The future of Sino Shipping Logistics and Supply Chain in China

Summary

1/ THE INTERNET OF THINGS (IOT) AND BIG DATA

2/ ROBOTS AND AUTOMATION

3/ DRONES AND SELF-DRIVING SYSTEMS

4/ 3D PRINTING

5/ QUANTUM COMPUTING

6/ BLOCKCHAIN

INTRODUCTION

Logistics and supply chain management have been defined by traditional methods and the slow adoption of new technology. But refining existing tech has reached its practical limit, and the demands of global businesses and changing customer expectations are pushing change.

Customers are asking for shorter lead times, lower prices, and more frequent, smaller deliveries. And the costs of mistakes, inefficiencies, and missed deadlines is growing as competition increases. To meet these evolving expectations and challenges, logistics will soon adopt a slew of innovative, disruptive technologies, transforming the industry forever.

The move to digital supply chain management, leveraging the power of the Internet of Things to ‘smarten’ logistics, will redefine what it means to keep an eye on a delivery. Big data will allow a level of optimisation unheralded by the past, and the new, smart automation of warehouses will vastly improve efficiency while lowering overheads.

By investing in drones, selfdriving systems, and 3D printing, the way products are delivered will undergo transformative change. And quantum processing and Blockchain offer new, exciting opportunities for supply chain management. In short, the future of logistics is hightech, defined by a new array of smart advances that offer a profound break with the past.

1/ THE INTERNET OF THINGS AND BIG DATA

“In my specific area, we’re just starting to see Internet of Things (IoT) technology really take hold because this industry is… a bit medieval in terms of adopting leading-edge technology. Logistics companies tend to be slow followers, in most cases, except perhaps for the UPSes and the FedExes of the world.” –

John Maley, global leader for freight logistics at IBM

The Internet of Things (IoT) is the connectivity that allows smart devices to talk to one another, and it’s at the foundation of the supply chain management of the future. By gathering and sharing information from and between connected devices, the IoT is the beating heart of big data and the nervous system at the centre of the supply chain. Without it, supply chain management is essentially blind.

“These are industries which, despite the constant chatter about optimisation, streamlining and technology, remain bloated and inefficient.” –

Finbarr Bermingham, Global Trade Review

For instance, end-to-end visibility is critical for ensuring delivery, increasing efficiency, and avoiding loss, spoilage, and unnecessary duplication. By harnessing the power of sensors, and enabling these sensing devices to communicate, the logistics services of the future can guarantee the kind of visibility that will allow them to stand out. But when we speak of sensors, we mean far more than RFID badges or GPS tracking for cargo containers.

The future of sensors is sophistication and complex information gathering. For instance, sensors embedded on pallets of perishable goods can alert you to temperature fluctuations that might damage items in transit, letting you know about an emerging problem before cargo is spoiled. Smart sensors in your trucks can tell you when they’ll need maintenance before they break down in transit.

And cargo containers that know when they’re open, delivery trucks that signal when they’ve been idling for unusual periods, and wearable smart badges that track the location of your delivery men in the field, can help you lower costs by ensuring that your deliveries arrive as promised.

Think of this as a process that begins with the IoT, moves through data collection to analysis, resulting in improved customer service. The IoT is the glue binding a process of refinement and analysis that improves the quality of your service. Smart sensors are a company’s eyes in the field, generating data about the strength of its logistics chain. This data isn’t just information about where shipments are – that’s the old way. Instead, think of the wealth of new information they provide: average idling times for delivery trucks, temperature averages and extremes in transit, and the frequencies of various problems. By analysing this data, the companies of the future will refine their service and enhance customer satisfaction.

“…Big data logistics can be used to optimise routing, to streamline factory functions, and to give transparency to the entire supply chain, for the benefit of both logistics and shipping companies alike.”

– Mona Lebied, Datapine

Maersk Line has adopted the IoT to manage its colossal fleet of refrigerated containers. By equipping each unit with connected sensors, they’re aware of problems as they happen, know precisely where the problem is, and can provide the resources necessary to fix it in real-time. UPS is also an early adopter in the industry, using smart devices to track its delivery men on urban routes, where the last mile problem is the most pressing due to issues like parking and long walks to the final destination. ‘Big Brown’ is a perfect example of how to use the IoT for analysis. As they gathered information about these deliveries, they realised the need for micro-hubs, streamlining the process and improving their bottom line.

Indeed, the savings of IoT optimisation can be enormous. As Finnbarr Bermingham reports for Global Trade Review:

Lasse Eriksson, vice-president of digitisation at Finnish company Cargotec, said that in the cargo trade, using smart devices to monitor and control vessel fuel consumption, to conduct requisite maintenance and repairs and to manage and co-ordinate the fleet correctly could save US$350,000 per vessel per year. With more than 90,000 ships currently sailing the world, that is a colossal US$32bn industry saving each year.

2/ ROBOTS AND AUTOMATION

“Robotics have been around for more than 50 years, but they have become dramatically more dynamic in the last five. They are no longer stationary, blind, expensive and unintelligent but can work alongside people and learn as jobs change.” – Paul Dittmann, executive director of the Global Supply Chain Institute

Robotics is revolutionising warehouses, and the future of warehouse logistics is a smart mix of humans and machines. This was a disruption that was slow in the making, as the last generation of robotics was simply to clumsy, strong, and stupid to improve warehousing. Moreover, until recently, the cost of machines exceeded the price of human labour.

But both concerns are falling to the new automation. Amazon, perhaps the most forward thinking company when it comes to warehouse robotics, went all-in in 2012, purchasing the robotics company, Kiva, to supply its growing need for logistical automation. Over the last three years, it’s added no less than 15,000 robots a year, quickling building to a present total of 45,000

https://www.youtube.com/watch?v=cLVCGEmkJs0

These tiny robots, just 40 centimetres tall, move in collaborative order, lifting entire shelves of stock and bringing them to their human coworkers for processing. The people stay put, working at centralised fulfillment stations; the robots do the moving, and their precision, speed, and organisation means that more items can move through a warehouse than ever before

Locus Robotics, building on an $8 million venture capital foundation, has developed the LocusBot, an alternative to Amazon’s system. It’s now selling these warehouse robots to clients including DHL at an estimated price of about $30,000 per robot. The LocusBots, too, work with humans – they find an item on the shelf, while people patrol allocated ‘zones’ of the warehouse, meeting the robot at the item. The human then logs the item on a robot-mounted touch screen and drops it in the LocusBot’s basket for shipping. Again, this system minimises the distances people move, relying on tireless, efficient, precise robots to do the heavy lifting.

“With Sawyer able to undertake a range of repetitive tasks on a variety of products, its up-and-down-scalable nature helps us fulfil e-commerce orders more efficiently.” –

Mark Parsons, Chief Customer Officer, DHL Supply Chain

Traditionally, automation meant powerful, dangerous equipment, demanding its own workspace, carefully separated from human beings. But a new generation of robotic coworkers – designed with collaboration in mind – are altering how warehousing works. Such ‘cobots’ are equipped with sophisticated sensors that alert them to the presence of their human partners, and they have a range of safety features that allow them to work alongside people without risking injury

Rethink Robotic’s Sawyer is a great example. Their first design, Baxter, took the manufacturing world by storm because of its low cost, high flexibility, and impressive safety. Sawyer is a more compact version of the same tech, and both cobots have various ways of ensuring worker safety: they operate at human speeds, sense contact and stop or slow automatically. They also have ‘force limit’, so that any contact that might occur is below a force capable of causing injury.

Additionally, both cobots have ‘faces’ with digital eyes that signal the cobot’s intent, telling coworkers where they plan to move next. Sawyer is a small design, ideal for warehouse packaging. Because cobots can work with people, tirelessly repeating the same task, they are ideal for packing containers, loading palettes, and shipping stock. This cobot has already been employed packing “pet food, confectionery, aerosols and canned drinks,” and the range of items that Sawyer can manipulate is essentially unlimited

3/ DRONES AND SELF-DRIVING SYSTEMS

“Right now, we’re at a point where conventional technology is already at such a high standard, there’s not much more room for improvement. As a result, companies are looking for new technologies they can use.”

– Arne Viehmeister-Kerner, MULTIROTOR

Drones are small, unmanned aerial vehicles. They typically use four propellers to provide lift, thrust, and control for a centralised, lightweight chassis. They’re fast, nimble, and strong, and depending on their size, they can carry significant payloads. Industry insiders like Aren ViehmeisterKerner think that the explosion in drone tech is driven by the exhaustion of capacity in logistics. With consistent double-digit growth in online shopping, for instance, logistic chains are reaching the limits of traditional tech. And improvements in materials, design, flight control, and battery life have led to these tiny workhorses to make the transition from expensive toys to cheap helpmates for industry.

Unsurprisingly, Amazon is leading the way here, too. Given its tremendous investment in automation, this was the next logical step for the online retail giant. In March, it unveiled its first automated delivery, four pounds of sunscreen ferried by drone to a crowd at an outdoor conference.

But the reality is still a few years from deployment. The US Federal Aviation Authority needs to set guidelines for drone delivery, and that won’t happen overnight. But we have a good sense of what the service will look like when it’s operational. Amazon doesn’t intend to use the drones for regular delivery; they’re an emergency option for super-fast, one hour delivery. They’ll cruise at about 90 metres at a touch more than 95 kilometres per hour, dodging birds and obstacles with automated sensors. You’ll need an Amazon landing pad for the drones to recognise from the air, and when they see it, they’ll hover, slowly descending to deliver your package before returning to base for a recharging. Realistically, you’ll need to live close to a distribution centre – the drones won’t be crossing China to make deliveries

We think drones will revolutionise the last mile problem for hard to reach customers and urgent deliveries, and as the tech improves even more, drone-ferried packages may end up being more cost effective than current methods.

Self-driving systems, however, are poised to transform logistics. They use sophisticated sensors, radar, and LIDAR to detect obstacles, see their position relative other objects, and steer clear of hazards. And they’ve already proven themselves more than roadworthy.

Freightliner developed the Highway Pilot program, leading to the licensing (in Nevada) of its first autonomous truck. Its advanced sensors and smart driving algorithms allow it to navigate roads better than a human driver can. As Antuan Goodwin reports for CNET, “The truck can steer to stay between lane markers and adjust its speed and braking to maintain a safe following distance behind other cars on the road, all while the driver is free to do other things.” The human driver, however, is still an integral part of this delivery system. He’s needed to negotiate inclement weather, interchanges and exits, and to drive surface roads and back the trailer in for deliveries. For its part, the self-driving system handles the long-haul cruising

If you think this is farfetched, consider that Anheuser-Busch has already put autonomous delivery into action. It unveiled its own self-driving platform powered by Otto, a subsidiary of Uber. It completed a 193-kilometre autonomous delivery run in Colorado, paving the way for self-driving systems to assist or replace professional drivers for the 450 billion kilometres per year they log in the US alone.

But even bigger disruptions are coming. Europe’s Maritime Unmanned Navigation through Intelligence in Networks (MUNIN) project seeks to automate ship traffic, the medium of 90 percent of the world’s goods. Fully automated ships would radically alter the calculus of maritime logistics. Ørnulf Jan Rødseth, a scientist with the MUNIN project, insists that this is “an idea that opens up entirely new possibilities in terms of new business models.You cannot underestimate how important it is.”

4/ 3D PRINTING

Major delivery players like UPS are exploring the power of 3D printing to replace delivery for a variety of goods. 3D printing is a form of additive manufacturing in which a high precision nozzle extrudes material in layers, quickly building the desired shape. These printers are small, often only slightly larger than a water cooler, and they can be installed anywhere. As the cost of this technology has continued to drop, we anticipate a shift in logistics from centralised hubs to decentralised printing stations, changing the way products are delivered to customers.

The idea, says Tim Gohoc, managing director of UPS Philippines, is to move to ‘zero inventory’ warehousing. The ultimate idea is to deliver goods to a consumer instantly, and have them print the item in their homes or factories.“ On-demand manufacturing allows certain goods to be transported digitally to their location before taking shape as a physical product,” he explains.

This instant delivery is a big sell with customers who need spare parts to continue production, for instance. With virtually no lead time, companies that leverage the power of 3D printing as part of their logistical chain can quickly corner the market on this emerging tech

5/ QUANTUM COMPUTING

Logisticians nearly always have to consider the optimal route between varying points. This sounds like a simple problem, but the number of variables induce calculations beyond the capacity of even the fastest computers. To get around this problem, software engineers are forced to take shortcuts and divide these mammoth calculations into smaller problems.

But the advent of quantum computing will end this, allowing computers ‘to swallow complexity whole.’ Quantum computing takes advantage of the strange properties of tiny particles. In some ways, they bend the laws of physics, allowing some very interesting advances in computing. Normal computers depend on upon standard binary – a bit can be encoded with either a 1 or a 0. But one of the strange properties at the quantum level is that quantum bits, or qubits, can be more than one thing – representing both a 1 and a 0 at the same time. This property is called quantum superposition. Moreover, and perhaps even stranger, quantum particles are linked to each other in sometimes mysterious ways, entangled in such a way that more than one qubit immediately shares information, across space. This allows the state of one qubit to depend on another, instantly. This is called quantum entanglement.

The combination of these two quantum properties means that quantum processing is to conventional computing as counting on your fingers is to your iPhone 7. A quantum processor can handle enormously complicated calculations, finishing a process in hours that would take even the fastest supercomputers decades to do. And while quantum processing is not better at every task than conventional processing, for logistical calculations it will unlock answers that will transform supply chain management. They’ll be able to plan routes, order supply chains, and streamline logistics to a level that has been simply unattainable with existing tech.

Until recently, however, the promise of quantum computing was thought to be decades from commercial application. But a first step was recently taken by D-Wave Systems, who sell a ‘quantum chip’ that’s very good at optimisation problems. Scientists don’t think that the D-Wave’s chip is truly quantum – it relies on quantum annealing – rather than the real thing, but it’s already available and solving complex problems.

But the real thing is almost here. IBM is developing a true quantum computer with 50 qubits of processing power, a large, expensive, unwieldy device the size of a refrigerator. They plan to sell this behemoth in the next few years, and it promises to truly revolutionise… well, everything.

6/ BLOCKCHAIN

“…This is a world premiere and a huge achievement considering the transaction involved actual physical goods being traded across borders.” – Aurélien Menant, the founder and CEO of Gatecoin

You’re probably familiar with Blockchain as the software undergirding Bitcoin. Blockchain can do this well because it provides a secure, diffuse, transparent system to record transactions. Here’s how it works. Information is embedded in a time-stamped block. This block is then placed between two others, forming a chain. The chain is stored on every computer running Blockchain, ensuring that there’s never an outage. Moreover, these chains are publicly accessible – guaranteeing transparency – and virtually unhackable. To alter one block, you need to hack them all.

But the power of Blockchain is useful for more than cryptocurrency. Because it can record any transactional information, it’s being considered for storing medical records, as it would allow physicians to see a patient’s medical history over time. This is promising a new era in patient information record keeping.

Similarly, Blockchain can do wonders for supply chain management.

By joining Blockchain to the IoT and smart contracts, it’s possible to make shipments and payments automatic and transparent, providing immediate payment when the conditions of a contract are filled. The Commonwealth Bank of Australia (CBA), Wells Fargo and Brighann Cotton are experimenting with an international shipment of 88 bales of cotton from the supplier in Texas to the customer in China. Using a digital smart contract and a distributed ledger system like Blockchain, they’re doing away with the paperwork and uncertainty.

We think this is the future of supply chain management. Forget paperwork, signatures, and labour intensive manual processing. Distributed ledger systems, smart contracts, and the IoT will enable a new era of autonomous logistical management.

CONCLUSION

We promised that the future of logistics and supply chain management would constitute a radical break from the past, and it’s clear we believe that to be true. From the data supplied by the IoT to self-driving systems, from advanced automation to Blockchain, the next decades of logistics and supply chain management will enable faster, more efficient, more precise delivery, allowing tomorrow’s companies to meet the growing needs of their customers.