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Aeolus Perspectives 21st Edition: The main T&L trends from now on, 2021 must start from these.


Great highway at night illuminated by car lights

Digitalization, risk management, sustainability, last mile, collaboration: are the keywords setting the next future for Transport & Logistics. In 2020, the Covid-19 experience has confirmed and relaunched the main trends underlying the next evolution of the T&L sector.

The Covid-19 wave has strongly fallen on the global economy, overwhelming almost all the sectors and even disrupting supply chains as well. Suddenly called to work overtime and profuse an extraordinary commitment in exceptional and uncertain conditions, Transportation & Logistics (T&L) is now suffering because of the dramatic drop in global consumption. About this, the latest forecasts are not encouraging at all: according to International Monetary Fund (IMF), the Global GPD could shrink ‘till about 5% in 2020, and a slower recovery is expected in 2021 (+5.4%). Even estimates for international trade are not very good: the impact on 2020 volumes equals 12%, with a rebound of 8% in 2021. Therefore, the upturn will be generally slow and - experts seem to agree about this -, as for transport and logistic sectors -, probably even slower than it has ever been following the past crises. 

The current extraordinary circumstances lead us to look forward to the near future with apprehension. But fear must not lead. For a concrete and effective economic relaunch, T&L companies need now to understand the newly emerged scenarios and therefore prepare for the many challenges to face. Some of these - to be fair - are not a product of the pandemic. However, there is no doubt that the emergency has made a decisive contribution to accelerating the spread and affirmation of some trends. 

The transformation of the logistics and transportation industry was underway before the Coronavirus crisis. Some companies had long ago started a process of automation and digitization. Issues such as last-mile management and sustainability, although not yet fully addressed, were already top on the list of priorities. Core topics in the T&L evolution will remain the same, but the focus has already radically shifted to the effects produced by the most recent sensitive increase in the e-commerce business. 

Digitization is a fundamental matter: implemented in different situations - from warehouse and fleet management to goods traceability, from order planning to historical trend analysis -, the new digital tools make it possible to reach and check the goals more quickly. Even more in 2021, there should be an increase in the spread of automation and digitization in almost all T&L sectors. 

Since e-commerce advancing double-digit percentages in most of the major markets, "speed" and "control" will be crucial. Indeed, e-commerce has set consumers' expectations on a very tight lead-time and increasingly tailor-made delivery service. So margins for error, inefficiency, debug allowable along the supply chain are strictly reduced. A growing need for control and visibility also occurs: the experience during the lockdown has unveiled the raw nerves of global supply chains and so has put in the spotlight the need and urgency to rethink some business models to prevent the risk associated with any sudden interruptions of supplying. 

Therefore, if on the one hand companies seem to be really close to the digital turning point of their processes, on the other hand, there is still a way to go on the risk management front. In this sense, for some T&L companies, managing the activity during the pandemic emergency - with uncertain operative and time conditions, general delays, "leopard-stained" lockdowns, and so on - has really represented a "cold shower". The adoption of a supply risk prevention and management approach, based on greater visibility of its supply chain and growing attention to global scenarios, is, therefore, one of the main challenges that the T&L sector faces to recover part of its lost competitiveness and achieve the much sought-after restart. 

In the emergency framework, sustainability may have temporarily taken a back seat, but it is still a really big knot to solve. Tracking Transport 2020 Annual Report by IEA confirms that transportations contribute to almost a quarter of all emissions directly generated by fuel combustion globally. The freight transportation alone generates about 70% of the GHG (greenhouses gases) emissions by logistic activities. So, responding to both law regulations and market demand, companies must now commit themselves to reduce their carbon footprint more and more, especially looking to freight transportations' impacts. And the "green turning point" is not only a good chance for the environment but even also an opportunity for companies of enhancing their performances, reducing costs. 

Then, the management of the last mile represents an important testbed to prove benefits and results coming from digitalization, better visibility, and increasing sustainability applied to all distribution processes. The "last mile" becomes a really critical area under the tight march of digital commerce, the spread of which has brought to a multiplication of residential orders and the overstressing of urban roads. On this ground, T&L companies play one of their main games. 

Last but not least, the experience during the lockdown highlighted the strategic importance of building solid and lasting collaborative relationships with all the partners and actors involved in the supply chain. So, maybe the next biggest challenge is to make the supply chain a real network of partners whose activities are digital, fast, transparent, safe, sustainable, and also harmoniously orchestrated. 

TAGS: Aeolus perspectives, Technology, Innovation