Several technologies are accelerating development in the logistics and eCommerce sector – 5G, data analytics, automation, artificial intelligence and location technology are coalescing to transform logistics operations. Solutions from innovative location and digital map vendors can play an invaluable role in delivering operational efficiencies for the management of fleets as well as increased end-user customer satisfaction.
Challenges and Opportunities in the Fleet Solutions
This article serves as a guide on maximizing fleet utilization in times of crisis, with insights and examples from the Asia Pacific region. Read on this article to understand the challenges and opportunities that the supply chain and logistics industry is facing, and what is going to be the new normal post-pandemic.
This article discusses:
- The impact of COVID-19 on the logistics and eCommerce sector
- Bringing value across the fleet value chain
- Is Blockchain the Future for fleet solutions?
- Optimizing last-mile deliveries and on-time customer ETA
- And more
Hear from experts like CouriersPlease and Zalando on changing challenges and opportunities in the fleet solutions for logistics and eCommerce players.
Table of contents
Introduction
The Logistics industry – growth, challenges and the impact of COVID-19
The retail industry – growth, challenges and the impact of COVID-19
Bringing value across the fleet value chain
Optimizing last-mile deliveries and on-time customer ETA
Conclusion: The new normal
The location promise
Is it for me? If you’re interested in improving your fleet utilization by leveraging location-powered solutions, this eBook is for you. This resource is for:
- Fleet owners and operators looking to increase operational efficiencies and reduce cost-to-serve.
- Online retailers looking to achieve on-time deliveries and maximize customer satisfaction.
- Logistics industry professionals looking to keep up with the latest thinking in the industry.
Introduction
Both the eCommerce and logistics industries have one thing in common – they prioritize achieving internal cost control whilst simultaneously maximizing customer satisfaction. Over the past few years, we have seen exponential growth, and with COVID-19, a significant amount of disruption. The challenge now lies in continuous innovation to meet changing environments and high customer demands while driving efficiencies across the entire value chain. With rich location data that optimizes routing for fleets of all shapes and sizes, businesses and industry players can now enhance their logistics planning tools to make informed decisions faster about capacity and routes, manage expectations around delivery ETAs, and provide drivers with timely and precise routing to enhance their last-mile services.
The logistics industry is fraught with challenges: an ageing driver population, complex regulation, rapid technological changes, and now COVID-19. More than ever, fleet and logistics managers are looking to their transportation management solutions to help them get detailed visibility into operations, better manage their fleet and communicate with drivers, and maximize the utilization of their commercial vehicles.
Meanwhile, eCommerce retailers must also put every option (delivery, curbside pickup, in-store pickup) in front of their customers to enhance ease of delivery. Businesses have started investing in location-based technology to enable seamless online shopping experiences and on-time deliveries, including more convenient contactless options and efficient last-mile delivery. Real-time ETAs are essential with increased competition and high demand for ‘immediate’ deliveries from consumers.
Recent surveys by Ernst & Young, Baker McKenzie and the World Economic Forum revealed the following findings:
- 67% of Asian businesses are taking steps to redesign their supply chains
- 72% of Asian businesses are actively budgeting for digitization to allow for seamless information flow
- 56% of leaders believe they might be losing repeat customer business due to the use of outdated technology
This article discusses the challenges and innovations that can support maximizing fleet utilization, drawing on the conversations during the roundtable sessions as well as examining considerations such as what the ‘new normal’ looks like for retailers and T&L players, how location technology can empower industry players in both sectors, and ultimately what the future holds for both industries.
The Logistics industry – growth, challenges and the impact of COVID-19
The fleet management market in 2020 is estimated to be worth about USD19 billion and will increase in value at a growth rate of 11% to approximately USD29 billion by 2024. Across Asia and China, in particular, companies are continuously innovating new solutions that will help streamline processes within the transport & logistics sector, from autonomous driving to robotics, AI, drones and cloud technologies.
There’s a need for efficient organization and management of drivers, matching those drivers to peak loads as well as making sure that the right distribution of drivers around the city, and urban and rural areas. – Jake Saunders, Managing Director and Vice President, ABI Research
In the long term, China looks to be a leader in the market in terms of growth, with an estimated 4-year 11.8% CAGR of fleet management revenue reaching USD4.6 billion by 2023. Another market that holds promise in Australia, at a CAGR of 12.6%, to deliver an estimated revenue of USD2.5 billion in 2023. The Southeast Asian region, similarly, is expected to continue on a growth trajectory.
However, the COVID-19 pandemic has, without a doubt, negatively impacted the transport & logistics sector, especially larger economies and countries dependent upon tourism. One such example is Thailand, which is also a logistical hub for the supply of goods around the region. As a result of lockdown orders and directives for citizens to shelter at home, services such as public transportation and transport manager systems will see a slowdown. In contrast, other essential services, including online food delivery and other delivery services, have grown during this time.
The key industry players in the region include:
- retailers and manufacturers that require logistics software and services to serve their customers better
- providers of fleet management and transportation management solutions
- third-party logistics providers and freight forwarders that facilitate supply chain operations
- private fleet operators that offer on-road freight transportation services
O2O platforms can actually be integrated into business operations to bridge the gap between fleet managers, dispatchers, and drivers while improving communication and allowing drivers to have accurate and updated information that enhances their safety as well as their satisfaction on the job and also improving the overall operational efficiency of the fleet management of the retailer. – Kangrui Ling, Research Analyst, ABI Research
Online to Offline (O2O) platforms have taken of in this decade, solving the problem of last-mile delivery for medication, parcels, groceries and food. These platforms improve connection and communication channels as well as allow information to be collected and disseminated in real-time, contributing to high levels of cost-savings and increasing productivity and efficiency through a seamless connection between the network operating centre and drivers in the fleet. Ride-hailing firms, for example, have been using their fleet of cars and motorcycles to enter the O2O market – great examples of this are Gojek and Grab in the ASEAN region, while Didi Chuxing in China. HERE Technologies’ Dynamic Route Optimization and Driver-facing Solutions have proven to be effective in supporting these O2O platforms.
The O2O platforms are a significant channel, and industry players need to recognize the main end-users of such platforms to determine their needs and the appropriate solutions to address them:
- Load planners: who plan the assignment of loads to drivers and vehicles, taking into consideration many factors and constraints such as traffic conditions, vehicle restrictions, and pickup and drop off windows.
- Dispatchers: who face challenges arising from ineffective communication channels, as time-sensitive information needs to be relayed promptly
- Drivers: who face challenges due to inadequate routing, especially as larger e-commerce players have begun shifting their focus to rural areas which are less well-mapped
- Fleet managers: who face challenges in managing capacity, improving operational costs and maintaining safety
The retail industry – growth, challenges and the impact of COVID-19
The retail industry has similarly seen tremendous growth in the last four years, particularly considering the e-commerce boom. AI technology is making its presence known through the enablement of more efficient warehouses and inventory management, while predictive analytics also plays a role in smoothing out delivery schedules.
As with transport and logistics, retailers, especially eCommerce players, have a greater need for faster and more efficient last mile and last meter deliveries in an on-demand economy. Third-party logistics services have evolved to tap into these opportunities to expand business horizons, from the use of autonomous support to smart parcel lockers as a package retrieval alternative. Drones or unmanned aerial systems, while still in a nascent state, have also been utilized in remote areas such as Australia’s outback or different parts of China during the ongoing pandemic.
By 2025, total retail e-commerce sales in the Asia Pacific is likely to reach USD4 trillion, representing two-thirds of the worldwide market. Last-mile deliveries which support e-commerce transactions are expected to represent USD8.6 billion of this total in 2025, from USD3.6 billion in 2020. There is a competition between different retailers and their partners for better delivery solutions, where it is crucial for routing, mapping and navigational capabilities to be as smooth and efficient as possible.
COVID-19 has seen many industry players adapt their operations to address the disruption caused by the pandemic. Contactless delivery has become the new normal, particularly in China, where e-commerce has already experienced rapid growth over the past few years. Autonomous delivery options have increased, with the use of land-based robots and drones, as consumer purchasing habits continue to shift towards online shopping.
From the research we’ve done, 30% of total delivery costs revolve around the last mile delivery. As we moved into this COVID-19 environment where people have taken an interest in last-mile delivery of groceries, assuring the quality of produce is very important. When that assurance is put in place, we’ve seen that 66% of consumers are very much willing to move towards grocery delivery options. – Jake Saunders, Managing Director and Vice President, ABI Research
A similar trend is noticeable in both Indonesia and Thailand, as grocery delivery services have unsurprisingly undergone a significant uptick in demand. In both markets, the challenges faced are also similar in terms of creating a seamless delivery experience for consumers, with delivery companies needing to address Indonesia’s widespread geography as well as the curfews, roadblocks, and checkpoints set up within Thailand’s borders. This is also a challenge faced by companies in India, given the limited road access in rural areas. However, consumer trends in the Indian market are still skewed towards a preference for purchasing goods in person rather than online.
Nonetheless, logistics companies across all four countries – China, India, Indonesia and Thailand – have made further investments in improving their delivery infrastructure.
We do see more start-ups paying more attention to last-mile delivery and how to optimize and make it more efficient. Additionally, we anticipate complementary partnerships between e-commerce platforms and delivery service providers to offer consumers a better experience. – Jun Wei Ee, Research Analyst, ABI Research
Bringing value across the fleet value chain
Within the first mile and middle mile, fleet management solutions need to bring value across the entire value chain – for instance, providing real-time location data for consumers, or even connecting them with drivers.
Three key solution profiles include dynamic route optimization, driver-facing solutions, and commercial vehicle estimated time of arrival (ETAs). These solutions aim to improve efficiencies in terms of routes being used, fuel costs, asset utilization, and workflow management, among others.
Long-term perspective with developing innovations
There are opportunities for companies to integrate augmented reality into training, maintenance, or even in terms of real-time routing. On the five-year horizon, there will likely be an upgrade cycle revolving around the move towards electric vehicles. This is a shift towards a vision of the future, and which allows for complementary technologies like machine learning and AI to be embedded into several devices within the cabin, smartphone, and more.
Is Blockchain the future?
Blockchain technology will play a specific role in fleet management solutions in the years to come, primarily in terms of contactless delivery. Secondly, payment on delivery is a common option in the Asia Pacific and other emerging markets, not to mention B2B deliveries. However, COVID-19 has made cash payments less desirable, and companies implementing blockchain technology should also take this into account.
What you really want to do is you want to automate this process, but it can only be done if you have reliable proof of location, so the drop is confirmed. From this perspective, I believe the blockchain will allow us to finally go to real-time management of the entire supply chain from the distribution center to the final recipient without any breakages, full-time visibility and a hundred percent compliance. – Christoph Herzig, Global Director of Product Management, Fleet Management, HERE Technologies
Industry-wide progress through embracing new technologies
For continued progress and to fully maximize the value of new technologies, the industry as a whole needs to be able to embrace their implementation. Different companies and service providers lead to there being multiple links in their supply chain, and it is important to have a consistent flow of information throughout.
Optimizing last-mile deliveries and on-time customer ETA
Solutions-wise, last-mile logistics providers also require end-to-end solutions spanning first to the middle to last-mile deliveries. Primarily, location intelligence stands out as being critical towards providing a safe workplace. Key to this is providing accurate and relevant information to the decision-makers and the people responsible for safety in an easily consumable way in real-time or as close to real-time as possible.
Following the pandemic and the greater adoption of e-commerce delivery systems, last-mile solutions need to be further enhanced. Tour planning takes route optimization to the next level of capability, making sure that orders are optimally divided between vehicles, including factoring in the type of cargo, the skills of the driver and the urgency of delivery.
On the warehousing end of the spectrum, the challenge is in linking the two systems in last-mile delivery – between what is happening on the street and warehouse automation. When these two sub-optimized systems are left operating independently, this will result in conflicts that impact the overall flow. For example, at the loading dock where goods for individual tour routes have been planned perfectly, a suboptimal system will mean the vehicle isn’t there, or vice versa when the driver has a perfect tour route set up, but the goods are not at the ramp at the right time.
We are talking to partners to combine and connect the tour planning for the last mile delivery drivers with the warehouse operations or distribution center automation. This is, of course, a complex undertaking. But once you connect these two, you can achieve a significant improvement in performance. For example, in the same day delivery example, you will achieve a higher fulfillment rate. – Jake Saunders, Managing Director and Vice President, ABI Research
Optimization also helps to provide scalability and flexibility, particularly during the pandemic, where volumes have been inconsistent and unpredictable.
At the core of these solutions and what is driving new opportunities for industry players in the use of data and AI. Through a combination of external and internal data, companies are better able to understand key areas of consumer demand from the local population, from which retailers can improve their business performance.
We can build a better understanding of the population interest in the area by utilizing the surrounding place of interest, so we use the location profiling to improve the stock allocation of our inventory and predict the product demand as well. And then, we should able to optimize the warehousing and utilities cost based on the location profiling. – Alex Raskita Ginting, Eureka AI
Conclusion: The new normal
The “new normal” has created a shift in trends across retail as well as logistics verticals. Contactless deliveries and other sustainable green initiatives are becoming a priority for end customers.
eCommerce and the technology powering these services are widely believed to pave the way forward, with an emphasis on non-attended and contactless deliveries, which also increase convenience and quality of life.
Additionally, different markets will move at different rates, in part as to whether countries have reached a post-lockdown recovery stage. In this regard, local governments and industry players will also need to adjust their strategies. Regardless of the various approaches or solutions being implemented around the world, location technology remains at the core, from planning to execution to connecting with consumers.
Investing in supply chains that are not only business efficient but also equally good for the planet, can be both productive and sustainable business decisions. – Paul Roper, Chief Commercial Officer, CouriersPlease Australia
In terms of technologies, we can look at combining deliveries and pick-ups. For example, maybe an order comes in from a warehouse, and at the same time, we have a local delivery that picks up packages from local stores and then delivers them together. Combine that with some value-added services like a return pick-up – it will all require technology solutions services that enable us to combine all of these delivery services and transportation modes together into one compelling experience for customers. – Christian Scheer, Director of Premium Logistics, Zalando
Ultimately, technology and location technology will connect carriers to the consumer, especially in contact or contactless delivery scenarios. Real-time information is required, and only location technology online, in the cloud, will ensure personal safety and privacy are guaranteed.
Given the rise of contactless deliveries and the growth of eCommerce developments, particularly in a post-COVID-19 world, this push for new and innovative solutions will play a vital role in shaping the future of retail and transport & logistics industries.
The location promise
Global businesses are under pressure to enhance customer service while streamlining costs and processes. This puts pressure on logistics partners’ operating margins, who have to look for ways to maximize asset utilization, lower costs, and improve delivery performance.
HERE offers a rich portfolio of map data and location services specifically built to support some of the most critical fleet operations – going well beyond mapping, navigation and routing into other aspects that keep truck drivers safe and reduce incidents, including road curvature, slope, speed limits for trucks, location of traffic lights, legal and physical restrictions, newly added roads, blocking access on specific road segments, accident blackspots, and toll cost calculation along a route. With our enterprise-grade data and services specifically tailored for trucks and cargo-types, software developers have the power to easily integrate this rich data or APIs to maximize their customers’ most critical KPIs. HERE data and services have proven integration with many Fleet management and Transportation management systems to improve operational effectiveness.
Transforming fleet operations, from start to finish
- Calculate accurate ETAs
- Improve safety
- Increase asset utilization
- Lower operational costs
- Optimize routes
- Enhance the driver experience
Source: HERE Technologies
