In contrast with other steady growing industries, profits in the logistic industry are relatively low in recent years. National Statistics show that logistics expenses still account for 14.52% of GDP in china, compared with the United States, Japan and Germany, which are less than 10% per each country, China's logistics industry still has a large space for development.
At last year Cainiao’s Global Smart Logistic Summit, Jack Ma, former executive chairman of Alibaba Group, announced that “Cainiao Network, the logistic platform operator of Alibaba Group, is going to invest more than RMB 100 billion ($15 billion) to build the technical backbone for a smart logistics network aimed at improving delivery reach and service efficiency.”
And this is just the beginning, Jack Ma wants eventually to achieve a vision of logistic future where Cainiao Network will be able to deliver within 24-hours across China and within 72-hour to worldwide.
Jack Ma ambitious dream is that “The salmon fished in Norway in the morning can be delivered in Hangzhou in the night of the same day.” He also noted that in the future, the logistic will be like a big web able to connect every package, courier, family and city together.
In the World Retail Congress of last year, Richard Liu, the founder of JD Mall, mentioned that in future JD will operate 100% unmanned and fully automated. In the meantime, JD will reduce the number of employees from 160,000 down to 80,000.
Speaking of the Logistics Industry trend, there are many aspects to consider, hence, on this short post, we will only take a closer look at Intelligent Logistics, considering it by three different topics:
Digitalization is already happening, it’s visible in business processes ranging from administration, through operations to contracting. Today digitalization is no longer about simple Information & Communication Technologies or ERP (Enterprise Resource Planning) in the work places, but about devising completely new business processes and models, including integrations across the value chain.
IoT-enabled GPS trackers allow companies to accurately monitor a vehicle’s location at all times. The data is transmitted to a central system that sends real-time updates to an internet-enabled mobile device. This allows for quick responses to potential re-routes, avoiding subsequent delays.
With a strong economy and an aging workforce, warehouse employees are growing scarce — much like truck drivers. The trend, however, is for the warehouse to become more automated at a faster pace than trucking. The timing is good, because the effect of the demands of e-commerce and customer expectations on warehouses is changing quickly as well. Automation is helping the situation, slightly at least. Automation in warehouses is enabling improved accuracy and shorter lead times, making it easier to meet these new demands
Automated warehousing has contributed significantly to this year's peak trade on the 11th of November (Double Eleven 11.11), a.k.a. Singles' Day Festival is a global shopping event initiated by Alibaba and adopted by other e-commerce platforms and retailers.). Cainiao, which is 51% owned by Alibaba has opened a warehouse with over 700 robots working in it to deal with the demand of Singles Day event.
The use of Big Data and Data Analytics in the logistics industry is allowing several stakeholders involved in the business to make informed purchase decisions. Companies are now using big data to anticipate busy periods, potential future supply shortage and other insights for making strategic decisions to improve their market positions and offer a significant competitive advantage over other counterparts. Furthermore, as per the Council of Supply Chain Management Professionals, over 90% of shippers and third-party logistics firms predict that data-driven decision-making is extremely crucial to supply chain activities as the big data improves quality and performance by offering effective supply and demand forecast, inventory management, route optimization, and efficient labor management, in turn, boosting the growth of the global third-party logistics market during the predicted period.
In the past, during the Singles' Day Festival, most of retailers need to mortgage and loan as many as they can to prepare for the event as knowing nothing digital prediction of the costumes’ demands.
We have a clearly feeling that the delivery speed of this year single’s festival has significantly accelerated. Retailers got the customer’s data form Alibaba, such as how many goods they have added into shopping car, and analyzing the previous purchase rate, which enable businesses to predict and deploy in advance.
Jack Ma said that they hope through the digitalization, the cost of 15% will be cut to 5%. To make it happen it is necessarily to highly utilize the new technologies. Please have a glance of the hottest technologies below.
Last Mile Deliveries
With the continuously increasing proliferation of e-commerce companies, the provision of efficient last mile deliveries is witnessing a major upswing to become one of the most critical aspect of creating differentiation of services among the competitors. Furthermore, getting a package within the same day of delivery is almost common in the present days, resulting in the growth of the same-day delivery market in the US. Businesses are also witnessing a greater emphasis on including same day delivery options across industries including pharmaceuticals and food and beverages. Furthermore, along with the same-day delivery, the consumers are also expecting a higher level of services while encouraging large retailers including Walmart and Amazon to add DIY last mile delivery divisions in their own companies instead of outsourcing. Consequently, the continuous efforts of logistics companies to offer efficient last mile deliveries is another logistics trends expected to offer promising logistics market’s growth during the predicted period. The need for getting the orders not just right but perfect will also allow companies to offer ultimate customer satisfaction.
Logistics Safety Becomes the Topmost Priority
With greater connectivity to the internet, there have been rising concerns among the companies pertaining the cybersecurity and logistics safety. Furthermore, the protection of consumers’ private data is another key concern making the safety of logistics solutions as one of the topmost priorities. Continuous hacks into the websites of e-commerce companies including Amazon, Walmart and others have revealed potential cyber security threats. This has further encouraged logistics providers to focus more on offering secure logistics solutions. According to Technavio’s global secure logistics market, various logistics companies including FedEx and International Post Corporation are using technologies like automatic identification and data capture (AIDC) for keeping a track of the shipments in real-time, in turn, resulting the market to register a CAGR close to 7% by 2022.
Alibaba’s global vision is one of the key reasons for what the Company has achieved so far and the mindset is shaping Cainiao’s future.
This network’s reach is not only national but also global. Cainiao’s global network will support 72-hour delivery across the world, starting from countries and regions involved in China’s Belt and Road Initiative.“World trade will change because of logistics. Global trade will go from containers to packages, from trading between countries, to trading between companies. All this change, we should be ready to prepare and fight today,” Jack Ma explained.
#3, Green Logistic