Harnessing new technologies to transform logistics

New technologies such as drones, driverless vehicles and 3D printing could revolutionize delivery methods.

Even now, in the aftermath of the digital revolution and the early years of the Information Age, the need to move physical goods from A to B endures. Delivery methods, however, are starting to change, with the plummeting cost of key technologies contributing to innovation (see Figure 1).

In this theme – delivery capabilities – we look at how the trend of crowdsourcing and innovations in manufacturing (3D printing) and technology (drones, autonomous trucks) have widened the range of options and opened up logistics markets to new players.

Delivery capabilities is one of five themes that we believe will be central to the digitization of the logistics industry over the next decade. The other themes we examine are information services, logistics services, circular economy and shared logistics capabilities.

Drones

Once the stuff of science fiction, unmanned aerial vehicles (UAVs) have some exciting applications in logistics. Capable of making fast, cheap deliveries – 30-minute turnaround times are already possible – delivery drones might encourage consumers to keep their fridges less fully stocked. Able to offer perishables on demand, home deliverers could well see a jump in purchasing volumes, raising revenues for logistics operators. With the right geolocation data, drones could even deliver direct to consumers outside the home.

Although drones still have a number of regulatory hoops to fly through, it seems likely that they will mainly replace last-mile delivery vehicles such as vans. Shorter delivery times and increased purchasing flexibility would appeal to consumers, while the ditching of bigger vehicles would shrink operators’ carbon footprint.

Logistics could be a significant part of an overall commercial UAV market worth a projected $6.4 billion by 2020.¹

Drones can allow logistics companies to provide faster, cheaper (about 25%), and lower emission (about 90%) deliveries through avoidance of road traffic in last-mile delivery. However, drones today account for less than 0.5% of all logistics deliveries globally. As technology improves and regulation changes, companies stand to benefit from premiums for faster/same-day deliveries. We estimate this could be worth as much as $20 billion in operating profits over the next decade. The use of drones can also benefit society. It could lead to a reduction of 15 million metric tons in emissions, and prevent up to 4,000 deaths from road accidents.

Autonomous trucks

Self-driving passenger cars have generated more hype recently, but autonomous trucks offer similar reductions in road accidents and carbon dioxide (CO2) emissions, while also promising to significantly boost business bottom lines.⁵

The volume of freight on the road will almost quadruple between 2010 and 2050, according to the International Transport Forum.⁶ The rollout of autonomous trucks is likely to happen in phases, with the benefits expected to accrue first to companies in B2B logistics.

Convoy trucking marks the start of the process of automating truck deliveries and will see drivers take responsibility for two or more vehicles. Moving in convoys, autonomous trucks avoid unnecessary overtaking and, by using the slipstream of the vehicle in front and optimizing accelerations and decelerations, they can reduce fuel consumption. Truck drivers who are relieved from paying attention to the road could be more productive behind the wheel, handling logistics and maintenance issues that would otherwise create a dangerous distraction while driving.

Eventually, truck drivers will no longer need to pay attention to the road and can be more productive, handling logistics and maintenance issues that would otherwise create a dangerous distraction while driving.

Autonomous trucking convoys offer a range of benefits to the industry. They are fuel-efficient and save up to 12%  of the fuel consumed by traditional trucks. These convoys also save on employee costs. A convoy of three or four  trucks can be controlled by just one driver. Additionally, autonomous trucks have 14%  lower maintenance costs. In total, we estimate $30 billion can be saved in operating costs from autonomous trucks. The shift toward autonomous trucks can also benefit society. It could lead to a reduction of 25 million metric tons in emissions, and prevent up to 400 deaths from road accidents.

3D printing

Additive layer manufacturing (ALM), also known as 3D printing, creates three-dimensional solid objects from digital blueprint files.⁸ On average, ALM generates 5 to 10% waste material (which can be recycled and reused), instead of the 90 to 95% typical of machining techniques that create a part by cutting away a solid block of material, rather than building it up layer by layer.

At first glance, 3D printing would appear to pose a great threat to the logistics industry, with objects printed on location, reducing demand for shipments. However, opportunities exist for logistics providers to expand their range of services – for instance, by refashioning themselves as printers, shippers and installers of 3D-printed objects.

Crowdsourcing

Crowdsourcing is about getting what one needs from an undefined group of people – typically an online community – instead of from traditional sources (say, employees or suppliers). Everyone involved makes a small contribution that, in combination with everyone else’s, should deliver the final result desired. In logistics, crowdsourcing can reduce environmental footprints by helping industry players make more efficient use of available capacity and thus reduce total driven miles.