Amazon is reported to have spent USD 9.6 Billion on global shipping costs in the third quarter of 2019. This expenditure was not due to any purchase spike though. It was part of Amazon’s strategy to accelerate their two-day shipping to one-day for Prime members and also enhance the range of items shipped in one day. In fact, Amazon’s annual global shipping costs have surged from USD 3.9 Billion in 2011 to USD 27.7 Billion in 2018.
The e-commerce behemoth is a great example of how companies have successfully and seamlessly straddled the two worlds of digital supremacy and customer-first obsession. It is also a timely reminder of why Shipping and Logistics (S&L) has become an integral element of a brand’s promise and experience. For example, the delivery of a pair of Nike shoes on or before time is today seen as a part of the Nike customer experience and not mere logistics excellence.
Demands of a Real-time Economy
Businesses now operate in a demanding customer-led real-time landscape. Speed and timing of the last-mile delivery experience have emerged as the e-commerce industry’s biggest competitive advantages.
Ultimately, S&L has one ‘make-or-break’ promise to fulfil. The promise to deliver all purchases in the ‘here and now’ with the traditional seven ‘rights’ — the right product, customer, place, time, condition, quantity and cost.
Such a disruptive shift calls for a transformative approach to business models and processes. Industry players will have to leverage Robotic Process Automation (RPA), analytics, blockchain, Internet of Things and Artificial Intelligence (AI) in platform-based models to remain competitive in a complex and interconnected world. All of this will be underpinned by digital.
For example, sensor-generated data from physical assets such as vehicles, containers and warehouses, when combined with blockchain, can achieve accurate record-keeping and automated co-ordination across the value chain. Blockchain’s open architecture further allows multiple parties to share and co-manage ‘single-source-of-truth’ data with quality, accuracy and accountability. Such transparency and efficiency lead to high trust and customer confidence.
Unlocking the Digital Dividend
In the face of emerging technologies and infrastructure, huge volumes of rich logistics data and compulsion to reduce costs, S&L companies are increasingly engaging with service providers who offer bespoke platform services underpinned by a combination of proven domain expertise and capabilities in digital technologies. These services provide increased functionality and more efficient, cost-optimized use of assets. Platform models also enable significant value capture from links in the chain, without having to own them.
For example, TradeLens, a blockchain-based platform, manages global shipments across the shipping life cycle – credit checks, contract execution, port formalities and payments. Similarly, Singapore’s Transport Integrated Platform (TRIP) provides a single and shared view to independent players across fleet management, job allocation and data management. UPS’ Ware2Go and Chicago-based project44 bring together e-commerce companies and logistics players for an end-to-end delivery experience.
With digitization becoming the vital pivot for process innovation, the value of creating future-ready solutions with a service provider that has deep domain expertise and strong capabilities in data analytics, RPA, AI and business processes cannot be underestimated. These providers understand the nuances of the S&L industry to deliver solutions and services wherein the value goes beyond mere cost arbitrage. The right provider demonstrates multi-faceted value in the areas of risk management, compliance, product delivery and versatile business models customized to specific needs.
For the S&L industry, the future is all about accepting digitization as a transformative force and not just as a disruption that needs to be addressed. The time to accept this ground reality is now!