Logistics digitalization

The explosion of e-commerce

The birth of e-commerce goes back to the first e-transaction in history: the purchase of a Sting music CD ("Ten Summoners Tale") in 1994 on the first e-commerce website: Net Market. Since then, digital technologies and the Internet, smartphones, small and large online stores have shifted commerce from stores to online stores.

The e-commerce sales of products and services in France have reached 129 billion euros in 2021 with annual growth at over 15% per year. As a reminder, not so long ago, in the mid-1990s, there was no such thing as e-commerce.

Internationally, the figures are even more impressive with e-commerce sales reaching 5 trillion euros (twice the GDP of France) in 2021. E-commerce now represents 22% of global trade, with two main contributors: China, then the USA.

The supply chain transports and delivers purchased products to their recipients. This chain is complex, with many actors, professions and resources involved. It begins in the warehouses where the products are stored, it continues with transport by plane, truck or boat through intermediate hubs, and it ends with the "last mile", i.e. local delivery to the final recipient.

In France in 2021, e-commerce will represent 2 billion product deliveries. Worldwide, about 100 billion packages are sent per year, with an annual increase of more than 10%.

Logistics companies are giants..

The parcel delivery industry is estimated to reach 343 billion USD worldwide in 2020. Some key players such as "express operators" are noteworthy :

Express carriers are companies that provide express transport, i.e. the rapid delivery of parcels and letters, typically within a few days, with worldwide coverage and their own logistics resources such as vehicles and hubs. The best known in France are Fedex, UPS, DHL, Chronopost and TNT.

To illustrate the size of the major players:

UPS, with a turnover of $100 billion, transported more than 5 billion packages in 2021, operates 572 aircraft and 125,000 vehicles in 2500 logistics centers. For its deliveries, Amazon received a bill of $11.3 billion from UPS in 2020...

For its part, Fedex delivered 4 billion packages in 2021, representing a turnover of $84 billion, with 700 aircraft and 210,000 vehicles.

..they go green..

The ecological impact of logistics transport is necessarily major: Fedex has emitted 21.5 million m3 of CO2 in 2021 and used 93,000 tons of materials for packaging (cardboard + wedging).

Aware of these deficiencies, the major players in logistics are evolving. Some have set up a specific organization and created positions of "chief sustainability officer": Bolloré Logistics, Fedex... and have defined very ambitious objectives.

UPS aims to be carbon neutral by 2040. Fedex is aiming for carbon neutrality in 2050 with 2 billion dollars of investments and 3 intermediate strategic objectives in 2035:

• 50% reduction in CO2 per package delivered
• 100% of facilities powered by renewable electricity
• 30% of the fuel used by its air fleet must be sustainable aviation fuel

It will remain to ensure that these ambitious goals are achievable. But expectations are real, 87% of French people are interested in a greener delivery method.

…and digitalize

These companies have undertaken major transformations with their transition to digital and the 4.0 warehouse: internet of things with connected sensors to optimize stocks, robotic arms, self-guiding vehicles, autonomous carriers operating in the midst of humans, TMS (transport management system) back-ends which are being transformed into TMP (transport management platform) open to all supplier & customer partners, high-speed conveyors, big data optimization, artificial intelligence, electrification of means of transport, etc...

The first step of modernization and eco-responsible approach is the transition to the electric vehicle that all the actors are carrying out.

The packaging

Another logistical waste that can no longer be neglected is packaging. In the vast majority of cases, these are cardboard boxes of all sizes and shapes with information labels, cushioning material such as bubble wrap and tape for closure. These boxes are basic, practical, inexpensive and offer minimal service. Of course, the boxes are progressively improved in shape, strength, manufacturing and recycling processes... but this is incremental innovation. To this day, about 64% of the cardboard is recycled: this means that a cardboard is on average re-used only 3 times.

We can add that the energy and diplomatic crises and the international increase in demand for goods have had a strong impact on costs. In one year, the price of cardboard has risen by 67%, the price of scotch tape by more than 50% and the price of bubble wrap by more than 25%. And cardboard packaging can only be reused 2 to 3 times, which is still limited.

Finally, we can only be surprised that packaging is a logistical element that has hardly evolved towards digital. This is even more astonishing since packaging is tis now the missing link to fully digitized logistics.

It is not identified or prioritized by the logisticians themselves. And there is almost nothing on the shelf. This must change: LivingPackets already offers a range of smart and reusable packaging with many very innovative services. This is an opportunity for professionals to ensure total control of their logistics shipments while engaging in a CSR (Corporate Social Responsibility) approach that reduces the carbon footprint related to logistics.

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Jérôme Colin, Chief technical officer, Head of Innovation and Engineering at LivingPackets.