Keeping the world moving: Disruptive innovation speeds change for transportation and logistics

transportation and logistics

The mishap in the Suez Canal demonstrated just how important transportation and logistics is to the global economy. For almost a week, a giant cargo ship was stuck, blocking more than 300 other ships. The economic damage was $400 million an hour, according to Lloyd’s list.

Meanwhile, the long way around South Africa takes weeks and adds more than $26,000 per day in fuel costs alone, according to the New York Times.

Clearly, in 2021, it will be impossible for transportation and logistics companies to compete if they’re still relying on a myriad of complex processes and legacy technology. Multiple factors ranging from the pandemic, congestion, container shortage, and geopolitical implications will impact global trade. Then there are the mishaps.

But the good news is, disruptive innovations are speeding up digital transformation agendas.

Companies have accelerated the digitization of their customer and supply-chain interactions and their internal operations by three to four years, according to a recent global survey of executives by McKinsey. And the share of digital or digitally enabled products in their portfolios has accelerated by a shocking seven years.

Top 5 drivers of digitization in transportation and logistics

Let’s take a look at what’s driving these digital transformations.

1. The accelerated movement to digitize all business processesautomation

New digital entrants, built on big data, cloud and connected platforms, combined with a global pandemic, have exposed weaknesses in supply chains. When the crisis suddenly forced manufacturers around the globe to shut down or restrict activities, it interrupted the flow of goods, and supply chains broke down.

This has forced the industry to rethink supply chain infrastructure. Organizations that are currently manufacturing products overseas will start to make them locally. This will change many of the freight lanes and patterns that fleets currently use.

The shift to local manufacturing will also make it more important to have efficient ways to bid on freight contracts and manage freight movement using digital tools such as electronic bills of lading (eBOL), electronic signatures, and digital proof of deliveries. Many industry-leading carriers have also shifted to an electronic approach to BOL to increase efficiency and accuracy.

2. The need for contactless transactions is growing

Keeping front-line employees safe and informed is critical to continuing operations. There is still a heightened awareness of the risks associated with the handling of paper and physical interactions.

Again, there’s good news. Digitization eliminates much of the paper handling as well as enables social distancing. As the industry digitizes more transactions, logistics teams will have greater flexibility regarding where and when they work.

Meanwhile, the pandemic has shown that it’s possible to run businesses, including transportation companies, “virtually” if information is available digitally. Many industry-leading carriers have already shifted to an electronic approach to bill of ladings as eBOLs have become an obvious choice for companies looking to prioritize critical safety within today’s work environment.

The whole subject of eBOLs is ripe territory for both shippers and carriers. There’s so much efficiency to be gained on both sides of the equation.

– Scott Sullivan, Pitt Ohio

3. Cash is king

The industry was already under financial pressure with lower freight volumes and lower rates due to over-capacity. Pandemic-related government funding such as PPP loans provided a lifeline to many companies. However, those that survive will need to have an increased focus on cash flow.

Digitizing load documents improves cash flow by compressing the time from freight delivery to payment. Drivers can submit proof-of-delivery electronically and the shipper can be invoiced immediately. DCSA, a nonprofit consortium of nine container lines working to develop interoperable standards, estimates that eBOLs could save the shipping industry a collective $4 billion in processing costs if they reach 50 percent adoption by shipment volume.

4. Customer expectations are at an all-time high

The experiences they receive elsewhere and in their personal lives greatly influence customer expectations. They are demanding transparency and will no longer accept incorrect billing, late deliveries, or a lack of visibility into their deliveries.

But there are still an overwhelming 80 percent of carrier invoices that contain discrepancies, according to American Shipper. And 15 to 20 percent of the freight invoice inaccuracies were overcharges by the carrier. Without the proper technology in place, organizations struggle to maintain efficient invoicing processes, according to survey data from the 2020 Level Research Payables report.

5. eCommerce continues to grow

Demand has surged for grocery deliveries, eCommerce, and the associated logistics services, amplified by the online shipping and home delivery of those sheltering at home. This has reshaped the roles of store fronts, distribution centers, and shipping, forcing companies to accelerate automation.

Keeping the world moving

transportation and logistics

COVID-19 has brought attention to information flowing through every step of supply chain. As transportation and logistics organizations bear much of the responsibility in keeping the world moving, they need instant access to accurate information. Because even in times of uncertainty and global crises, they must continue moving the products that people and companies depend on.

Think of the next several months, when logistics providers will need to rapidly move large quantities of temperature-sensitive COVID-19 vaccines. Experts expect distribution of the vaccine to disrupt the freight chain in hard-to-predict and sporadic ways.

For example, providing just one dose to 7.8 billion people would fill 8,000 Boeing 747 cargo planes, according to the International Air Transportation Association. How can organizations guarantee they deliver the vaccines safely, so they are effective?

They’ll need the right technology to verify that they are adhering to all regulations throughout the entire shipping journey.

As a result, the transportation and logistics industry is under tremendous pressure to rapidly expand capacity, diversify routes, reduce costs, and embrace automation and digitization. Executives will need to focus on their people as well as the workflows and technology infrastructure that enable them.

Unfortunately, the industry’s incumbents are still reliant on manual and heterogeneous processes in both operations and the back-office, supported by siloed and disconnected systems that are inefficient and lack transparency.

To overcome this, leaders need to accelerate their journeys to the cloud to digitize and automate quickly and effectively.

Digitizing manual processes creates opportunities to improve transparency, increase collaboration, and make continual process improvements. Organizations that were hesitant to invest in digital technologies like electronic bills of lading, electronic proof of deliveries, electronic signatures, and freight invoice automation, claiming they were not a necessity, are now seeing these technology investments table stakes for future survival.

And their survival is important, because they keep the world moving.

Cara McFarlane

Cara McFarlane

Cara McFarlane is the global solution marketing manager for Hyland’s insurance vertical. Her mission is to effectively position Hyland as the leading content services platform within the insurance market by... read more about: Cara McFarlane

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.