How digitalisation and sustainability are changing the transport and logistics sector

The logistics industry is largely based on "just-in-time" deliveries, meaning goods are delivered on time and in the exact quantities. This offers benefits such as reduced inefficiencies and lower costs for warehouse logistics. However, the pandemic, climate change and trade sanctions have exposed the risks of this system.

Brian Reed, VP of GEODIS Supply Chain Optimization, anticipates a reassessment of "just-in-time" supply chains and procurement strategies. "Years of savings from efficient warehouse logistics have been offset by inflexibility and a lack of being prepared for a crisis", says Reed. "We should think about alternative storage strategies for the future." This could mean, for example, diversifying suppliers more and locating supply chains more locally to save transport costs and reduce the impact on the environment.

"This crisis brings the costs of (a lack of) preventative measures to the attention of the entire industry. It is similar to sustainability, where we are slowly starting to understand the damage that climate change will cause if we do not internalise these costs", said Jens Brokate, Vice President of the Automotive Sector at ING.

Transparency is an important factor in increasing resilience and ensuring more efficient planning in the transport and logistics sector. The increasing use of Internet of Things (IoT), artificial intelligence and real-time data management supports this process.

An example of this is intelligent containers, which are equipped with sensors and IoT connectivity and can be monitored in real time. The data is then used for other applications and services, such as customised insurance premiums, which are calculated automatically depending on the location. If the container is in a conflict zone, the premium increases, and if the container is loaded into a warehouse in a safe country, the premium decreases.

How can companies be supported with the changes happening in the sector? On the one hand, by providing financing solutions that help companies through the current crisis. On the other hand, by providing long-term support and financing to companies to help them with the transformation that some of them are currently undergoing. Jens Brokate also stresses that transport and logistics companies need to invest now in order to keep pace with the rapid development of new technologies and to be able to align their business model in a sustainable manner. Reducing emissions and improving energy efficiency in the transport sector through electrification and digitalisation will become even more important in order to achieve key climate goals, as the energy transition continues to advance despite the Covid-19 pandemic.

Banks play a central role in this regard. ING is supporting its customers with the financing of sustainable projects and products. With the Sustainability Improvement Loan, for example, the bank has developed an innovative new product that links the interest rate to how the company is performing in terms of sustainability. This allows the company to focus on what is really important: the long-term sustainability of its business model. "It is important that companies wake up to the new reality", says Jens Brokate.