The coming tipping point in data-driven logistics

Four leading figures in transportation and logistics offer a glimpse into what they see coming around the corner.

By Alistair Croll
March 7, 2017
Shanghai roundabout. Shanghai roundabout. (source: Tauno Tõhk on Flickr)

Self-driving cars and ride-hailing services build their businesses atop inexpensive and abundant mapping, powerful algorithms, and real-time data. Every time Google Maps suggests a new route or Uber tells a driver where to wait, these services are using data to make transportation more efficient.

Delivery companies, too, are now using data and machine learning to handle the massive demand of online shopping. Data is already upending containerization and automating delivery, and delivery drones are appearing on the horizon. As the industrial internet embeds sensors across a range of products and equipment, companies have expanding opportunities to react to service interruptions quickly and access data to develop long-term strategic improvement.

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This March at Strata + Hadoop World, we convened experts in the fields of data science, logistics, transportation, and innovation to better understand the future of the industry. We investigated the latest advances in and applications of self-driving vehicles, automated drones, and embedded sensors, and we explored how new uses of data are requiring more efficiency from existing infrastructure and challenging the industry to evolve infrastructure for the future.

In preparing for the event, we reached out to some of our speakers for their thoughts on the future of logistics: Dr. Andreas Ribbrock, analytics approach architect at Lufthansa AG; Rodrigo Fontecilla, VP and global lead, advanced data analytics at Unisys; Ryan Baumann, sales engineer at Mapbox; and Evangelos Simoudis, founder and managing director at Synapse Partners.

Question: When it comes to transportation, it’s clear that technology is changing how we move. From self-driving cars, to ride-sharing, to pay-as-you go business models, we’ve seen plenty of new launches. How will this affect cities and public transit?

Andreas Ribbrock: Passenger airlines have started to understand that a customer journey is about much more than the actual flight. For example, people need to get to the airport or the city center on time, using local transportation. Rather than leaving this to passengers, airlines are offering services interlinked with the flight, ensuring that passengers make it to the airport on time. This requires to interconnect service providers in such a way that individual preferences are being considered. With new digital players in the transportation industry, new bundles can be offered to passengers, simplifying the customer journey even further.

Ryan Baumann: Cities have a lot on their plates. Between infrastructure costs, citizen happiness, and economic investment concerns, public transportation spend is difficult to scope—citizens’ preferred modality (cars, buses, trains, bikes, walking) changes largely based on economics. With the cost of ride-sharing services for autos going down, there is a greater cost focus on public transit plans. City planners and city government representatives need tools to measure how citizens move today, and how they may move tomorrow. Additionally, taxpayers will pay greater attention to infrastructure costs associated with public transit spend.

Evangelos Simoudis: We are starting to realize that as each megacity’s population continues to grow, particularly in megacities with low population density like Los Angeles or Bangkok, road and parking infrastructures cannot expand proportionately in a way that will support the prevailing car ownership and use models.

Today, we spend too much time driving to commute to work or home​, and this is seriously impacting productivity. Cities like Singapore and Copenhagen are starting to work on how to exploit new technologies, including autonomous vehicles, IoT, and big data analytics, in combination with novel business models, such as on-demand transportation to reduce the amount of space they allocate to transportation infrastructure in order to increase the space devoted to residential, work, and recreational uses in order to further increase their population density. These cities are also looking to bring together living, working, and recreational environments. Under these conditions, the car ownership-centric model will become even more unfeasible.

Rodrigo Fontecilla: Owning transportation equipment like cars will be a thing of the past. The Uber business model will expand, and, in combination with driverless cars, will change public transit. Also, it is to be expected that drones will be a common mode of transport, starting with the movement of goods and expanding to moving people.

Question: Where are the “tipping points” in logistics? What places in the logistics and shipping industry can data most affect?

Rodrigo Fontecilla: Increased use of sensory detection to track shipment movements and avoid intentional and unintentional loss of value in transportation. Detailed analytics of the collected information will provide real-time dashboards and predictive models with the purpose of optimizing operational efficiencies and end-customer experience.

Ryan Baumann: Sharing capacity of transportation equipment for many carriers. Think of ride-sharing for trucks and ships. It’s happening in construction at Yard Club, and in auto with Uber and Lyft. Trucking and marine are next.

Question: How has a connected consumer and an abundance of data changed user expectations in transportation?

Andreas Ribbrock: With almost all of us carrying a connected mobile device, customers expect to be informed about steps in their customer journey proactively by an airline. For analytic teams, it is important to understand the context a customer is in and anticipate the situation in order to take a data-driven decision of what piece of information should be pushed toward the individual customer. The mobile device has become a very important travel companion, and airlines that fail to make adequate use of this channel will see lower customer satisfaction values and customer loyalty.

​Evangelos Simoudis: Hyperconnectivity and the improving ability to quickly analyze the big data being generated and apply the generated insights are leading consumers to expect highly personalized, full-of-value, on-demand transportation experiences that are delivered with a high degree of accuracy, safety, and security. These experiences must be end-to-end and could involve multi-modal transportation, as long as the personalization, value, accuracy, safety, and security are met.

Rodrigo Fontecilla: The connected consumer has very little patience for transportation failures, knowing that this abundance of data can be used to predict and avoid such failures. The passengers will expect a fully personalized approach at the times of travel inspiration, planning, and booking, and also frictionless movements through all checkpoints—without having to present an ID.

Question: What thing we take for granted today will not exist in the logistics and transportation world in a decade?

Evangelos Simoudis: Today, we separate manufacturing from logistics. We are moving toward a world where logistics providers will offer manufacturing services at the distribution center. This will be driven by:

  1. The need for logistics companies to radically reduce carbon emissions
  2. Consumer demand for increasingly personalized goods that are tailored to a lifestyle that intertwines more closely with work and leisure
  3. The inability of logistics companies to otherwise deliver goods within the expected time frames due to the increasingly congested transportation infrastructure around and within urban areas (primarily megacities)

Key enablers will be: additive manufacturing; real-time big data and machine intelligence; and autonomous, connected, and electrified vehicles.

Question: Connected, data-driven logistics and travel have changed in part because of speed of information: from refrigeration, to flight delays, to shipment location, we can get status information almost immediately. What are the consequences of this always-updated flow of information?

Andreas Ribbrock: The mobile channel is one the most important channels for staying in touch with a customer along the complete journey. Keeping the customer informed about upcoming stages in his or her current or upcoming journey has a huge impact on customer satisfaction, and, as a consequence, customer loyalty. However, the challenge for airlines is to keep the information flow across the different channels—including non-customer-facing back end systems—in sync. Ensuring the right piece of information is available to customers, but also customer-facing staff is extremely important.

Many airlines use data analytics to identify the relevance of each and every bit of information they communicate to their customers, but also to their ground and on-board employees, as both should only deal the right amount of time making use of the information they receive.

Question: Logistics involves borders, regulations, and safety. It’s highly constrained. Can the harsh light of data improve things? Where will data have little or no effect on improving logistics?

Ryan Baumann: Data is just data—without user-centric tools to make decisions from the data, along with clear goals, data will not do anything. In fact, it may make us worse at moving fast since we perceive that there are too many options to evaluate. Two things make logistics and city data useful. One is leadership. More than ever, our city and government leaders must have a clear vision and translate that vision into concrete goals to drive a shared understanding. Two is tools. We need tools focused on users solving problems specific to their domain. Technical details only make so much difference. At the end of the day, the tools we build need to make it much simpler and faster to solve the problem a customer has.

Join Ribbrock, Evangelos, Fontecilla, Baumann, and other experts from companies such as IBM, BMW, Transport for London, Haven, and VNomics at Strata + Hadoop World’s Data and Logistics Day—check out the entire lineup.

Post topics: Data-Driven Business