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Wholesale Banking

Crisis, opportunity and the case for sustainability: transport and logistics moves with the times

Covid-19 has thrown transport and logistics into sharp focus. During the height of the pandemic businesses and governments grappled with a range of supply chain disruptions: shuttered production facilities, cross-border transport restrictions, medical equipment bottlenecks. At the same time, lockdowns caused a spike in consumer demand for e-commerce and home deliveries, and the likes of Amazon, Alibaba and Ocado reaped the benefits. That combination of new challenges and heightened demand is accelerating far-reaching changes in how the transport and logistics sector operates. It was already moving towards digitalisation and improved sustainability – now, those moves are happening at pace.

Kid pushing boxes to car trunk

Covid makes the business case

Jules Kollmann, Managing Director at ING Structured Finance, says that for transport and logistics, sustainability measures are not a luxury – they make supply chains more resilient to future shocks, such as pandemics, trade restrictions and climate change. “Sustainability and digitalisation are not extra burdens on companies,” he says. “They actually make them more efficient and more adaptable for the future.”

What better time, then, for businesses to pursue these resilience-boosting measures? “Covid-19 will not delay the sustainability agenda,” says Kollmann. “Rather, there will be a lot of government focus on sustainability – and ultimately that agenda will be pushed through.” 

So businesses need to get ahead of the curve. And that means looking at the longer term – not only in terms of becoming more sustainable, but also investigating the technologies that will help them respond to today’s increased demand for flexibility and transparency. 

Brian Reed, VP at GEODIS Supply Chain Optimisation, compares the current situation to 2008. The companies that came out on top then, he says, were those that responded quickly – the ones that worked proactively through the crisis to anticipate “what comes next?” 
“Change may be painful at the moment but we're already starting to see some of that,” he says.

He believes that technologies that generate greater visibility will see a great push. “E-commerce was already expanding, but it will increase even more now,” he says. “And as a result, businesses really want to know where their things are and what is happening with them so that they can react – and also update their customers on those goods.”

Reed was advocating the benefits of better supply chain visibility prior to the pandemic, he says, but for many, “it was always very difficult to justify and quantify a business case for visibility technology alone.”
“Now,” he says, “Covid is your business case.”

Technology adoption gathers pace

Reed expects the crisis to accelerate the use of technology in the transport and logistics sector. Artificial intelligence (AI), for instance, can process information in near real-time, which could be a particularly powerful tool as businesses respond to the effects of the pandemic.

“AI and machine learning were gearing up before the crisis, and are now gaining momentum and really being moved along,” he says. That is because these technologies enable businesses to respond rapidly to questions about location and quantity of goods.

GEODIS is also supplementing its workforce with robot and drone technology in and around warehouses, the benefits of which are obvious at a time when staff availability can be affected by illness, lockdowns and social-distancing measures. So the development of drones and autonomous vehicles – and public acceptance of their use – is likely to gather pace in the logistics sector.

Digital services drive efficiency

The global recession is squeezing many businesses in transport and logistics, but those that can invest in sustainability and expanded digital services are better placed to ride out the crisis and recover. What may have seemed an unnecessary extra cost a few months ago may now be considered vital to long-term growth.

For many, this will be new territory, and they might need to form partnerships or integrate new services that will support their long-term business sustainability, resilience, and competitiveness. Businesses seeking to expand their reach, improve their cost-efficiency and reduce their emissions, especially where the ‘last mile’ is concerned, can often benefit from collaboration with innovative start-ups and market entrants.
One such new service provider is navigation platform PostTag, which focuses on improving last-mile delivery. Or “the last 100 metres,” as the company’s Commercial Director Patrick McGuirk puts it.

On average, using Google Maps in the UK will take a delivery to 62 metres away from the actual location, says McGuirk. That does not just inconvenience the recipient – it also has an impact on sustainability. “There are an awful lot of additional carbon miles being travelled as a result of inaccurate addressing,” he says.

Drawing on a range of data sources, PostTag’s technology reduces that distance to less than 1 metre, which improves time efficiency, customer service and emissions reductions.

PostTag’s executives were initially worried about the negative impact that the pandemic would have on their company. But they have found themselves busier than ever: companies are turning to PostTag and other last-mile specialists as they rapidly pivot their businesses to seize new opportunities to implement efficiencies and sustainability measures.

As many business models switch from B2B to B2C to make the most of the e-commerce explosion caused by the Covid-19 lockdowns, supply chains are stepping up. “As part of the reaction to the pandemic,” says McGuirk, “There's been a desire to drive fundamental change in how supply chains operate.”