The global transportation and logistics (T&L) industry – the last to embrace the innovative 4.0 transition – is facing a profound shift in its market, forcing an innovative adaptation to enhanced customer expectations, the embrace of new disruptive entrants, rapidly changing technology and heightened competition, collaboration and consolidation.
As the digitisation evolution reshapes industries across the board, the T&L sector has yet to fully tap into the potential of the digital era, and the pressure to innovate is increasingly pushing T&L companies to the point where, in effect, they must now become “fast digital followers” to keep up.
Customer value chains were changing, with many clients actually already ahead of the technological curve and developing into competitors with greater expectations, which placed T&Ls at a great disadvantage to deliver a better integrated service at an ever lower cost, PwC global transport and logistics leader for Europe, Middle East and Africa Stefan Stroh said during recent a roundtable discussion, in Johannesburg.
In addition to the evolving technology trends reshaping the logistics industry, the competitive landscape was shifting, there was increasing collaboration among incumbents and new entrants were disrupting the flow as technology provided the platform for new business models.
There is also an urgent need for the strategic management of the logistics portfolio to capture growth and pursue operational excellence through technology to become “fit for growth”.
Meanwhile, the potential structure of the logistics market of the future still remained uncertain, PwC Africa transport and logistics head Dr Andrew Shaw said; however, four key scenarios emerged out of the major shifts that were under way.
One suggestion is themed “sharing PI”, which shows the growth of collaborations, wherein incumbents collaborate more and develop new business models, including by sharing networks and adopting possible shared standards for shipment sizes, greater modal connectivity, and information technology requirements across carriers.
Shaw also highlighted the “start-up, shake-up” scenario, where new entrants are making a bigger impact through new business models based on technologies, and the “complex competition” scenario revealing customers’ emerging competitive streak, as large industrial or retail customers and suppliers start entering the logistics market themselves, effectively moving from being customers to becoming competitors.
The final scenario outlined is the “scale matters”, where the current market leaders take full advantage of new technology and compete for a dominant market position by acquiring smaller players, achieving scale through consolidation and innovation through the acquisition of smaller entrepreneurial start-ups.