The growth of e-commerce has catapulted shipments around the world. The innovation ecosystem is looking for solutions to optimise this supply chain, based on the needs of each company. Tracking platforms, blockchain and artificial intelligence facilitate ways of working that streamline the customer experience and improve how inventory and transportation processes perform.
In March 2021, the Evergiven cargo ship got stuck in the Suez canal in Egypt, paralysing 12% of global trade for a week. The blockage caused daily losses of €8 billion, according to Lloyd’s List, as well as a 6% rise in the crude oil price worldwide. It affected all kinds of companies across all sectors, from suppliers to SMEs, but it also helped the world understand the fundamental role of logistics in the global economy.
This role has become stronger than ever because of the digital revolution that consumption is experiencing. Every day we are buying more and returning more over the internet. To meet the resource demand that this entails and curb the growing pollution that it causes, new emerging companies are using different technologies to improve their services, reduce impacts on the environment, and contribute to a sustainable and smart supply chain. As a company committed to sustainability, BBVA backs this type of innovation by supporting such initiatives through BBVA Open Innovation.
Digital consumption, automated logistics
The rise in e-commerce in the wake of the health crisis has led to a profound transformation in logistics. According to data from the Spanish National Commission for Markets and Competition (CNMC), e-commerce billing in Spain increased 9.3% year-on-year in the fourth quarter of 2020 to almost €15 billion, while in Latin America, according to the Global Ecommerce Update 2021, online purchases grew by 36.7% throughout 2020.
New technologies are supporting the changes needed to cope with this increase. Blockchain allows all the traceability information for a product to be recorded; artificial intelligence (AI) creates movement analyses to design more efficient working methods; and last mile delivery provides a better user experience and optimised planning for each route. “The history of logistics is also a history of automation – from the steam engine to today’s robot packers,” a McKinsey report explains.
This paper points to growing labour shortages, new technical developments, and the explosion in demand from online retailers as the trends that are now driving automation to the top of the agenda for logistics company managers.
Nevertheless, we have to bear in mind that this commerce model has a significant impact on transport in cities and on the environment by generating major inefficiencies. “Without meaning to, we are flooding cities with vans every time we click a button”, explains May López, driving force behind the entregasostenible.org website, the purpose of which is to encourage responsible consumption in society by providing information both to the e-commerce sector and to the end consumer.
This accreditation offers guidelines for making deliveries as sustainable as possible, taking into account the type of shipment, deliveries, returns and packaging. For example, López explains that picking up an order in store or at a collection point has less of an environmental impact than a home delivery. “We should also avoid urgent deliveries whenever we can”, she insists.
The growth of e-commerce has led to the emergence of a whole ecosystem of startups in the logistics industry that are trying to address these new challenges, and in which investors seem to be increasingly interested.
By 2023 it is estimated that 50% of product companies will have invested in platforms that allow them to track transport in real time, notes a Gartner report. This is the case with the startup Paack, which received the largest round of investment in a startup in 2020, has BBVA in its banking pool and has participated in the BBVA Open Innovation support programme Fast Track. Paack is dedicated to last mile shipments for e-commerce and the retail sector. Its platform, used by companies like Inditex and El Corte Inglés, increases route optimisation and the scalability of the service by allowing customers to schedule their deliveries.
“Our vision as a company is that we want to be the leaders in sustainable distribution for e-commerce”, explains B2C Sales Director Eduard Coves, stressing that technology is an essential aspect of their value proposition. On the one hand, it allows them to schedule deliveries to improve the experience for users, who select a time slot to suit them. “Scheduled deliveries are already the new market standard,” says Coves. On the other hand, thanks to innovation, they offer a real-time tracking service through dashboards on their platform, which in turn allows them to improve their metrics.
The well-being of drivers should also be a priority and, in this respect, technology can play a part. Trucksters is a logistics industry startup that, while improving the lives of transport workers, doubles the speed of shipping goods and makes its customers’ businesses more efficient. While doing so, it is reducing the environmental footprint of transport. The company has created a relay system that optimises long-distance road haulage – drivers replace one another so that they can go home and rest, while the goods continue on their way to their destination. “We offer a non-stop service, and drivers don’t have to spend weeks or months away from home”, explains co-founder Gabor Balogh. The key lies in assigning each stretch of road to a local professional who, after completing their leg and handing over their goods, drives back home.
Balogh assures us that their system would not be viable without the use of AI and “a planning algorithm”. A relay system is “operationally very complex” because it involves many variables that affect how long the route will take to complete, such as loading and unloading times, and average driving stints and rest stops. “If we wanted to do a technology-free relay operation using only pen and paper, we would need a whole department dedicated exclusively to it, so it wouldn’t be scalable or cost-efficient,” he points out.
By doubling the speed of delivery times, the Trucksters system can be used to transport those urgent goods that previously would have been sent by air, so they are contributing to reducing pollution. The project went through BBVA Open Innovation’s Fast Track programme and a pilot was developed. This has now culminated in the signing of a collaboration agreement with BBVA that will allow the entity’s corporate customers to reduce costs and help the environment whenever they need to import or export products.
Although the origin of blockchain technology is associated with fintech, it has also begun to be applied in the logistics sector as it allows for increased efficiency and security. It consists of creating a digital record, thanks to a network of decentralised databases that are distributed among all its users.
The startup Usyncro (previously eCustoms) was another that went through the BBVA Open Innovation Fast Track. It uses this technology to coordinate, trace and secure shipments, and to digitise the documentation associated with the transport of goods to accelerate the flow of information between all stakeholders. Its CEO Cristina Martín explains how their technological solution makes it possible to synchronise all parties involved in the shipment of goods – exporters, customs, warehouses, maritime and airlines – to make the process more efficient. “We mix artificial intelligence with blockchain because it’s a powerful tool that grants transparency and traceability to the process”, she notes.
AI is increasingly accessible to logistics professionals. In this industry, it allows people to leverage underutilised data, automate processes and carry out predictive analyses to lessen the impact of unforeseen events, explains an article by Sage.
Pulpo, formerly Pulpomatic, a startup in the BBVA Open Innovation ecosystem after going through its Fast Track initiative, has developed software to operate vehicles that optimises fleet performance and reduces costs, times and environmental impacts. Co-founder Javier Arambari recounts how they decided to launch this initiative after having detected a need in the corporate sector: “Whether they had 30 or 100 vehicles, companies had to work simultaneously with Excel and multiple platforms to manage them”. Pulpo developed a platform that simplifies the process, centralising all the functions in a single place to save fleet managers time and money on maintenance, fuel and transfers, while constantly providing information so as to be able to make decisions quickly.
Arambari also adds that the platform is well prepared for electrical innovation and that the process improvements it offers help to reduce the number of vehicles on the roads, which in turn leads to a reduction in CO2 emissions. Companies including Acciona, Danone, Cabify, DHL and Telefónica are already managing their fleets with this software.
In a context of Industry 4.0 and in response to current demand, the logistics sector has had to look at being much more flexible and agile. Nonetheless, this increase in efficiency should translate not only into greater profitability, but also a reduced environmental impact. To tackle this dual challenge, companies can reply on startups’ innovative solutions and work alongside them to go further thanks to open innovation.