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3 February 2021

6 logistics industry trends to look out for in 2021

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Logistics employee

Even before the pandemic began, the logistics industry was experiencing a boom. With the emergence of Covid-19 and the impact of this on internet sales and activity, this growth has only continued on its upward trend.

According to figures released by the Office of National Statistics, internet shopping grew from 18.1% in September 2019 to 26.1% of total retail sales in September 2020, a relatively small decrease from the 2020 peak in May of 32.8%. Despite this drop, the figures show a huge increase year on year.

There’s no dispute around the untold challenges that the pandemic has presented to businesses, but the unexpected pressure and need to adapt has seen accelerated development in several areas, particularly in technology, as well as some other key logistics trends to look out for in 2021.

1. Increased automation and use of emerging technologies

Automation in the logistics sector was already well underway before the pandemic, but in the new world of social distancing and minimal workers in any one workplace, automation and the use of emerging technologies – particularly AI – are expected to increase this year. Automation in warehouses is predicted to include using pick and place technologies such as automatically guided vehicles, which would make a huge impact on productivity and the speed of work. Not only can AI be used for these more detailed tasks but also on a wider scale for route planning and prediction as well.

2. Holding onto talent

Although it’s hard to say when we can expect it, a semblance of normality will most likely return in 2021 and with that more vacancies and job opportunities will appear. With this increased competition for talent, it’s expected that logistics businesses could suffer if they don’t invest in their employees, making retention of key talent a likely challenge for the sector this year. Ensuring that logistics businesses review their current employee engagement strategies, including the employee benefits they can offer, will be crucial in making sure that organisations hold onto their talent whilst the job market gets busier and more competitive.

3. Changing consumer behaviour

It’s predicted that the significant increase in online shopping will remain at a high level, even when normality starts to return; some observers of the logistics market have suggested that the pandemic has sped up ecommerce adoption by nearly a decade. It’s challenging to predict how consumers will behave in the near future, but  these fluctuations have highlighted  the need for businesses to be able to react in an agile and effective way to changing customer demands. The need for technology to enable this agility in logistics businesses will be more important this year than ever.

4. Analytics for intelligent forecasting

Although it remains a challenge to predict the near future, the return of some stability for businesses is expected to lead to an uptake in advanced analytics and planning solutions in 2021. With the difficulties and unpredictability presented by the pandemic, it’ll be essential for organisations to use analytics solutions to forecast and plan, and even more so when customer behaviour stabilises. Making the most of intelligent solutions will enable logistics businesses to get ahead of the competition in 2021 and drive efficiencies at the same time.

5. Leveraging the specialists 

Over the course of 2020, it became clear to many logistics businesses that using a specialist third party for supply chain and other essential business activity such as payroll, would enable organisations to focus on their core business and increase their flexibility at the same time. Third party companies proved their value in significantly reducing risk for logistics businesses by allowing them to respond rapidly and effectively to changes in the market. Having grown in popularity during 2020, higher levels of outsourcing are expected to continue this year.

6. A renewed emphasis on business resilience

Monitoring risk has always been essential for businesses, but the pandemic has thrown a new light on the importance of this area and the need to build resilience to tackle unforeseen events. Much of this strength and resilience relies on your people and their skills and talent, making it even more important to ensure your employees feel fulfilled, connected and valued in their workplace.

Other areas of resilience include how agile a business is and where it is in its digital transformation journey. In research completed by McKinsey in 2020, it was found that some of the key pillars of business resilience in logistics organisations was the ability to complete fast decision making, as well as having strong digital programmes in place. This enabled businesses to react in an agile way with the strong digital foundations and capabilities to work effectively whatever the restrictions inflicted on the businesses were. McKinsey found that digital technologies ensured logistics businesses could improve cost and performance in four key areas – managing employees digitally, automation and streamlining of processes, ensuring a more thorough understanding of the market and allowing logistics businesses to reimagine their networks through scenario simulation and complex route optimisation. A thorough review of an organisation’s business resilience to ensure that logistics organisations are as robust as they can be, will be essential to success in 2021 and beyond.

We’re here to help!

All of these logistics industry trends involve achieving efficiencies and streamlining processes through technology, which is paramount for building effective resilience. This can only be achieved through a thorough review of current processes and a clear strategy of how to move forward. At MHR, we can help in a number of ways, whether it’s through providing a strategic review of your digital capabilities or providing solutions and services that serve the specific needs of the logistics sector.

Katie Buckingham

Katie Buckingham

Field Marketing Manager at MHR. 

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