Published on January 23rd, 2023 📆 | 6911 Views ⚑0
Technology’s Role in Transforming the Logistics Industry
In a 2015 LinkedIn post, Meg Whitman, the former CEO of Hewlett Packard Enterprise, said that “Every company is a technology company.” I agree with Ms. Whitman, especially with how she’s defined it — that across every industry, IT strategy is now business strategy, and that speed of execution will define winners and losers. This is particularly true in the logistics industry, as was clearly highlighted during the pandemic. How is technology transforming the logistics industry? That is the main question I discussed with Raj Subbiah, Head of Product at Uber Freight, on a recent episode of Talking Logistics.
A World We No Longer Live In
At the Deliver 2022 conference, Lior Ron, the CEO of Uber Freight, said that “The logistics industry was built for a world that we no longer live in.” This quote fascinated me so I asked Raj to explain what that means for the industry.
Raj began by restating Ms. Whitman’s quote as, “Every company that deals with the movement of goods is a logistics company.” He goes on to explain that the movement of goods used to be an afterthought. It was handled by someone else. But now it’s very much intertwined with the customer experience. And retailers have upped the bar for their expectations as well. In addition, all of the recent challenges such as the pandemic, fuel price increases and driver shortages have made logistics more difficult and more important. “Every company has to up its level of expertise in the logistics space,” says Raj. “There is a large hunger in the industry for technology to help.”
Raj also states that, as an industry, “We’re very good at just-in-time logistics. We’re not very good at just-in-case logistics. Our resilience needs to be better so we can ensure a consistent customer experience.” He mentions the importance of scenario planning for things such as fuel price increases, network imbalances, seasonal changes and improvements in efficiency. “Technology is the perfect solution for solving these challenges.”
Platforms as a Foundation for Network Innovation
Marc Andreessen famously said that “Software is eating the world,” but I have argued that the quote needs to be updated to “Software and networks are eating the world.” I asked Raj how software and networks can be the foundation of innovation.
Raj points out that in the U.S. industry spends about $1 trillion on moving goods, but about 25% of that is empty miles (deadhead miles). “It’s a very large waste of resources, time and money. It’s also somewhat irresponsible because the trucking industry is responsible for about 7% of global greenhouse gasses emissions. But this is a solvable problem because it’s an optimization problem. Having technology handle optimization across the network versus having a person doing it is orders of magnitude more effective.”
Raj explains that for this optimization to happen, shippers and carriers must first digitize their freight networks onto a technology platform. Once you have the platform, you can begin working on things like resilience and making networks self-correcting. Digitization enables the platform to see the network in action and resolve problems without human interaction. Then it creates the opportunity for collaboration between networks at scale.
With all of the exciting things Uber Freight is working on, I asked Raj what excites him most. Raj notes what excites him begins with companies starting to digitize their networks and change their business models and processes to position themselves to take advantage of new technologies. He mentions the visibility and transparency that digital network platforms provide as a key factor in enabling better insights and responses. It all comes down to transparency, trust and control for successful collaboration and network improvements.
There are also exciting advanced technologies emerging. Raj is particularly interested in autonomous self-driving trucks. Uber Freight is working with Waymo on some trials in that area. AI and machine learning are other technologies that will have significant impact.
Selecting a Logistics Partner
With all of the changes in the marketplace, logistics requirements, and technology, I asked Raj if manufacturers and retailers need to think differently when selecting a logistic partner, and if logistics companies need to position themselves (and their value proposition) differently too.
Raj comments that the traditional practice of looking 12 months out when selecting logistics partners is no longer adequate. He notes that logistics practices today are significantly different than they were five years ago and they will be significantly different again in the next five years. Therefore, companies “should choose a partner who they know can take them to the future, a partner who can help them move the needle forward in using technology and embracing what the future world will look like.”
Raj had a number of insights on what will be important in that evaluation and how platform partners must lead. He also shared his insights on exciting new technologies and innovations driving change in the future. For all of his insights and advice on those topics and more, I encourage you to watch the full episode. Then keep the conversation going by posting a comment and sharing your perspective on technology’s role in transforming the logistics industry.