In an industry where
earnings before interest
and tax (EBIT) margins are
relatively low, companies
that have a technological
advantage are in a position
to win market share quickly
– and that is the challenge
of this industry, according
Andrew Shaw, transport
and logistics leader at PWC
Africa.
Speaking at a recent FTW/
JCCI business breakfast on
the impact of technology
on the freight industry,
Shaw said that in the 4PL
space a lot of change was
coming not from traditional
transport and logistics
players but from industry
disruptors that we weren’t
aware of before. “And that’s
the key message – that a
lot of technology is not
from people who have been
playing in these industries
for a long time but from
people who have a very
strong handle on technology
and are looking for
opportunities to take
that technology
into industries
where they have
never been before.
“That’s what's
disrupting things.
The metered
taxi market has
been turned on its
head by someone
who had no
interest in taxis when they
started out.”
From an SA perspective
big players have been looking
for opportunities outside of
South Africa – more recently
in the Middle East, Eastern
Europe and prior to that
Africa.
“In the rest
of world we’re
seeing logistics
providers who
have a global
expansion
drive and are
looking at
Africa and
some of our own players as
opportunities for takeover
targets.”
According to Shaw, a
recent CEO survey run
annually by PWC questioned
transport and logistics
operators about their views
on digitisation.
“28% had a strong focus
but 43% indicated there
would be massive drive
towards digitisation
in this industry,
indicating that in
five years’ time
digitisation will
dominate the
market.
“CEOs see this
as an emerging
trend that they
will have to
grapple with going
forward.”
From a
competitive perspective
Uber has not only had a
massive global impact on the
owners of metered taxis but
also on decision-making in
the category of 25-year-olds
around whether they should
even purchase a car.
“In the logistics space we
are seeing a
lot of startups
offering
similar models
that 'Uberise'
a lot of the
supply chain –
which means
that areas of
the supply chain that you
believe are yours and that
you hold will not be yours
forever.”
The likes of Amazon and
Alibiba are clear examples of
the impact of the internet on
retail logistics where speed
to destination becomes the
single biggest
differentiator.
“They are
expanding
their value
chain to
include the
transport
and logistics
component
– Takealot is
in the same
position
having bought
Mr Delivery
and created a solution
around that.”
Technology is also
changing the whole
industrial complex. Adidas,
for example, has set up a
customisable shoe factory
in Germany rather than
traditionally manufacturing
in China. “So as technology
changes and we move people
out of the system we’ll
also see changes in where
production is located. It
will no longer be driven by
how much I pay for a low
cost worker. It’s how much
do I pay for a technology
platform.”
In the transport and
logistics space, Shaw believes
that the biggest overall
disruption is in warehousing
– and it’s already happening.
Amazon, for example,
has automated the picking
and packing process and
currently has 30 000 robots
employed in 13 Amazon
employment centres. Stock
taking by drones is another
example, where a drone
developed specifically
for flying indoors could
transform distribution
centre operations by
automating inventory and
operations control.
There are also numerous
options for digitising
transport – and autonomous
trucks are already here.
In the state of Nevada, for
example, two Mercedes Benz
Freightliner Inspiration
Trucks have been approved
for public
highways
while DHL
already
uses drones
to deliver
medication
to North Sea
island as the
first routine
drone delivery
to customers.
In the
wake of these
cataclysmic
developments, Shaw believes
that there are three key
questions that the logistic
industry should be asking
themselves:
• Will ‘new entrants’ take
over significant parts of the
logistics value chain?
• How will technology
developments change
business models of
established players?
• Are logistics service
providers equipped to
tackle the digital challenge?
The answers will clearly
define the very existence of
the industry as we know it.
INSERT
43% The percentage of CEOs who
believe there will be a massive
digitisation drive in the industry
INSERT
Areas of the supply
chain that you
believe are yours and
that you hold will not
be yours forever
– Andrew Shaw
Non-traditional new players turning logistics industry on its head
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