Logistics – how trends shape an industry

• BNP Paribas
  

Admittedly, the recent announcement by US President Donald Trump to introduce a kind of “punishment tax” for some countries because they do not support his desire for the USA to take over Greenland is not a good development for the logistics industry, but on the other hand, logistics is now one of the cornerstones of a modern economy and Trump will not change that. In any case, logistics, from which we benefit on a daily basis, is one of the most interesting sectors because it is subject to major change. The USA’s new trade policy, for example, is changing transportation routes. The exchange of goods between Europe and the USA is shrinking, while trade with the Far East is booming. This also means that cargo ports, the “hubs” of global trade, are booming in Asia. The ten largest ports in the world are now all located in Asia, seven of them in China alone. Another change, climate change and new laws are forcing logistics companies to develop new technologies. Cargo ships are fueled with methanol, trucks run on electric motors, and cargo bikes are returning to city centers.

However, a shift in transport routes and new mobility concepts are only a small part of the change that the logistics industry is undergoing. More than in almost any other industry, different trends are coming together in logistics, changing it profoundly and thus ensuring new growth, regardless of what is currently being decided in the White House. These trends include autonomous driving, artificial intelligence, drones and robotics.

The trends that are changing logistics

• Autonomous driving: Trucks that drive autonomously and without a driver on board are anything but a fantasy. The first tests and models are already available, even if they are not yet approved for road use. But that will come. The advantages are clear: a significant reduction in costs, as drivers are no longer needed, and 24-hour utilization of the trucks, as rest periods no longer have to be observed.

• Artificial intelligence: Not only does it make a significant contribution to autonomous driving, it is already ensuring that transport routes are optimally planned and empty runs are avoided.

• Drones: Difficult, the driver thinks, the parcel has to go up to the tenth floor. No problem, the parcel is clamped under the drone and up it goes. Science fiction? Not at all. Almost all large mail order companies that have their own logistics are working on drone deliveries. They fly autonomously through car-clogged cities and deliver their parcels on time. Post by drone also works well in the countryside, eliminating the need for a delivery person to drive for miles to deliver a single parcel.

• Robotics: Trucks running on hydrogen or electric motors – they already exist and fleet conversion is in full swing. But that’s just one side of the story, the other is that in large cities in particular, means of transportation are suddenly being used that were once familiar but are now back in demand: the cargo bike. They can ride through any pedestrian zone and get around any traffic jam. Equipped with autonomous driving, AI and an electric motor, the cargo bike becomes an independently operating robot. Sometimes they can even look like humans, but they don’t have to.

Mergers and acquisitions – an additional “bonus”

As you can see, numerous technological innovations are accumulating in the logistics sector. Logistics is a playground, so to speak, where technology developed in “laboratories” has to prove itself in everyday life and is driven forward. There are a number of such sectors, including agriculture, but logistics has another “treat” to offer, especially on the stock market: mergers and acquisitions. The top 20 logistics companies currently only have a market share of 30 to 40 percent. In the end, there will probably only be a handful of logistics groups that hold the reins, i.e. the trade, at least on the global stage. This will not only affect the traditional transport route by road, but also shipping companies, airlines and mail order companies.

There are several ways for investors to participate in the changes in the logistics sector. For example, with products on leading global logistics companies such as Kuehne + Nagel from Switzerland, Deutsche Post from Germany, Fedex and UPS from the USA, and AP Møller-Mærsk from Denmark

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