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Soon, Most Logistics Companies May Go Out of Business Due to Technology

A major transformation is underway in logistics and transport.

Due to the complexity of modern transport and logistics, there is no doubt that the transport and logistics sector is undergoing an important transformation as new technological solutions come into regular use on a daily basis, driven by industry trends. At no point in recent history have we witnessed such a large degree of political, economic, social, technological, environmental and legal changes influencing this segment of the economy.

The logistics industry has been one of the most unorganized, loosely regulated and conventional sectors.

Therefore, we have seen that technology companies have targeted this sector to provide software solutions to organize this sector and expand the capabilities of services that companies in this industry can provide to their customers to ease their work load and prevent human error in any event with logistical operations.

The future of logistics strictly depends upon the level of technological advancements and adaptation of those technologies to its full potential. As complexity of modern transport and logistics grows, it is more difficult to understand what the short versus long-term focus should be and what to invest in.

One way or another, companies are adopting new software solutions to advance business.

Some companies make great deals with technology companies to create in-house software based on that particular company’s culture and chemistry to adapt their internal organization along with their customer network. On the other hand, some companies just buy software from technology companies to adapt particular software features and provide their customers additional value.

Considering outsourced software from technology companies is very crucial in terms of selecting the right software that is the best match for your business model. For example, if your company’s focus is on land transportation but you also do ocean and/or air transportation, you must find software that provides everything but is more detailed in the area of land transportation. The exact nature of software that is a best fit for your business will depend on your business’s focus.

As profit margins are very low in the logistics industry, while tech investment costs are very high, you must balance the most-optimal and most-economical technological investment.

As the logistics industry changes, you should not only follow industry trends, but also broader digitalization trends, shifts in international trade, software-driven process changes, changes in particular markets, and machine-driven process changes.

For Example, Amazon and Alibaba have brought a new understanding of e-commerce. Due to trust and long delivery lead-time issues, people previously preferred in-store shopping. But, now, as delivery lead times have improved, and new same-day delivery options are provided, people do not want to go into stores to waste their time on the shopping all day and being stuck in traffic on the way home. Instead of wasting your time, you just need to go online, order and wait 1-2 days for your order to arrive. Those companies have thought about supply chain integration with e-commerce and they understand the importance of logistics for their organization, so they invested in technology for online shopping, along with technology that they need for delivering those goods to us.

I believe that companies that have seen massive success brought together international trade, logistics, and e-commerce into one place by investing in technological solutions. Those same technological solutions may now be just the thing that puts most logistics companies out of business.

Aytac Akgul
Aytac Akgul
Aytac Akgul was born and raised in Istanbul, Turkey. He got his Master’s Degree in International Transportation Management from State University of New York - Maritime College in December, 2012 and He got his bachelor of science degree in Transportation and Logistics from Istanbul University in June, 2010. He previously worked for Maersk Line in Istanbul, Turkey. He is now working for MTS Logistics, Inc. as a Business Development Manager since May 2015.
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