Logtech is making logistics more sustainable and saving energy and costs. A survey from the Luxembourg Cluster for Logistics sheds light on the main barriers to its adoption. Development advisor Philippe Scholten explains.
How would you describe the state of logistics in Luxembourg in terms of digital transformation?
It is clear that the covid pandemic has provided a boost to digital transformation in the sector as companies became aware of the importance of transparent and visible global supply chains. The transport and logistics sector was for many years dominated by paper and Excel-heavy processes where many operations were done manually. However, the COVID-19 pandemic has demonstrated the importance of traceable and predictable logistics processes to cope with disruptions in global supply chains.
As a result, many companies have made efforts to transform their processes digitally. Interestingly, 90% of the companies surveyed among our network of the Cluster for Logistics indicated that they are actively driving projects in digital transformation, which was new for us.
What are your members’ digital transformation priorities?
Priorities were the (1) transparency of supply chains, so the visibility of goods and transportation flows; (2) the integration of secure and future proof IT systems, which will then be the (3) basis for data analyses; data processing and AI based solutions in order to optimise the business processes. And, last but not least, (4) digitalisation of internal business processes: online communication, customer relationship management, digital procurement. So these are the four main points companies are focusing on.
What role can tech startups play in tackling these priorities?
They have a major role. Activities in logistics are so diverse, that every transport mode has its own digital transformation strategy. To have these young, dynamic startups provide solutions that maybe the people from the field couldn’t imagine is a perfect opportunity for tech startups to take a dominant role in the logistics sector.
On the other hand, a conclusion from our survey was that a lot of the logistics sector is fragmented with several small and medium sized companies that often don’t have the internal resources to develop certain digital tools or solutions themselves. They often rely on younger startups to find solutions that are dedicated to certain problems they identify in their business practices. This is also why we at the Cluster organise matchmaking events which give the opportunity for logtech startups to directly present solutions to our members.
“If you want to manage your greenhouse gas emissions, you need reliable and transparent data to measure and report the impact of your logistics activities on the environment.”
Philippe Scholten
What are the pain points that logtech can and are helping to tackle?
In view of the current challenges the sector has with high labour costs, shortage of drivers, high energy costs and so on, the main pain point is to provide AI or IoT-based solutions in order to optimise business processes and best make use of the current resources the companies have. This means resource planning for transportation flows, but also everything related to warehouse planning and optimisation, inside the storage space, which is limited and very expensive in Luxembourg.
On the other side, a major issue is also the digitisation of freight documents, especially in road transport. The so-called CMR [consignment note] is the freight document that the worker has on his truck, with all the information about the shipper, the carrier, the consignee, and so on. Currently, a large majority of these documents for road transport are done on paper. However, today, 29 countries and their authorities have ratified the eCMR [the electronic consignment note] convention and since 2021 Germany, another central player in Europe, has signed the convention, which was an important missing building block in the harmonization process. To make that process paperless will become a major challenge for the road transport sector in the coming years as the use of the e-CMR is planned to be mandatory in the European Union by 2026.
There are new logtech startups already on the market providing platforms where these documents can be securely stored and exchanged between the different parties. But to bring all the stakeholders on the same level where they all use the eCMR is the next challenge, especially for the road transport industry.
Part of your role is to work on sustainable logistics with the Lean and Green programme. What logtech is emerging to ease this transition?
If you want to manage your greenhouse gas emissions, you need reliable and transparent data to measure and report the impact of your logistics activities on the environment. Startups like Waves, in Luxembourg, for example, provides concrete solutions based on real-time data to measure the CO2 emissions of transport companies and then also to provide them with a platform to see on which trips they had high emissions, why that was the case. It provides them with intelligent solutions to save CO2 emissions and also gasoline, also becoming more cost efficient.
What other promising startups from Luxembourg are making waves with logtech solutions?
Shipsta, the freight procurement for online booking, bringing carriers and shippers together. Then we have Champ Cargo Systems, providing IT solutions for cargo management systems in order to make the supply chain visible for the different stakeholders in the supply chain.
What are the remaining barriers now for logtech adoption?
The first barrier it’s a lack of time and too many conflicting priorities. We are coming from one crisis to another. With all the disruptions, covid, high energy cost, driver shortages, together with the war, mean companies are trying to handle many different conflicts so they don’t have the possibility to look into other domains and drive the digital transformation journey.
The next point is the acceptance of stakeholders. Interconnected global supply chains include shippers, carriers, authorities. There are many different stakeholders involved and if there is one party which has for example, an IT system that is not compatible with the other ones, it is hard to develop this interconnectivity of stakeholders. The last point, which was also an issue from our survey, is willingness to share data. This is still a concern for many companies.
The full Cluster for Logistics survey results will be published in the coming months.
