Logistics, a prominent sector in the overall industry supply chain is seeing the largescale deployment of smart technologies. Logistics companies are deploying new technologies from IoT to drones to boost efficiencies. The timing seems to be right as the sector gets ready to face headwinds being caused by the overall economic slowdown and US-China trade dispute amongst other factors.
Leading the pack in terms of the use of technology is German logistics company, DHL Deutsche Post. Leveraging investment in research and development, DHL has become a frontrunner in introducing various innovations such as its most recent digital twin warehouse in Singapore. This smart warehouse solution that combines IoT with data analytics is the first such solution in Asia Pacific and has been implemented for Swiss-based food packaging and processing company, Tetra Pak.
In an exclusive interview with International Finance, the company tells us about its other recent technological innovations in Asia, its plans for the continent, challenges for the industry, and how DHL plans to overcome them.
IF: DHL recently implemented its smart warehouse in Singapore. How many such warehouses could we expect in the next one to two years in Asia? Which specific countries come under the plan? And with which companies is DHL working?
DHL: We are unable to comment on the specific instances. However, as thought leaders in the logistics industry, DHL structurally invests in trend research and solution development to address today and tomorrow’s logistics challenges. The smart warehouse in Singapore is one of such use cases that came out of our innovation pursuits.
At DHL, we believe in customer-centric innovation. Our Asia Pacific Innovation Center (APIC), based in Singapore (First innovation centre outside of Europe) specialises in facilitating the quick adoption of solutions, where they are scaled up for customers, different countries, sectors and business units within DHL. The centre also hosts the DHL Advanced Analytics lab that provides advanced data analytics solutions to DHL business units and their customers.
IF: Are there any other verticals where you are using or plan to use IoT, AI, or other latest technologies?
DHL: We are confident that we can be an active driver of digitisation and digitalisation in our industry to ultimately seize its opportunities because of our long-standing industry position and size. We are exploring different arenas with our partners and customers.
We are also keeping tabs on key trends and developing solutions to enhance our offerings to our customers. For instance we have drone delivery. Here, we have, collaborated with EHang, one of the world’s leading intelligent autonomous aerial vehicle company, to jointly launch a fully automated and intelligent smart drone delivery solution to tackle the last-mile delivery challenges in the urban areas of China.
Apart from drones, electric vehicles too are an important part of our innovation. As part of our goal to achieve zero logistics-related carbon emissions by 2050, we have been deploying electric vehicles in our fleet across the region. These include the use of electric vans and cars such as in China and Korea and e-bikes and cubicycles such as in Malaysia and Taiwan. We are also working with Japanese logistics provider, Yamato through StreetScooter, a subsidiary of Deutsche Post DHL Group to deploy electric vehicles in Japan.
We also have Resilience 360, an innovative innovative supply chain risk management platform that provides businesses with the information they need to be used for supply chain visualisation, trade compliance and to help provide near real time monitoring of incidents that have the capabilities to disrupt supply chains.
With regard to India we launched DHL SmarTrucking, an innovative trucking solution that leverages Internet of Things (IoT) technology and data-driven insights for route optimisation. This reduces transit times by up to 50 percent compared to the traditional trucking industry, and provides over 95 percent reliability with ease of use, end-to-end consignment visibility, temperature-controlled capabilities and real-time tracking
In addition, we published a new trend report looking at the impact of digital twins on every part of the value chain, their potential to improve the performance and efficiency of logistics processes, and the new demands that digital twin enabled businesses will place on supply chains and logistics activities. We have since successfully launched our customer, Tetra Pak’s first smart warehouse in the region.
DHL has also taken solid steps to illustrate how the logistics sector could embrace artificial intelligence. We are working with our customers to explore how AI can be integrated in their operations to maximise productivity. In collaboration with IBM, DHL has released a report that evaluates the potential of AI in logistics and exposes how it can be best applied to transform the industry, giving rise to a new class of intelligent logistics assets and operational paradigms.
IF: What are the latest technologies or products that DHL has introduced or plans to introduce in Asia over the next few years?
DHL: DHL regards innovation as an important aspect of our business, to drive efficiency and customer satisfaction. At our innovation centres in Singapore and Germany, we are looking at proof-of-concepts with our customers, and conducting trials. Most of these are work-in-progress but we will be able to share more when these ideas are commercialised.
IF: What are your future plans for Asia?
DHL: As the leading global brand in the logistics industry, the DHL family of divisions offers an unrivalled portfolio of logistics services ranging from national and international parcel delivery, e-commerce shipping and fulfillment solutions, international express, road, rail, air and ocean transport to industrial supply chain management. With about 380,000 employees in more than 220 countries and territories worldwide, and more than 84,000 employees in Asia Pacific, DHL connects people and businesses securely and reliably, enabling global trade flows.
We are the global market leader in the international express market, contract logistics and air freight, among the top two leading players in ocean freight services, and one of Europe’s leading road freight forwarders. Asia represents more than 17 percent of our global revenue in FY 2018 (approximately EUR 11 billion) and remains an important market for us to invest in. We will continue to look into opportunities to enhance our service offerings to our customers.
IF: What impact is the US-China trade tension having on this market?
DHL: We observe economic developments around the world very closely and we are aware that the general economic climate is less favourable. Findings from DHL Global Trade Barometer, issued in June 2019 allude to that. It indicates a slight contraction of worldwide trade for the next three months, with growth weakening in key drivers of the world economy. Most macroeconomic and labour market indicators, point to a cooling of US growth and financial market sentiment that has been hurt by trade tensions.
IF: What is the future potential for the Asian logistics market? What are the challenges for growth and how do you plan to overcome them?
DHL: According to the Asian Development Bank, Asia is forecast to maintain strong but moderating growth: the regional gross domestic product (GDP) is forecast to expand by 5.7 percent in 2019, and by 5.6 percent in 2020.
While our broad portfolio and extensive global network do make us more resilient to these uncertainties, as a global logistics provider, we are especially aware of the importance of free trade and open borders, and remain a strong supporter of such. We are of the view that the growth and prosperity realised by globalisation must not be jeopardised by protectionist and nationalist activities. We are focused on our core business, and will continue to invest in quality services, innovations and infrastructure to meet our customers’ needs.
While we are aware that these external factors such as the ongoing trade tensions and geopolitical uncertainties are not within our control, we remain optimistic that there are positive trends and developments that we can still count on, to fuel the economy and for logistics to play a role.
Most importantly, we can expect continued robust domestic demand and strong foreign investment flows and in various economies, to enable trade flows. Apart from this, Asian economies are also looking to increase bilateral and multilateral Free Trade Zone Agreements (FTAs) either within their own sub-region bloc, including with major trade partners such as Japan, India, and China. Regional economic blocs like the Association of Southeast Asian Nations (ASEAN) are continuing to look at ways to lower trade barriers within its region, to boost economic integration.
Also, while Asia has been spending more on infrastructure (the road networks for the region has been growing at about 5 percent annually – a much faster rate than in other developing nations), there is room for more to be done, as the region takes on rapid economic growth. With this, we expect global cross border B2C e-commerce industry will continue to grow, and are expected to be worth $1 trillion by 2021. With this, we can expect logistics to play a key role in cross border trade.
 Accenture and AliResearch