The Digital Future of Logistics

“Digitalization is something logistics service providers need to adapt to – and they need to do it quickly”, says KLU professor Hanno Friedrich. He has just co-authored a study on digitalization in the travel, transport, and logistics industry in cooperation with consulting firm McKinsey&Company and Google.

“People are used to obtain information on schedules, prices, and availability for their personal travels with just a few clicks. And more and more of them expect the same customer experience when looking for logistics services. Those providers who understand this need and can offer their clients a quick and convenient customer journey will have an advantage in the future”, says Friedrich.

However, a lot of work needs to be done in this respect. Friedrich summarizes the differences between the industries: “For personal travels, your journey starts with an online search and can be completed a few clicks later. In logistics however, more often than not, it starts with a phone call to your broker and ends with a lot of paper work.”

First steps taken

While online research and booking is very common in personal travel (and 43 percent of customers use mobile devices to book services), online quotes for transporting cargo are less common and bookings are hardly ever made online. In the sub-sectors freight forwarding, air cargo, and ocean cargo, only six percent of the largest companies offer a complete online booking service. In rail cargo and trucking, this service is practically non-existent. In trucking, for example, 72 percent of all requests and bookings are still handled offline.

And it’s not only about the services offered, it’s about digital infrastructure, as well. “We took a look at the websites of 33 large ocean carriers”, Friedrich describes some results of the study. “Turns out, the majority of those sites took 13 seconds or more to load on a customer’s mobile device. 20 percent even took more than 20 seconds.” Time that many customers are not willing to spend waiting. “In today’s world, people are used to order things online within a few seconds and with just a few clicks. This means that customers that have to wait for too long for a website to load are very likely to turn away and look elsewhere.”

It is especially small and midsize companies that demand online services from logistics service providers. They want to understand the products and services, compare and book online. Feeling this pressure from their customers the most are ocean carriers and freight forwarders. In these sub-sectors, online quotes are getting more and more common (although customers still need to confirm and book them offline).

Let’s get digital

At the same time, competition is growing. More and more start-ups are taking to the logistics sector, offering new online services and end-to-end solutions. “Online services like quotes and bookings are beginning to permeate the logistics sector. Customers will quickly get used to these services and turn to providers who can offer them the most convenient way of booking.” Which means that providers that don’t have a digital agenda yet need to act quickly. “The time to invest in digital services and in the customer journey is now”, says Friedrich. “Those who don’t will be left behind in the long run.”

And Friedrich can see even more opportunities for logistics companies investing in digital services. “Thinking about digitalization does not end with an online booking tool and a faster loading website. There are some trends developing right now that could offer better services and more convenience to customers. Take the Internet of Things, advanced analytics, or Blockchain , for example.” According to Friedrich, these technologies could lead to tailor-made solutions for customers and smarter pricing models. And even new, value-added services like end-to-end visibility of shipments.

“If logistics companies can find ways to use these technologies to develop new, data-driven products and services this could change the whole industry”, Friedrich concludes. “The earlier logistics companies adopt these trends and offer a better experience to their customers the more they will benefit from them.”

Find out more about digitalization in travel and logistics and read the whole study.