Time of change: How British logistics companies can embrace AI and sustainability

a warehouse with boxes and a forklift | Time of change: How British logistics companies can embrace AI and sustainability

Today’s supply chain professionals are engaging with technology to improve delivery tracking and on-time arrivals but have yet to unlock the full potential of data analytics, ML and AI.

Data analytics have been used by transportation and logistics (T&L) companies for more than a decade and continue to hold huge potential for the sector, with the promise of modernizing logistics operations, informing strategic decision-making as well as boosting sustainability initiatives.

But so far, just half of organizations in the UK are using data analytics, and an even smaller fraction (19 percent) are using AI for advanced use cases such as demand forecasting, according to T&L research by HERE Technologies and AWS. With T&L companies facing a time of change, it has never been more important to engage with these technologies.

Importance of big data

The movement of goods stands at a crossroads in Britain: the Covid-19 pandemic, supply chain issues, Brexit and the rise of e-commerce have had a seismic impact on the way goods are bought, stored and shipped. The number of businesses devoted to transport and storage has almost doubled in recent years, rising 88 percent between 2011 and 2021 in Britain, to reflect a shift towards warehousing in the UK. Sustainability is also a major issue for the T&L sector in the UK, with heavy goods vehicles and vans still accounting for 32 percent of all UK transport greenhouse gas emissions.

The applications of AI continue to transform the way T&L organizations operate and benefit customers. Today, AI is utilized across digital mapping and location-based services tailored for T&L use cases. These range from scheduling the most efficient tour plans per vehicle and driver to optimizing fleet routing and improving fuel efficiency, CO₂ emissions and estimated times of arrival (ETA) incorporating historical information and dynamic data such as real-time traffic conditions. Each process relies on big data ingestion – and customer data feedback loops – for increasingly sophisticated applications powered by algorithms enhanced by AI and ML. There is huge untapped technology potential here and opportunities for every organization in the T&L space in the UK.

Technology adoption barriers for British T&L companies

Cost is the main obstacle holding back British T&L companies from adopting technologies such as AI and analytics. The difficulty of developing in-house AI and analytics solutions also emerged as a significant issue for British organizations, with 76 percent of UK companies preferring to approach external providers with ready-made solutions.

British organizations are utilizing location data, with 41 percent using it for driver routing and 30 percent using it to improve on-time deliveries. The opportunity for companies is to take the natural next steps with this location data and use it as the foundation for analytics and AI to drive efficiencies in their operations. With other industries adopting AI at a rapid rate, the T&L industry needs to ensure it is not left behind to create the efficiencies and visibility that it craves.

Making changes to an active supply chain will always be a concern for T&L leaders but adapting to new technologies is one of the most important and strategic challenges companies will face over the next five years.

To find the right path forward, technology leaders and logistics providers need to understand execution goals and develop a well-defined digital supply chain vision strategy and implementation plan. The aim is to identify a series of projects that come together to deliver extended cost savings by leveraging customer data, in a consistent format, across a common platform.

Improving supply chain visibility

Visibility, or the ability to track goods and products in transit across the first-to-last mile, has long been a goal for the T&L sector, allowing organizations to deliver improved customer service while limiting disruptions and costs. But as British organizations are moving towards this long-desired goal, they still have some way to travel.

Respondents in the UK placed real-time tracking and route optimization as their number one and number two most valued capabilities to improve their supply chain visibility.

Improving last meter delivery requires robust use of mapping and location-based services, from geocoding to route planning and optimization software to incorporating live, historical and predictive traffic information.

In this new world, “map-making” becomes a shared responsibility between the map and location platform provider and the fleet operator. Data collected by one can be used by the other, in a virtuous circle of data exchanges which over time builds out a data asset of scale and precision. The customer and tool provider become truly new partners in this data economy.

On the positive side, more than two-thirds of T&L professionals (72 percent) believe their organizations are making progress towards real-time supply-chain visibility. But less than one in four believe their organizations have made ‘significant’ progress. Interestingly, operations within Britain appear to be where progress is being made, with respondents saying that truck operations have the highest amount of real-time visibility while ocean freight has the lowest amount of real-time visibility. Visibility into the wider environmental impact they are having though, is still lacking.

Sustainability and AI on the back burner

According to the HERE and AWS survey, British companies are failing to both prioritize sustainability and to take advantage of technologies such as AI and analytics which could help to cut carbon emissions. The potential of AI for fleet route optimization alone should be an enticing one for organizations in the sector. But many organizations still don’t have sustainability goals.

More than 60 percent of British logistics professionals say their organizations don’t have defined sustainability goals for their T&L operations and a third have no plans in place to define such goals. In fact, when asked to rank seven end-to-end supply chain considerations in order of importance, 24 percent of organizations placed sustainability last. But there are some hopeful signs: 11 percent of organizations rank sustainability as their top priority. For these forward-thinking organizations, technologies such as AI and analytics hold the promise of rapid gains from an environmental perspective.

How to start? Focus on fuel and route optimization. Trucking is the most common mode of freight transportation and fuel is the number one expense for trucking fleets. By focusing on fuel and route optimization, companies can not only reduce their expenses but reduce their emissions output as well.

Automated fleet tour planning and driver routing leverage vast amounts of data, such as vehicle restrictions and real-time traffic data, to increase efficiency and reduce fuel consumption. Companies that already use these technologies can go one step further and aim at reducing truck idling and dwell time. Less idle time means less fuel waste and emissions, in addition to happier drivers and customers.

A smarter future

There are some grounds for optimism. Sustainability metrics can be a by-product of technology implementation for supply chain visibility that improves customer satisfaction, driver safety and fuel consumption. Companies are making progress towards that objective. Across the broader T&L sector in the UK, there’s a widespread need to engage with technologies such as data analytics and AI, along with the huge potential they hold to drive efficiency, sustainability and profit.