Logistics in the Chemical Industry: The Trends of the Future
More than 90 percent of all products available worldwide can be traced back to the use of chemicals. Therefore, chemicals are essential economic goods for numerous national economies and are transported daily in considerable quantities by means of roads, railways or waterways. In industrialized countries such as Germany, the chemical industry account for around 40 percent of all road transport. It is not surprising that as the chemical industry continues to develop, many standards in logistics are also changing. In addition, chemical companies are increasing focus on logistical processes as part of their holistic approach to production.
The Challenges of Transport Logistics
Whether it is just-in-time delivery, economic order quantity or make-or-buy decision, more and more companies in the chemical industry have recognized the importance of reliable logistical processes and logistics providers in order to achieve logistics optimization. Control over the entire value-adding process, from the procurement of raw materials through manufacture of the product to the delivery to the end-customer, is becoming increasingly important for chemical companies in terms of price fluctuations typical of the industry and changes in end-consumer demand. Particularly in the context of value-adding services, chemical producers are deciding to set up their own logistics organization or better integrate external logistics providers into in-house processes to ensure an optimization of internal material flow. In addition to the topics mentioned above, chemical companies will have to tackle other challenges in the future. In the following we will present four trends in logistics that will be important for chemical companies.
Future Trend: Sustainability
Even though sustainability is not a new issue, it is gaining importance thanks to the increasing media presence and consistent international sustainability goals. Empty runs, i.e. trips without any freight loaded, are major problem in the logistics sector. About one third of all truck journeys are such empty runs. To avoid this in the future, logistics service providers and software companies are working on transport management solutions to calculate more efficient routes and avoid as many empty runs as possible. EU standards on CO2 emissions from commercial vehicles and emerging driving bans on diesel-powered cars are fueling the development of newer and more efficient drive technologies. In light of recent regulations, automobile manufacturers such as Tesla, Daimler, Volvo and the US start-up Nicola are using the latest technology to electric trucks that will cover long distances. Nevertheless, the expansion of charging stations remains imperative so that electric trucks can prevail in the future.
Future Trend: Close Partnerships
For a long time, there are some preconceptions that logistics providers are merely deliverers of goods. Many logistics companies have a wide range of know-hows, which chemical companies can find beneficial. In order to maintain a high level of customer satisfaction and a positive reputation, strong and close partnerships are becoming technically but also strategically more and more important. The mutual and active exchange of knowledge creates new synergies that lead to a considerable competitive advantage, especially in a fragmented market such as the logistics sector. An active cooperation does not only ensure reliable just-in-time deliveries, but also enables tracking and tracing to be customized to the client’s needs, which, in future, will not only transmit the location of the order but also extensive product information.
Future Trend: Digitalization and Big Data
Like the chemical industry, digitalization is becoming increasingly important in the logistics sector. Pioneers in the logistics industry understand that digitalization is not only a translation of the analog process into a digital language, but also an optimization of the logistics process and value appreciation of existing services. For example, this is reflected in digital communication through automated notifications such as late deliveries or precise chemical deliveries. In combination with big data, the processing of large amounts of data, not only can deliveries be specified, but journeys can also be optimized in the interests of the environment. Big data can also be used for risk management, deliverer research and forecasting. Some companies already use big data to model prices and costs, for example, using price algorithm to calculate fixed prices. And even though the PwC Trend Book 2019 for Transport and Logistics names digitalization as the most important future driver for transport and logistics, renowned companies such as McKinsey see a considerable need for the B2B sector to catch up in terms of digitalization. According to the study, only six percent of all large transport companies have digitalized their end-to-end process yet.
Future Trend: Autonomous Driving
Another important trend in transport logistics will undoubtedly include autonomous driving. Even if legislators are still skeptical about autonomous driving now, there are gradually draft laws allowing semi-autonomous driving. According to the experts, fully autonomous driving will not only be legally permittable, but will revolutionize the logistics industry. The first manufacturers have already introduced models with self-driving capabilities. Mercedes unveiled the „Actros,” their partially autonomous driving trucks, i.e. it is constantly monitored by a driver during the journey. On the other hand, Volvo is working on „Vera,“ an almost completely independent driving truck that does not have a driver’s compartment. Instead, it is monitored by a control center with cloud computing. A vehicle’s autonomous driving progress is indicated by levels one to five. The higher the level, the more advanced the transportation. From level three, for instance, no drivers are required inside the vehicle. The highest current level reached by the latest models is level four „High Automation“. Technology such as the sensors, the software, the map material and many other technical adjustments need to be worked on until level five „Full Automation“ is possible. It is only a matter of time before chemicals can be transported by autonomous trucks.
Even though some of the trends mentioned above sound like dreams of the future right now, scientists and researchers are consistently working on bringing them to fruition. Today, many technologies from the fields of digitalization and autonomous driving can already be implemented on a smaller scale. As the largest logistics customer, the chemical industry has the opportunity to participate in the development of the logistics industry and gain competitive advantages through close partnerships.