The Changing Climate of Logistics

The Changing Climate of Logistics: Sustainability, Digitalization and Automation

By TURGUT ERKESKİN – Senior Vice President, FIATA – President & CEO, GENEL TRANSPORT

The logistics industry is undergoing a significant transformation driven by several key factors, including sustainability, digitalization, and automation. These changes are shaping the way goods are transported, stored, and distributed, with a focus on reducing environmental impact, improving efficiency, and increasing transparency.

Climate change is by far the toughest challenge of our time. Despite the ongoing debate and urgent call for action by authorities, it was often mistakenly perceived as a distant threat or just another risk scenario that is unlikely to cause major impacts on public and private industry. However, its effects and repercussions are being felt more and more every other day by all sectors. Businesses are now trying to “adapt to the changing climate” both literally and figuratively.

The logistics industry is not spared. The confluence of climate change, sustainability imperatives, and technological advancements is reshaping the global logistics landscape. In the last couple of decades, the realm of logistics has undergone a profound transformation. The intersecting trends of sustainability, digitalization, and automation are changing the way goods are packed, handled, transported, and stored. These revolutionary trends will continue to rewrite the rules of the game in the logistics industry, particularly for carriers and freight forwarders:

Climate Change and Sustainability from a Logistics Perspective

The effects of climate change on the logistics industry are multifaceted and far more comprehensive than thought.

Firstly, climate change is expected to have significant effects on trade routes and shipping due to its impact on weather patterns and sea levels. The increasing frequency and intensity of extreme weather events may cause damage to infrastructure, vehicles, and cargo, leading to delays and even disruption of operations. In fact, extreme weather conditions are only the tip of the iceberg compared to the imminent threat of polar ice cap erosion. Scientists argue that the melting polar ice might substantially change the traditional maritime and trade routes while rising sea levels pose a threat to ports and coastal infrastructure. Droughts, on the other side, are another problem as they cause a drop in water levels. Very recently, we have all witnessed how the vessel traffic has almost come to a halt at the Panama Canal due to low water levels.

Secondly, growing concerns about the environment and climate change, or more specifically carbon emissions, have driven the logistics industry to reassess its practices. The industry is expected to develop more sustainable practices to cut down on its significant contribution to GHG emissions. Freight forwarders are embracing eco-friendly green logistics practices to reduce their carbon footprint. Route optimization, freight consolidation, and integration of transportation modes to reduce fuel consumption, or the use of alternative fuels, renewable energy sources, and energy-efficient electric vehicles are examples of how the industry is increasingly adopting sustainability practices.

Moreover, as circular supply chain models are on the rise, sustainable packaging, and eco-friendly alternatives such as recycled, reusable, or biodegradable materials are gaining traction in logistics, as customers demand environmentally responsible practices from carriers and forwarders to meet their sustainability targets.

Meanwhile, increasing regulatory pressure, and new control mechanisms such as emission tracking, reporting, and carbon taxes, along with the ambitious sustainability targets – like the Net Zero 2050 – set by governments and authorities force logistics companies to adopt more sustainable practices unless they are willing to face penalties and loss of business.

In summary, climate change is likely to reshape trade routes and supply chain operations. Logistics companies should consider these factors carefully when planning routes, managing operations, and making new investments.

Digitalization and Automation as the Future of Logistics

The rise of digital technologies is another leading trend that is revolutionizing the logistics landscape. Freight forwarders process and exchange data with multiple parties through multiple channels every day. They may benefit significantly from digitalization and automation as they enable handling and analyzing large amounts of data more effectively, offering increased flexibility, and security compared to traditional data-processing methods.

From real-time tracking and tracing to data-driven analysis and predictions, digitalization improves visibility, efficiency, and decision-making. With the advancement of digital management systems, freight forwarders are leveraging big data analytics to optimize routes and predict demand. This data-driven approach leads to reduced lead times, lower costs, and improved customer experiences.

Automation, closely tied to digitization, is another catalyst that drives change in the logistics climate. Automating processes like documentation, customs clearance, and cargo tracking reduces errors, and increases speed and agility, improving the overall operational efficiency. Automation streamlines administrative tasks, creating more time for strategic tasks and business development. Autonomous vehicles, drones, and even automated warehouses are becoming integral parts of logistics operations, enhancing efficiency, and reducing the reliance on manual labor. However, the integration of automation also brings forth challenges such as adapting to new technologies, training your workforce, or finding skilled labor to employ these systems.

Navigating the Changing Climate

The logistics industry is at a crossroads, where the climate of change is being shaped by both external and internal factors. Climate change and sustainability concerns are pushing logistics players to adopt greener practices, while digitalization and automation are providing the tools to revolutionize the industry. Freight forwarders must adapt to these trends to stay competitive, reduce their environmental impact, and offer more efficient services to their clients. As the climate of logistics evolves, adaptation to these intertwined trends will define the success of industry players. By embracing sustainable practices and technological innovations, the logistics industry can not only survive but thrive in this dynamic new era.