read our post on calculating inventory shrinkage to see where your business stands.)
Shipping companies, retailers, distribution centers, and logistics providers — every step along the supply chain — are affected by inefficiency.
Poor packaging can lead to damaged goods, returns, and refunds, impacting your bottom line.
Packages get lost in the mail. Drivers get stuck at stop lights, burning fuel and losing time. Pallets get moved and misplaced.
Blockchain logistics aims to help avoid these inefficiencies by creating an immutable ledger of activities.
In the cryptocurrency world, the blockchain is used to track and verify cryptocurrency transactions.
In the logistics industry, the blockchain helps prevent fraud and makes it hard to alter data and make clerical errors.
The blockchain is a decentralized ledger system that offers security from tampering and data manipulation.
It also brings transparency within logistics management systems. Real-time data can be used for better supply chain management by offering updates on when products are shipped or delivered.
In short, you can use blockchain technology to track products from origin to destination.
Every step of the process is recorded in your network so you have the most updated, transparent, and fixed ledger.
This way, you can see inefficient practices, reduce bottlenecks and wasted money, and remove unnecessary middlemen.
The cloud is one technological advancement most of us can’t live without.
We use it for everything from storing files to sending emails, and it’s becoming increasingly important in the logistics industry.
The cloud logistics software market is expected to grow by nearly $580 million between 2021 and 2026.
You’ve probably experienced the power and convenience of cloud-based systems on your own devices, so it’s not hard to imagine how this could be helpful for logistics businesses.
Cloud computing allows for scalability and reduced logistics costs.
It means you don’t need to put a computer in every office nook and cranny or drive to work in the middle of the night to get a file.
You can access things from your phone, home, or anywhere else because it’s all in the cloud.
And because data isn’t stored in one physical location, there’s better security and less hardware maintenance and dependence.
Information technology (IT) and buying and maintaining computers, data storage, and other physical infrastructure are major operating costs.
Software, data networks, hardware, data/voice networks — it all adds up.
Cloud-based solutions make it easier to share information, collaborate on data, and communicate with customers and suppliers, no matter their location.
And it’s a great way for businesses to keep up with the ever-changing logistics industry because you aren’t tied to hardware that ages out and becomes obsolete.
We put out 1,000 megatonnes of CO2 per year from shipping.
That’s 3 percent of global CO2 emissions.
Logistics companies concerned about their environmental impact are turning to green logistics and sustainability initiatives.
Green logistics is about reducing carbon emissions, using renewable energy sources, cutting down on packaging, and minimizing waste.
It’s about creating a more efficient supply chain with less pollution.
Amazon is just one of the many industry leaders that took a pledge to go carbon neutral by 2040 or sooner.
Carbon neutrality refers to being environmentally sustainable by offsetting the emissions a company produces from its operations.
Businesses can do this by investing in renewable energy, capturing and storing carbon emissions, or reducing consumption.
Green logistics aims to keep your business profitable without sacrificing customer satisfaction or the planet’s health.
It can refer to efforts like using electric vehicles, switching to sustainable packaging, and relying on renewable energy sources like solar.
Green logistics can help you reduce transportation costs, minimize air pollution, and gain access to green subsidies and tax reductions.
For example, electric vehicles don’t guzzle up fuel (and the $$ that comes with it), and they cost up to 40 percent less to maintain than gas-powered cars.
Internet of Things (IoT)
There are about 13 billion connected IoT devices worldwide.
The Internet of Things (IoT) is an interconnected system of devices connected to the internet that communicate and exchange data.
This connectivity logistics trend combines several other advancements we discussed, like artificial intelligence, blockchain, cloud computing, and more.
DHL wrote a comprehensive report on how IoT helps logistics companies by making data collection easier and faster and allowing logistics businesses to track their shipments more accurately.
IoT includes technology like truck navigation systems and geofencing to help track shipments and gather data on how long it takes to transport goods.
With the help of IoT, your logistics business can track shipments in real-time, automate data entry, and improve the customer experience with on-time deliveries.
Self-driving cars are no longer a sci-fi dream. This technological innovation is now all around us.
Researchers forecast there will be about 8 million autonomous or semi-autonomous vehicles on the road by 2025.
And about 320,000 fully autonomous vehicles are expected to be shipped by the end of 2022.
Fully autonomous vehicles (AVs) use sensors and advanced algorithms to detect their surroundings and make decisions without any human input.
AVs have gained a lot of attention in the logistics industry as they could revolutionize freight transport and reduce costs.
AVs can drive longer hours without fatigue, and they never drink and drive. They’re also safer.
Human error causes 94 percent of all accidents. However, AVs aren’t without error.
Waymo — an autonomous driving technology company — claims its vehicles have driven 10 million miles and been involved in 18 accidents over 20 months.
Even so, companies like DHL are investing in autonomous delivery vehicles, as they see it as a long-term cost-saving strategy (since the company won’t need human delivery drivers).
Autonomous vehicles can also help avoid driver shortages, one of the leading issues in the US trucking industry.
As demand grows and the number of deliveries grows, we need more delivery drivers to make it work. But we have a major truck driver shortage already.
Autonomous vehicles can help.
With Amazon Air preparing for a drone delivery service in the US, it’s clear that the future of logistics operations will be more hands-off than ever before.
Implementation tips for logistics innovations in your business
Logistics technologies are thrilling to talk about, but it can be daunting to actually implement them in your business.
So how can you use logistics innovations to your advantage?
Here are a few tips:
- Start small. Don’t feel pressured to implement every new technology. Maybe your startup can’t afford an army of mobile robots. Start small with one or two technologies that could help improve your operations.
- Keep employees on board with new changes. It’s important to involve your employees and make sure they’re on board with the changes. Do they know how to use the new electronic logging devices (ELD) in their vehicles? Take the extra steps to offer training and make sure they understand the new changes.
- Create a plan to measure success. Come up with a plan to measure your return on investment for each innovation you use. This can help you determine which innovations are working and which need to be tweaked or removed.
- Go for the most impact. Focus on innovations that can have the biggest impact on time and money savings. For instance, route optimization software like Circuit for Teams could save your business time and money by optimizing your vehicles’ delivery routes.
How can you stay on top of future trends in logistics?
To stay ahead of the curve, you need to stay informed on new developments in the logistics industry.
Check out this list of logistics publications and websites to stay on top of the latest news and trends.
For the latest resources on warehouse safety and compliance, look to government resources from the Department of Transportation (DOT), Environmental Protection Agency (EPA), and Occupational Safety and Health Administration (OSHA).
Google Scholar is also a great resource for discovering new research in logistics and transportation. You can even create alerts when new articles are added.
You can also attend industry conferences, webinars, or seminars to learn from experts, network with other professionals, and gain insight into the latest developments in logistics.
Finally, follow industry leaders on LinkedIn to learn about the newest trends and technologies in logistics.
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