By Jacques Michel, UD Trucks International Sales, President
Despite all of the unforeseen setbacks, the 2020s could be among humanity’s most memorable, resilient and innovative decades. Whichever scenario plays out – a future where there is life after COVID-19 or a future where we need to live with COVID-19 – the immediate years ahead will be the most critical to defining what this decade will stand for and instil resilience for future generations.
Logistics has an important role to play in all of this. The lifeblood of society, keeps the world moving and connected even when COVID-19 containment measures isolate communities. The transportation of life-saving vaccines and essential goods to help meet the G20 goal of a 40% global vaccination rate by the end of 2021 is just one simple yet powerful example.
It will be a bumpy road ahead for recovery. A few things need to happen to ensure leaner, faster and more sustainable logistics over the next decade, namely investing in circular economy principles, building smarter logistics with lower environmental impact and taking a value-based approach to managing supply chains.
As the saying goes, “in every crisis lies great opportunity”. The question is, what are the opportunities can the logistics industry unlock from this current crisis?
The future of logistics is circular
As environmental awareness takes a back seat to healthcare priorities in COVID-19 times, pollution and rising mountains of waste continue to plague the region even amid COVID-19 lockdowns. The pandemic had a devastating impact on the global plastic waste footprint, in particular, driven by demand for takeaway food containers and packaging for essentials like masks and gloves.
The United Nations’ top climate science body, Intergovernmental Panel on Climate Change (IPCC), even reported that the global warming limit may be breached by the 2030s.
Amid this ecological crisis, investing in circular economy principles is not just a “nice to have” but an urgent “must-have”. The key to moving towards a circular system in the logistics industry is to keep fleets, tools and products in use for longer while minimising resource inputs and waste outputs.
Let’s take a look at how this is applied in retail. The pandemic-led boom in e-commerce and promises of easy (especially free) returns are driving up the volume of returned apparel, which comes with a hefty environmental cost. Managing this entire process through a circular lens could take the form of leveraging advanced tools for logistics planning to eliminate waste from returns or introducing recycling programmes for consumers.
This is known as reverse logistics, where supply chains do not just end when a product reaches a customer; they continue to create value in the opposite direction too. Reverse logistics is not a new concept, but it has grown in importance as a cornerstone of the circular economy today.
Autonomous, predictive, data-driven logistics
By 2030, World Data Lab estimated that more than one billion people in Asia will join the burgeoning global middle class. This growth will further add to the increased pressure faced by already strained logistics networks. Logistics pressures can be greatly reduced with enhanced processes through automation, connectivity and electromobility.
Much like how cities, workplaces and homes will get smarter, so too will logistics. When various components of the transportation system including the packages to be delivered are more interconnected via predictive technologies, businesses and consumers will benefit from greater visibility throughout the system from end to end. For businesses, this would mean greater visibility on how waste and costs are accrued along a supply chain to inform areas for improvement. For consumers, greater visibility means knowing where exactly their packages are at any given point, and when to expect them.
Fuel is traditionally the most important currency in logistics and transportation, but data will soon overtake fuel to become the most important decision-making factor.
To illustrate, telematics services have been used in commercial trucking to not only improve fleet uptime and fuel efficiency but also to improve profitability by reducing unplanned stops and operational costs. The real-time analyses powered by telematics allow a very precise approach for improving driving techniques and planning alternative routes when required to optimize operations.
A value-based approach in logistics
Sustainable growth empowered by smart logistics will also become increasingly value-driven. Aside from progressing innovation in smart logistics solutions, this value creation will also improve the supply chain and help all parties involved meet their shared goals, such as in meeting emission or waste elimination targets.
This value-based approach may also bring benefits at the community level. Logistics players have been drawing from the expertise and talents of its people and making good use of its facilities and resources to provide support and assistance on causes they support, from training female drivers to even playing an active role in humanitarian response plans to ward off COVID-19 by supplying necessities.
What companies will see as the value will also evolve, especially amid an evolving corporate landscape characterized by a growing push towards strengthening ESG credentials? It is no longer just about optimizing operational efficiencies, but also looking after the wellbeing of drivers, reducing environmental impact and empowering people and communities.
Central to many value chains, the logistics industry has been part of the environmental degradation problem that our only planet is facing. Now is the time to go the extra mile and be an active part of the solution as well. Companies and governments embracing the “full circle”, tech-driven and value-based approach will stand to unlock longer-term potential in economic benefits, innovation and even job creation to bring greater value back to the communities they serve.