Emerging trends for the logistics companies this year.

Byline: Ahsan Nisar

Logistics companies are facing an era of unprecedented change as digitization takes hold and customer expectations evolve. New technologies are enabling greater efficiency and more collaborative operating models; they are also re-shaping the marketplace in ways that are only just beginning to become apparent. New entrants, whether they be start-ups or the industry's own customers and suppliers, are also shaking up the sector.

For the logistics industry, we start by taking a closer look at some of the key disrupting factors: changing customer expectations, technological breakthroughs, new entrants to the industry, and new ways to compete or collaborate. These disruptions have very different implications for individual companies, depending on which segments they operate in, their type of ownership, and where they are located. They also don't exist in a vacuum: in each case, the interactions between them are equally, if not more, important. Government intervention and trade flows between regions and territories are influencing the industry too, but very much depend on national politics and geography.

Like individual consumers, industrial customers now expect to get shipments faster, more flexibly, and with more transparency at a lower price. No surprise that across the industry, both operating models and profitability are under strain. And the pace of transformation for large manufacturing and retail customers may turn out to be even faster than for private final consumers. Many logistics companies also serve B2C customers. Consumers went digital long before many of the retailers, and some parts of the sector are still struggling to keep up process. The leading players are adopting what we call 'total retail', which is an operating model across bricks and mortar, online mobile and other retail channels.

Technology is changing every aspect of how logistics companies operate. 'Digital fitness' will be a prerequisite for success: the winners will be those who understand how to exploit a whole range of new technologies, from data analytics to automation and platform solutions. Those who don't, risk obsolescence. But with so many technologies competing for management attention and investment, defining a clear digital strategy that's integrated into business strategy will be critical. Labor is a critical element of any logistics operating model, and up till now there's always been a trade-off between service levels and costs. But...