AI in Logistics & Transportation – Threat or a Blessing?

Updated Date: December 5, 2023
Mahil Jasani
Mahil Jasani
ai in logistics and supply chain

AI – the new dread, a nightmare to the modern world. Or is it not? Especially after the advent of chat-GPT, our new linguistic lord, the world’s workforce has started to sweat. And then stormed the AI wave into every industrial domain. It could not be touched; it could not be matched. Sofon, the AI breeze swayed the logistic leaves too.

Today, numerous logistics and on demand trucking companies have started to wield AI and grace up their functionality. For good or for bad? What is the impact of AI in logistics? Will it replace humans? And what does the future hold?

In a survey done, 40% responded by saying AI improved inventory management.

But as the sages say, not all who dive in the sea get the gold. The reason? Lack of proper knowledge and understanding. So, let’s dive into the sea of AI in logistics and supply chain to know if there is gold or garbage.

The Rising Role of Logistics in Supply Chain Management Business

Traditionally, just before the onset of the Industrial Revolution, every bit of work used to be done by human hands. Need bread? The baker will bake. Need to harvest? The farmers will cut using a scythe. Need clothes? The tailor will make a piece for everyone. But as the machines arrived, the fear arrived too, fear that machines would take over humans. Fear of losing jobs. We don’t realize it now because machines seem an innate part of our lives.

Now, the same is happening again, logistics and supply chains are taking a new track due to the onset of numerous revolutionary techs such as AI, ML, etc.

The Evolution of Supply Chain Management

The concept of supply chain management has its roots in the early 20th century. However, it has taken a totally new form over these past few decades.

Traditional supply chain models primarily focused on the procurement of raw materials and the delivery of finished products.

Today, supply chain management takes a much broader and complex set of activities. Unlike traditional models, companies today source materials and components from diverse locations, manufacture products in different parts of the world, and even distribute them globally.

It has propelled companies to rethink their supply chain strategies.

Logistics of Today

Logistics was once viewed as a supporting function. But now it has ascended to a core and strategic role in supply chain management. Several factors contributed to this expanding role of logistics in the supply chain:

  • Globalization:
  • Because businesses spread beyond boundaries, the need for efficient transportation, and warehousing grew. Today, logistics ensure movement across borders.

  • Customer-centric approach:
  • Modern-day logistics ensures that products reach customers promptly and in optimal condition.

  • Technological integration:
  • The rise of digital technologies, including the Internet of Things (IoT), blockchain, and AI, has enabled logistics to become more data-driven and responsive.

  • Risk Management:
  • Earlier, logistics barely had an option to deal with natural disasters and unexpected mishaps. Today, effective logistics strategies ensure business continuity.

But a big shift in modern logistics has already started.

Looking To Upgrade Your Logistics App with AI Features?

Logistics of Tomorrow

As the role of logistics continues to grow, businesses are looking to the logistics of tomorrow. Here are the trends that are shaping the future of logistics in the supply chain:

  • E-commerce Integration:
  • Shoppers have started to shop online. To cater to their shifted needs, e-commerce has pushed logistics to be agile and capable of handling last-mile deliveries.

  • Automation and Robotics:
  • To make faster deliveries fastest, and to save costs, automated vehicles, drones, and robotic order pickers are becoming commonplace.

  • Big Data and Analytics
  • Due to users spending most of their time on the internet, huge data is getting generated. The data generated by logistics operations provide valuable insights for optimization.

  • AI in Logistics
  • AI and ML is the latest addition to the business world. It has the power to revolutionize the whole logistics industry.

AI in Modern Business

Today, AI has been transforming the way of doing business. The purpose is one – to provide pace, precision, and profits to businesses.

Here are a few examples of how modern businesses are adapting to this changing environment:

  • Machine Learning in the logistics industry collects data from sensors and converts it to useful knowledge
  • AI being used for cybersecurity to recognize cyber attacks
  • AI helps CRM software to auto-update and correct
  • By giving access to online data, AI is framing marketing strategies that work
  • Digital personal assistants that understand user queries and have access to solutions and company policies
  • The integration of biological and information technologies can lead to breakthroughs in medical treatments and therapies, improving overall health outcomes.
  • When it comes to AI in logistics, it is helping predict the best possible routes, seasonal obstructions, reducing costs, etc.

    Now, we’ll delve deeper into how artificial intelligence in logistics is working wonders and transforming the complete landscape.

    The Advent of AI in the Logistics Industry

    We believe that stats speak more than anything else. So, what do the stats say about the impact of AI in logistics and supply chain?

  • Generative AI is projected to push the logistics market size to $ 18,872.57 million by 2032 with a CAGR of 44.02%. This growth rate is immense.
  • According to a study done by McKinsey, generative AI will add $4.4 trillion to the economy.
  • According to Statista, 34% of respondents believed that AI would improve quality control in logistics.
  • Entrepreneurs and startup owners around the world already have their eyes on these stats. More and more queries are being made about how to start a transportation business and leverage the rise of AI to garner bags of profits. The benefits are immense. Let’s have a look.

    The efficiency created by AI in logistics is predicted to leap the $1.3 trillion mark.
    Furthermore, a giant 32% CAGR was recorded in the AI logistics market during the forecast period of 2021-23.

    9 Benefits of Artificial Intelligence in Logistics

    Benefits of AI in logistics
    If you want to get more assurance on how good this AI logistics combo is, here is a statistical insight to vouch for it –

    It is there. And so are these many benefits:

    1. Efficiency – The Delivery Dash

    Imagine AI as your super-smart GPS for delivery trucks. It finds the quickest routes, avoids traffic jams, and makes sure your package zips to your doorstep faster. Bigger profits, lesser fuel. Brilliant!

    2. Demand Forecasting – The Inventory Wizard

    AI can predict what stuff people will want to buy in the future. This means online stores never run out of must-haves and never overstocking mountains of things they can’t sell.

    3. Warehouse Automation – The Robot Brigade

    Picture a bunch of robots whizzing around a warehouse, like a sci-fi movie. They grab items, pack them, and send them off to you. Although it is still a bit far, there are companies that have actually started doing this.

    4. Real-time Tracking – The Package Stalker

    AI can help logistics companies keep tabs on your delivery in real time. No more wondering where the bpackage is – you can see it on a map!

    5. Predictive Maintenance – The Machine Whisperer

    AI can chat with machines. It can tell when they’re feeling tired and might break down. Companies can use this insight and send a repair team before things go haywire. Less downtime and more running machines!

    6. Risk Mitigation – The Fortune Teller

    Want a fortune teller for your supply chain? Befriend AI. It will look at past events and predict when something bad might happen, like a snowstorm delaying shipments.

    7. Cost Reduction – The Money Saver

    AI can look at all the boring stuff, like paperwork and repetitive tasks. This is already happening and reducing work for humans, thereby bringing more cash into the bank.

    8. Enhanced Customer Experience – The Happy Shopper

    Suggesting companies about what the customers might love can help them retarget their lost customers. In this, AI can easily help by scanning user data and analyzing it thereafter.

    For instance, consider an e-commerce company that uses AI to analyze the browsing and purchase history of its customers. Accordingly, the company can accurately predict the preferences of individual customers and tailor their website recommendations. The result? Enhanced customers’ shopping experience and increase in sales.

    9. Sustainability – The Planet Protector

    AI cares about the Earth too! Companies may plan delivery routes that use less gas. This would mean fewer emissions and cleaner air.

    And we are not saying this, there have been promising results already out there. Don’t believe us? Below are some successful use cases of AI in logistics. Companies already are turning data into cash.

    And we are not saying this, there have been promising results already out there. Don’t believe us? Below are some successful use cases of AI in logistics. Companies already are turning data into cash.

    Real-life Successful Examples of AI in logistics

    Today, AI is not new to us. Maybe a decade ago, it could have been a mere word or a sci-fi movie, but today it is reality. And many companies have already started embracing it, that too successfully. Here are 3 case studies that speak –

    The Gramener Impact

    So, Gramener is an international giant known to the seas of AI and data science. It helps companies adapt to the changing AI environment and save costs. Recently it helped a German manufacturing company to create a genius data strategy that danced to the beat of the company’s objectives.

    The result? – A jaw-dropping $30 million saved!

    In a different project, they created a digital copy of a drug manufacturing process for a big pharmaceutical player. The issue was difficulty in making real-time adjustments in the production line. And Gramener helped again. It helped the client take the reins of production and tweak things on the fly using data insights.

    The result? Another jaw-dropping $6 million saved and improved efficiency of the production process.

    The NileDutch Fleet Issue

    The Boston Consulting Group estimated that 8% of shipping-line costs happen due to empty containers’ repositioning. This same issue troubled NileDutch too. Improper empty fleet management in logistics was costing it. Why? Lots of manual input in the supply chain, no insights into costs, etc.

    It took the help of AI and enhanced its empty fleet management. By tapping into historical data, primarily their own, these companies fed machine learning algorithms. This led to the creation of customized solutions aimed at cutting down the expenses linked to managing empty fleets. Brilliant stuff!

    The result? NileDutch was able to optimize and plan empty containers 10-12 weeks in advance.

    As alluring as it looks, implementing AI in logistics comes with challenges and barriers. So, how can you make your way through?

    How to Implement AI in Logistics and Supply Chain?

    Artificial Intelligence is reshaping the landscape of logistics and supply chain management. Efficiency, cost savings, enhanced customer experiences, everything is getting promised. However, it only can happen when implemented well. As a startup owner, it could be a tough landscape to walk upon.

    So let’s look at how to harness this brilliant beauty into the logistics business.

    Disrupting Traditional Models

    The first step is to identify the issues, the gaps, and the inefficiencies. These are the spots you will be working to wipe off. Your logistics app development company can collaborate with startups to develop AI-powered solutions tailored to your specific needs. It can help you develop features like route optimization, demand prediction, and many more.

    The optimum solution is to start with a Minimum Viable Product (MVP) and iterate based on feedback. Why? It’ll reduce risk and ensure alignment with market demands. But, there surely will lie challenges.

    Overcoming Common Challenges

    As a startup owner, you’d want to be a bit more careful. Because you will be tight on money, proper research, and planning are what you’d be practicing. Wisely, with planning and consultation, choose AI models that align with your logistics objectives.
    Here are a few examples –

  • For demand forecasting – Consider machine learning algorithms
  • For route optimization – Consider algorithms like genetic algorithms for reinforcement learning

Integrate existing data, if any, test, validate, scale, and do everything that you think will eliminate future issues and misalignments. If you have a workforce, train them and support them emotionally as well. They might be in fear of losing their jobs. It is time you update them with the changes.

Build an AI team with the right skills. It can be challenging, but it is required. You may consider partnerships or outsourcing to fill skill gaps. Just make sure it is done in the early stages.

One more thing. AI projects can be expensive, sometimes much more than you think. But it is an investment. In the future, it’ll save you many times more. What you can do is develop a clear cost strategy and allocate resources efficiently. Cloud-based AI platforms can provide cost-effective scalability.

Know that AI is a journey, not a destination. AI in logistics and supply chain management has the potential to revolutionize the industry. It holds a promising future, not one that threatens.

Future of AI in the Logistics

Future of AI powered logistics

What we just saw was the present. But what future is held by AI for logistics? Where is it all going?

From what we see, AI surely is expected to handle everyday tasks more efficiently. It has already made things like driverless cars possible. All hail the powerful processors called GPUs. These GPUs will continue to improve, making AI more capable. From the way we dine to the way we truck and transport, everything will be enhanced. There is no way to stop it. Companies are going to adapt it because it is always profitable when implemented well.

AI-driven autonomous vehicles and drones promise efficient goods transportation and on-demand deliveries. This will hugely benefit and will soon be implemented by pickup and delivery app development companies.

Here are a few things that will start rolling in soon:

  • Predictive analysis for proactive supply chain management
  • Natural and efficient customer service with AI and NLP-driven chatbots
  • Improved predictive maintenance
  • Customized supply chain solutions, etc.

But none of it will happen without human-AI collaboration.

The Bottom Line

AI in logistics is not a threat but a blessing. It is transforming the industry in remarkable ways. For example, route optimization, prediction, warehouse automation, real-time tracking, timely maintenance, etc. The benefits and use cases do not stop anywhere around. And it is happening with one purpose in mind — to increase profit and efficiency. As we see, successful cases like Gramener, NileDutch, and more prove its potential very well.

However, implementation requires overcoming challenges when implementing AI in logistics. Choosing the right AI models, integrating data, training teams, and wisely allocating resources are a few challenges that companies and startup owners will surely face. But AI’s future in logistics is quite promising. Think of it as the way out or way in, but the way is one – embrace AI.

Businesses must collaborate with AI, not replace it.

If you are already planning your way into logistics, consult aPurple. It has been helping logistics businesses adapt to AI with its laser-sharp expertise and precision. Check out the logistics – portfolio here and contact for some expert insights and start your logistics journey now.

Mahil Jasani
Author
Mahil Jasani
Mahil Jasani is an enthusiastic web and mobile app development expert who always loves to enlighten readers about his experiences and the ever-evolving technologies in today's world. He has a decade of experience helping startups and enterprises with custom digital solutions to drive better ROI results across different industries.

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