Building resilience in the logistics sector through technology and data

Freight and logistics companies have been on the frontline during this crisis, playing an indispensable role in manufacturing and transporting essential medical items and food staples. As the logistics industry has faced numerous challenges resulting from travel restrictions and labour shortages, strengthening the resilience of the sector has emerged as a priority.

As you may have read in June, BTA Bank (of which I am a shareholder) announced plans to acquire the Biek-Tau logopark in Tartastan. This acquisition will be a vital component of a network of logistics parks across the New Silk Road between China and Europe, running through Kazakhstan and Russia. Through careful integration of innovative technology, this network will facilitate an efficient flow of core commodities and goods, bringing certainty to many markets and manufacturers who have suffered during this pandemic.

Accounting for approximately 11% of global GDP, the logistics sector is a key enabler of global commerce and trade, supporting numerous other industries and services. Despite its importance in our globalized world, many countries still have unreliable and inefficient logistics sectors which result in long delays and also drive up the cost of goods. For instance, in Africa logistics accounts for 75% of a product’s price, making goods unaffordable in local markets and uncompetitive in international markets. However, even logistics companies in the most developed parts of the world have suffered as a result of the pandemic, as demand for certain goods has fluctuated, and many countries have imposed travel restrictions — making travel and trade incredibly difficult.

Although incorporating technology has already been a priority for many logistics companies, the unprecedented challenges posed by the pandemic have encouraged even greater focus on the role that tech can play in strengthening the resilience of the sector. Enabling technologies, predictive analytics and “smart logistics” have had proven success in streamlining and optimising logistical operations, yet unfortunately are still not commonplace. Predictive analytics use historical and transactional data to help identify patterns for risks and opportunities, helping influence strategic decisions and allowing businesses to prepare for future challenges. Connecting a chain of devices throughout the supply chain as well as intelligent asset tracking tools, “smart logistics” help create end-to-end transparency, enabling all parties to monitor the goods at all points of its journey. Indeed, harnessing this valuable operational data has multiple benefits: facilitating precise inventory management and sales forecasting; smoother cooperation between supply chain actors; and real-time management of cargo flows.

All in all, logistics companies can see vast improvements in terms of their asset and resource management with the help of predictive analytics and “smart logistics’”. But why are many companies reluctant to implementing these technologies?

The predominant concern is the high initial costs. However, these costs can be offset by increased efficiency, reduced delays, and long-term savings have warned that further delaying investment also can make the costs even higher in the long run.

According to a PWC white paper published in April, “smart logistics” is the key savings driver and a growth lever in the connected supply chain ecosystem”, accounting for “more than 50% of overall supply chain cost savings”. With the International Monetary Fund (IMF) forecasting a 3% contraction for the global economy, logistics companies must look at ways to ensure their business models are agile and resilient enough to withstand future challenges. While it may be too soon to determine what our society may look like in the coming years, I am confident that COVID-19 will push the logistics industry closer to a future where digitalisation is universal.

Prominent entrepreneur, investor & philanthropist with interests in mining, high tech and innovative technologies. https://www.linkedin