Shipping hasn’t been analog in a long time. For decades, shipping-based businesses and third-party shipping carriers have relied on software technologies to help increase efficiencies and make the process of shipping smoother.
Warehouses, for example, are in the process of becoming more and more automated. A few decades ago, most warehouse employees carried clipboards. A few years ago, those became digital handsets, which assigned them new tasks and asked for confirmation when each task was fulfilled. Now, companies have begun replacing handsets with headsets and heads-up displays, telling employees where to go via voice commands. Switching from paper to headsets helped Minnesota-based Patterson Logistics Service improve its filing rate by 25%, according to Supply Chain Dive.
Warehouses are also adopting robots that can stock shelves, retrieve packages, pull products off picking lines and pack shipments. They’re also implementing organizational algorithms that optimize the coming and going of trucks.
Speaking of trucks, experts widely believe that shipping will be one of the first industries to adopt autonomous vehicles or self-driving trucks. These vehicles will not have to take breaks, and although they’re expensive up front, they don’t have to be paid. They can also modify their routes in real time based on their carrier’s needs.
In 2018, UPS announced updates to the route-planning system that its drivers use. The software, UPSNav, designs drivers’ routes so they have to make few if any left turns. It also processes delivery data alongside proprietary internal maps to make routes between stops as cost-effective as possible. UPSNav may only shave a few minutes off drivers’ days, but at scale, it could save the company millions of dollars.
To make a long story short, shipping has evolved into a complex ecosystem of interconnected relationships. Software already governs many of these relationships. And a new generation of technologies is fast approaching to make its mark on the shipping industry.
What is blockchain and how will it impact supply chain technologies?
Blockchain, the much-hyped technology that underlies most cryptocurrencies, is actually quite simple. It’s a public ledger of transactions. These records are continuously updated, linked across a decentralized network (so no single server can take blockchain offline), and secured via cryptography.
Blockchain’s encryption and consensus mechanisms make the data stored there trustworthy and lets trading partners track and trace products with point-to-point accuracy. In other words, it’s a way for everyone involved in a transaction to keep track of what went where.
Currently, most of that information is siloed, with little transparency. If every transaction in shipping — from the organization of shipments within warehouses to the processing of packages by brokers to the delivery and receipt of packages at each destination — it could dramatically change shipping. When shipments fail, blockchain will allow shippers to know exactly what went wrong. It could also help companies manage product recalls if they need to quickly pull up every shipment of a certain product.
Further, contracts themselves could be encoded in the blockchain, which would make the invoice auditing a breeze compared to the current line-by-line process. (And because blockchain is public, that could make contracts visible to competitors — a dramatic change for the shipping industry, but perhaps not an unwelcome one.) Finally, blockchain could alleviate supply chain partners’ fears of cyber attacks.
In March 2018, DHL announced that it had partnered with Accenture to create a blockchain prototype that would track pharmaceuticals to provide end-to-end supply chain visibility. The International Data Corporation estimated in 2018 that within three years, one in three shippers would track the movement of goods along with their supply chain using blockchain.
What is artificial intelligence and how will it impact shipping?
Artificial intelligence is already widely in use in the shipping industry, in the form of algorithms that determine drivers’ and warehouse workers’ routes.
But AI can be far more advanced than that. It will power self-driving trucks when they arrive on the market. Certain AI technologies are also capable of speech recognition, visual perception, language translation, and decision making.
AI could dramatically improve package verification, an ongoing challenge for supply chain managers. It could help managers gather data about what’s moving through their warehouses, from the size and weight of packages to how long they sat on shelves, and could analyze that data for inefficiencies far faster than a staff member could.
AI technologies are also useful for simulations. When carriers announce rate increases, for instance, many shippers plug those new numbers into their spending totals from the previous year to approximate a budget. But with more sophisticated simulation technology, they could run through the holiday season in advance, a kind of rehearsal on a computer screen.
Finally, AI allows for much more sophisticated forecasting than what most shippers are currently able to achieve. As computers get more powerful and software more advanced, shippers and carriers can include an ever-wider set of variables in their analysis of what the next few years might look like. That means they can budget more accurately, better plan for industry changes, and make strategic business decisions even more carefully.
Blockchain and AI will help shipping carriers address some of the industry’s biggest operational challenges in a time of ever-increasing consumer demand. These technologies will increase efficiency, allowing carriers to do more with fewer low-level employees. That will have ramifications far beyond the shipping industry.
In the short term, supply chain leaders should focus on educating themselves about what’s to come. Then, they should prioritize the recruitment of capable staff with cutting-edge skills. Even in the age of AI and blockchain, people will still power supply chains.