What was once considered to be in the realm of future technologies and existed only as concepts and prototypes is now a reality. Ideas such as autonomous vehicles for doorstep deliveries have become necessities in a world dealing with the global health crisis caused by COVID-19.
The crisis disrupted supply chains, causing delays and backlogs in fulfillment of orders as demand for logistics to deliver essential commodities and e-commerce goods rose significantly. Lockdowns and international border closures stretched the supply chain further adding a new layer of complications to operations. Amidst this challenging situation, social distancing has become a norm and remote working a necessity, giving rise to an imperative need for digital interventions. Moreover, as we adjust to this new reality, enterprises are also reexamining their business models to align to a larger purpose-led workplace culture.
The global logistics market is expected to grow at 6.5% CAGR during the forecast period 2020-2028 factoring in the disruptions caused by COVID-19. Much before the pandemic set in, many third-party logistics players had already started investing in smart technologies like artificial intelligence (AI) and robotics to keep up with the rising demand for fast deliveries as well as the growth of e-commerce. But with more innovative options like drone, autonomous trucks, autonomous delivery robots coming to forefront, the entire logistics ecosystem will embrace digitalization, along with the much talked about supply chain visibility, which will aid in enhancing customer experience (CX).
Based on our research and market analysis, we have seen that large logistics players, specifically in North America, Europe and APAC, use AI capabilities for dynamic demand-based pricing and planning system, freight management with real-time data, optimization of transport routes and autonomous robots in their warehouse as well as for last-mile deliveries. The rise of e-commerce volumes and investments in things like automated sorting centers and route optimization have been the key elements in increasing the revenues and bringing the costs down for large logistics players during the pandemic.
Our research has shown that supply chain organizations will increase investments in applications that support AI, internet of things (IoT) and advanced analytics (AA) capabilities over the next 3-5 years. In line with this prediction, we have observed that organizations are already investing heavily in advanced technologies with focus on autonomous mobile robots in warehouses. In fact, there are use cases where renowned logistics players have deployed robots or cobots and drones in their warehouses. Some cobots work with humans for picking and palletization, some use computer vision for scanning warehouse shelves, some use robotic arms to move items or sometimes entire shelves from source to destination and drones are being used in those scenarios where shelves in warehouse are not accessible because of height.
Early investments in AI and robotics have already benefitted an incumbent North American player to reduce operational cost by about 20%. The company automated its processes such as sorting, ordering, picking, packing, transporting, warehousing, delivering, checking inventory and routing. As health, safety and hygiene are now taking precedence, customer-centric organizations have started implementing autonomous vehicles and drones for last-mile delivery. There has been a significant acceleration in the demand for robotic goods-to-person (G2P) systems due to COVID-19 and the demand is estimated to quadruple in the next 2-3 years to help enforce social distancing. In future, every logistics player in the industry will have to embark upon this transformation journey where end-to-end process will be automated with AI and robotics.