The logistics industry is changing fast. New technology, new business models and new entrants to the market are forcing established players to adapt in order to compete and survive – but those changes also bring opportunities. Osborne Clarke advises clients at all stages of the supply chain; below are the trends and developments which we see making an impact on the sector in 2016.
RFID
The dramatic fall in the price of “radio frequency ID” (RFID) tags in recent years mean that their use in large-scale supply chains is now feasible. Customers increasingly expect end-to-end product tracking across the whole supply chain and RFID enables this with greater effectiveness than ever before. Increased access to data will improve real-time demand management and fulfilment monitoring. Which leads us to…
Data sharing
Logistics providers, aided by improved technology, have access to enormous amounts of data regarding production, supply chain, delivery and sales. Analysing and sharing this ‘big data’ will be an important differentiator for companies which are able to package and market it effectively.
Disruptive business models
The ‘last mile’ area of the supply chain is seeing some of the most innovative developments in the logistics sector. The entry of players such as Uber into the market means that more established providers are being forced to adapt to meet the increasingly demanding expectations of customers regarding price and delivery timescales. Which in turn links to…
Next day/same day delivery
Consumers’ increasingly expect short delivery times. A few years ago, next day delivery was being offered as a ‘premium’ option; now delivery within even a few hours is a relatively standard offer. The UK is a world-leader when it comes to online selling; e-commerce accounted for almost 15% of all retail sales (almost £60 billion) in 2015 and the market continues to enjoy double-digit growth. Providers who can meet these delivery expectations are likely to enjoy a substantial competitive advantage. These developments have led to…
Smaller hubs and more of them
As demand grows for shorter delivery times, businesses are moving away from the traditional model of large distribution centres. A greater number of small hubs, placed nearer to cities and centres of demand, is a growing trend.
The No-Man Van
Driverless vans are to be trialled in Greenwich in 2016 in a government-funded trial. Whilst unlikely to transform consumer delivery patterns, if the trial proves successful we could see deliveries between warehouses and distribution centres being made by autonomous vehicles.
Collaboration between providers
Logistics providers at all levels are examining new models of innovative co-operation; and these collaborations are providing opportunities. New entrants are working with asset-heavy established entities which is providing the scope to upscale and create new revenue streams. Meanwhile, more and more businesses are looking to share overheads, data and transport costs.
Sustainability
Apart from the significant and growing costs associated with traditional carbon-heavy transport methods and business practices, demand is increasing for businesses to minimise their carbon footprint on all sides. The focus of consumers, regulators and governments (particularly in light of the Paris COP 21 agreement) is on reducing waste and conserving resources throughout the supply chain.
The logistics sector in 2016 and beyond faces opportunities and challenges in and from the digital revolution, disruptive business models, dramatically heightened end-user expectations and an unprecedented speed of innovation. Adaptation, flexibility and customer focus will be central to success in the sector.
Osborne Clarke offers valuable advice and assistance in the logistics sector; to discuss how we can help your business, please do contact one of our experts.
Contacts: Lara Burch and Ciaran Price
