I N S I G H T S I N TO G LO B A L T R A N S P O R T A N D LO G I S T I C S

FORWARD
LOGISTICS
2019

P O W E R E D B Y T H E D S V I N N O VAT I O N L A B
CONTENTS

Forward Logistics

0 3 Forewo rd 32 An o ver l o o ked hurd l e

to unfo l d i ng p red i c t i ve
04 Th e state of a na l y t i c s
l o gi sti c s i n 2019
36 T he p i l l a r s o f sea m l ess
08 Tracki n g i n real - ti me e- ful fi l m ent

10 In th i s trade war, th ere D i d y o u kno w?

are n o wi n n ers
40 B ro kera g e b o o m
D i d y ou kn ow ?
44 S up p l y c ha i n
14 Fu l l tran sparen c y. seg m enta t i o n
Pu tti n g bl o ckch ai n to wo r k sta r t s wi t h a C

16 How wi l l batteri es dri ve 46 Po l i t i ca l step s i m p o r ta nt

an au to moti ve f u tu re? to fa ster g reen t ra nsi t i o n

20 Fai l to pl an . Pl an to fa i l 50 Wi red co - wo r ker s

22 Ar ti f i ci al i n tel l i gen ce Wha t ha p p ens to

i n l ogi sti c s y o ur ca rg o ?

D i d y ou kn ow ? 56 10 wa y s to red uce
t ra nsp o r ta t i o n co st s
26 Mi n e y ou r data.
Fi n d y o u r gol d 60 P hi shi ng fo r wea k sp ot s

30 Th e n ex t ph ase o f 62 I nvento r y o p t i m i sa t i o n i s
3D pri n ti n g b a si ca l l y a b a l a nc i ng a c t
FOREWORD

Welcome

We recently asked some of our many This diversity means that not every
knowledgeable people across the organ- insight in this report may be relevant to
isation if they would be willing to share you and your business – but we hope
an insight from their areas of expertise that you will find a lot of it interesting.
with our customers. Their response was
so positive that we decided to turn their The experts you’ll meet on the follow-
input into an entire report – resulting in ing pages share their expertise with our
this, our first Forward Logistics report. customers every day. They are focused
on moving DSV forward using new
At DSV, our customers are a very technology and new ideas in order to do
diverse group of people and businesses. the same for you in the future. That said,
Every day, we have the pleasure and the their insights are most definitely focused
privilege to serve everyone from small, on topics that are relevant today – not
family-run businesses to global corpo- just topics that might be relevant 10
rations. And within those organisations, years from now.
there are people with many different
functions, from logistics and operations If you want to learn more, I urge you
to the highest levels of management. to follow us on LinkedIn where we post
insights and news on a regular basis. And
if you have a transport or logistics need,
don’t hesitate to get in touch with us.

I hope you enjoy the read.

Best regards

Jens Bjørn Andersen

Group CEO
DSV Panalpina
INTRODUCTION

The state
of logistics
in 2019

4
Despite recent concerns about recession and
the drift towards ‘reversed globalisation’, world
economic growth is still expected to rise.

The logistics industry

needs to innovate.

According to the International Monetary in 2008 and the tremors it sent through
Fund, the global economy is projected to economy and culture. And it may well be.
grow by 3.0 % in 2019 and 3.4 % in 2020. But the question now is whether this trend
The IMF’s outlook was adjusted downwards takes hold and becomes long term, or if it
in October 2019 because of the negative is just a moment of insecurity in the world’s
effects of trade tariffs implemented in the economic development.
USA and China.1
REASONS TO BE OPTIMISTIC
As a mover of goods, it is hard to find There are, however, reasons to be opti-
another statistic that better paints the out- mistic. As a logistics professional, I am of
look, and potential threat, for our industry. course happy with the increased demand
for the transportation of goods. Transpar-
Brexit, trade wars and related develop- ency Market Research have estimated that
ments are all part of a trend towards what the value of the global logistics market will
you could call reversed globalisation. Some rise to USD 15.5 trillion in 2023 from USD
say this started with the financial crisis 8.1 trillion in 2016.2

5
INTRODUCTION

Other reasons to be optimistic are the DIGITAL PLAYING FIELD

digital and technological possibilities that – NEW RULES
lay before the logistics industry. Whether On the new digital playing field, we also see
it’s crunching data into more predictable a race to become the most efficient player
transportation, using robots to carry the in the industry. Driving down costs is key
heavy load in warehouses, or developing to offering our customers the service they
blockchain solutions that increase transpar- expect, at the price they expect.
ency and minimise slow, manual processes,
innovation allows us to offer our customers a Our own initiatives in 3D printing, pre-
better experience. dictive analytics and robotic process
automation are examples of potential
The new generation of logistics customers game-changers in the industry. The players
want to easily find the services they need, who are quickest to make the most out of
and they have high expectations regarding these innovations will have an advantage
precision, reliability, and responsiveness. If – and that comes down to people. Digital
something does not go according to plan, developments won’t matter if you don’t
they want to be notified early enough to have the right team.
take remedial action and thereby prevent
disruption in the end. They also expect But does all this innovation mean that our
logistics companies to act in a responsible vast experience as a logistics provider is
way that does not trample on the environment. useless in the new world? No, it does not.
I believe that we can take our knowledge
Our ability to respond to increasing with us to this new playing field and em-
demands will be key in winning tomorrow’s brace the new opportunities to move our
logistics customers. And so will our ability customers, our business, and our industry
to break down complexity. With more and forward.
more data sources and technologies, the
possibilities for combinations are endless,
but if we don’t keep things simple for our
customers and for ourselves, we can lose
track.

6
 Insight provided by Rene Falch Olesen
Group Chief Commercial Officer, DSV Panalpina

6
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7
TRACKING

Tracking in real-time
Logistics providers are getting closer to
solving the complexity of tracking cargo
shipments in real-time. At DSV, we make use
of both cutting-edge and established
technology.

As consumers, we have become increasingly Orchestrating those performance parame-

demanding when it comes to getting what ters requires visibility, and an essential part
we order delivered. We have a low toler- of visibility is knowing when shipments are
ance for delays or damages, and we don’t going to arrive.
hesitate to complain publicly so that other
shoppers, and the retailer, can see what has A VAST NUMBER OF VARIABLES
gone wrong. Moreover, a study from 2017 The industry’s race to make end-to-end re-
showed that almost 50% of online shoppers al-time cargo tracking and ETA (estimated
consider ‘full visibility on delivery process’ time of arrival) prediction a reality has been
as the most important delivery element.1 going on for years. One challenge has been
finding technology that can make it happen.
This development over the past few years Radio-frequency identification (RFID), for
has seen us bring that behaviour to work, example, was heralded 20 years ago as the
meaning that high demands and low tol- breakthrough needed, but today, barcode
erance for mistakes now also apply to scanning is still the industry’s most widely
business to business logistics. Maybe even used method for tracking shipments.
more so. Not only are the high consumer
demands trickling down the supply chain, Another challenge is the complexity of the
but companies are also under pressure to shipment delivery process. If all there was
minimise costs in order to compete. Pre- to it was moving a package from A to B,
cision, speed, and low costs have become then a basic GPS receiver could take care of
parameters that can make or break busi- both tracking and estimating arrival time.
nesses. But road freight, for instance, is much more

8
 Insight provided by Søren Krejberg
Executive Vice President, DSV Road

complex. You have organisational factors to from our warehouses. Before leaving, the
deal with (delivering to multiple locations; driver receives a suggested delivery route,
delays that can happen at each location), while the consignee receives an ETA. The
weather factors (rain or wind can lead to ETA is based on variables including driving
congestion), traffic factors (congestion, time and distance. If there is a delay at one
roadwork, accidents), and human factors of the destinations, a new ETA is estimated
(route planning, driving style, experience, for the remainder of the route, and a new
incentives) just to mention a few. status message is sent to each consignee

“
and the shipper. All the information is deliv-
ered through our customer portal, myDSV,
Not only are the high and can include push notifications to a
mobile phone.
consumer demands trickling
down the supply chain, but The next development step involves using
companies are also under the existing GPS information to live-track
pressure to minimise costs shipments and add machine learning to

”
more accurately predict ETA. Besides driving
in order to compete
time and distance, DSV’s machine learning
Søren Krejberg model crunches a wide range of historical
transport data to predict how any given
For freight forwarders, another big chal- shipment is going to proceed. Every 15
lenge is that many different suppliers can be minutes, it makes a new prediction for when
involved in the delivery process, and setting the shipment will arrive based on the GPS
up interconnected tracking throughout the information. If suddenly the predicted arrival
delivery process requires everyone involved time is off target, a notification is sent to the
to work on the same system and provide consignee. The clever part is that the model
the same output. learns along the way – so if ferry times, rest
times or anything else changes, the model’s
ROAD TRACKING IN DSV predictions change with them.
At DSV, we are developing real-time track-
ing of road shipments by combining both DSV’s real-time tracking developments
new and old technologies. While we already show strong results so far, and it’s an area
offer several tracking services, the chal- that has our highest attention. Because
lenge remains to get closer to real-time. with increasing expectations for precision,
speed and cost control, knowing where
In one pilot, we start the process by scan- shipments are and when they are going to
ning shipments when goods are picked up arrive can make the crucial difference.

9
TRADE

In this trade war,

there are no winners
COMMENT

Recent policies of setting up bar- the US dropped 30%. In the US, export-
ers are hurting as well, with data showing
riers to trade is a lose-lose devel-
a 38% decrease in tariff-hit exports to
opment for businesses and indi- China.2 An analysis by Goldman Sachs in
viduals. The question is whether August 2019 showed that the US economy
we are entering a new era of may even enter a recession because of the
trade war.
strained international trade rela-
tions – or if the current compli- Besides the restrictions on trade with China,
cations will be short lived. recent US policies have included withdrawal
from the Trans-Pacific Partnership, rene-
In March 2018, the US President asked gotiation of trade agreements with Mex-
the US Trade Representative to investigate ico and Canada (NAFTA) and South Korea
applying tariffs on $50-60 billion worth (KORUS), as well as blocking appointments
of imported Chinese goods, calling it “a in the Appellate Body of the World Trade
response to the unfair trade practices of Organisation (WTO).
China over the years.” Later, China’s Min-
istry of Commerce responded by imposing These decisions are having real-world
tariffs on imports from America, including consequences. Some companies are making
aluminium, aeroplanes, cars, pork, and soy- considerable changes to their supply chains
beans.1 Many retaliations later, we can look because of the trade war, choosing to
back on a trade war with few winners and source materials from countries other than
plenty of losers. China to avoid paying the additional duty.
Other companies are passing the bill down
And that war is still raging, with the con- to their customers. “The impact of tariffs
sequences becoming ever more apparent. at 25% will result in price increases which
Data shows that China’s total exports to the will be felt by US consumers,” said the CEO
US dropped by more than 7% in the first of Best Buy, Hubert Joly, in June 2019, re-
five months of 2019 and, for goods subject sponding to the proposed US tariff increase
to these new tariffs, China’s shipments to from 10% to 25%.3

10
 Insight provided by Neil Munro
Senior Customs Compliance Manager, DSV Panalpina

Companies with less at stake are waiting eliminate the tariff-free trade status the UK
to see if the situation will be resolved in has with EU countries and UK membership
the trade talks between the US and China. of all EU Free Trade Agreements. The costs
Pressure from US companies is not going of trading between the UK & EU27 will
unnoticed in the White House, but since increase as new tariffs combine with delays
the trade war has escalated and become a and costs of customs checks at UK and EU
central part of the current administration’s ports, as a result many traders will need to
political agenda, the US president is likely revise their supply chains. Thus, the com-
looking for a suitable way of declaring him- plexity of international trade deepens again.
self the winner regardless.
Though there are signs that the current

“
complications initiated by the US and UK
have short or medium term impact, there
Some companies are are other challenges in international trade
making considerable changes that cause more long-term concerns; sanc-
tions on certain countries and the threat of
to their supply chains

”
international terrorism are also trade barri-
because of the trade war ers. Companies must increasingly check on
Neil Munro people they hire, companies they work with
and goods they trade. Today, you need to
demonstrate that your compliance setup
As this plays out, some countries are reap- and processes are operating effectively, or
ing the rewards. For example, Vietnam is risk heavy penalties and lose business.
experiencing a boom in trade with the US as
a direct result of the US-China trade war.4 It may well be that the US reaches an
While that may be good for Vietnam, it agreement with China that ends the trade
adds a layer of complexity, as it would ap- war, it may be that Brexit happens in an
pear some Chinese goods have simply been orderly, not-too-costly manner (or not at
transported to Vietnam, relabelled and then all), and it’s possible that the US ratifies
illegally exported to the US as Vietnamese NAFTA’s replacement, USMCA, but compa-
origin in an attempt to evade the additional nies nevertheless need to be prepared for
duty. The challenge is to differentiate be- new and ever changing levels of complexity
tween relabelled products and those which in international trade, and be able to make
are legitimately of Vietnamese origin. rapid changes to their supply chains in the
future.
In Europe, Brexit also adds complexity. If
a ‘no-deal’ Brexit becomes a reality, it will

This article was updated in October 2019.

11
DID YOU KNOW ?

Singapore and
have the highest qualit
with a score of 6.4 o
Economic Forum

IT TAKES OVER
60 MODERN TRUCKS
USING TODAY’S DIESEL

12
 d Switzerland
ty of roads in the world
out of 7 in the World
m’s rating system
(Source: World Economic Forum)

TO EQUAL THE PARTICULATE

EMISSIONS OF A SINGLE TRUCK
PRODUCED PRIOR TO 1988.

13 (Source: Dieselforum.org)
B LO C KC H A I N

Full transparency.
Putting blockchain to work

In the increasingly complex world of logistics,

blockchain technology can provide real-time
transparency and reduce manual processes.

With more and more focus on real-time time and trading costs in its clearance
transparency to optimise efficiencies, the processes by implementing blockchain into
world of logistics long mired in bureaucracy, its online port clearance system.2 Another
manual processes, paperwork and heavy example is Walmart that has created a food
administration can seem strangely dark. traceability system based on blockchain. It
One development with potential to illumi- enables the company to trace food all the
nate the darkness is blockchain technology, way back to individual farmers in case of
which is projected to reach a market size of food-borne disease breakouts.3
$23 billion in 2023 – from $2.2 billion in
2019.1 An example from DSV is our pilot test to
replace paper documentation for Electronic
Roughly speaking, a blockchain can be Original Negotiable Documents in Israel.
thought of as a decentralised, cryptograph- Starting with small export transactions over
ically secure, verified digital ledger where several months, we scaled up and suc-
each entry is permanent and viewable in cessfully completed a total paperless LoC
real-time by every interested party. It’s (letter of credit – or transportation docu-
cryptographic and decentralised nature ment) across all parties. The results speak
makes it ‘secure by design’. for themselves with us saving 2 days of
document transportation time, as well as
Blockchain is widely being tested and savings of $30 on this journey alone. We
piloted in the logistics industry. Examples estimate if we extended this to the entire
include the port of Shanghai, one of the trade route, we could save 6 more days
busiest in the world, that is working to save and ~$150 as well as risk reduction for

14
 Insight provided by Ofir Bronhaim
Business Development Manager, Innovation, DSV Air & Sea

How blockchain may change

logistics over the coming 5 years

1 2 3 4
Increased confidence Improved tracking of Reductions in time Enhanced prevention of
within transaction of product information delays, incremental fraud and theft through
data, goods, and finan- through the supply costs and human errors. better authenticity
cial resources. chain. confirmation.

all parties. Imagine what those savings blockchain technology. With the same
would amount to over the entirety of a legal standing as paper, but with increased
logistics operation? transparency and flexibility Wave provides
us a foundation to step into the future,
Armed with those findings we partnered prepared. And with an increasing number of
with Wave, a start-up company that acts customers asking for more transparency,
as a platform for original documents – we’ll be ready to supply.
digitised as opposed to paper - based on

15
E L E C T R I F I C AT I O N

How will
batteries drive
an automotive
future?
Battery-powered electric vehicles are
expected to take a growing share of the
automotive market over the coming years,
but uncertainties in the market make their
future hard to predict.

16
 Share of car sales

0%
20%
40%
60%
80%
100%

76%
GA
SO
LIN
E

47%

19%
DIE
SEL

by fuel technology

5%
1%
MIL
D H
VEH YBR
ID

15%
ICL ELE
E (
MH CTR

17
EV) IC
Breakdown of global car sales

2%
HY
BR
VEH ID ELE

13%
ICL CTR
E (
HEV IC
)

1%
B AT
TER
VEH Y E
ICL LEC
TRI

14%
E ( C
BEV
)

1%
PLU
G-I
N H

6%
ELE YBR

2030 numbers are projected (Source: Statista)

CTR
IC ID
2030
2017

VEH
ICL
E (
PH
EV)
E L E C T R I F I C AT I O N

Projections by Bloomberg, OPEC, and Exxon RD in other areas of technical innovation

show wildly different figures for how much such as autonomous and mobility. The
sales of electric vehicles will rise in the investment would also pose a risk due to
future. Bloomberg sees around 548 million the market still being so immature. The risk
electric cars driving around the world in extends to the availability and price of the,
2040, while Exxon, maybe not surprisingly, in many cases, hazardous and rare earth el-
is at the other end of the scale with a pro- ements needed to build the batteries. From
jection around 162 million in 2040.1 a supply chain standpoint, shipping, storing
and moving batteries are processes that
What is certain, however, is the growing manufacturers are not doing today on a
interest in greener solutions and increased large scale and would have to be developed.
societal demands on companies – par-
ticularly in the transport industry – to do Tesla has taken the risk and is currently
something about their environmental foot- building its second giga factory to produce
print. And with billions of dollars invested in the batteries they need. Like Henry Ford,
electric research and development by the who owned all the links in the supply chain
automotive industry, the question isn’t ‘if’ right down to the lumber yards supplying
battery electric vehicles will begin dominat- the wood for steering wheels, Tesla is very
ing the streets – but ‘when.’ much vertically integrated, building their
own batteries and manufacturing most of
That being said, the market is still imma- the components that are in their vehicles,
ture, with car manufacturers, governments rather than sourcing them from sub-con-
and consumers still trying to work out how tractors.
electrification fits their agenda. Here are
just a few of the uncertainties. Another battery challenge is what to do
with them when they are no longer usable.
1: BATTERY STRATEGY The batteries in battery-powered elec-
Car manufacturers are still figuring out their tric vehicles can’t simply be thrown onto a
strategy around batteries. Will they build or landfill – they need an end-of-life plan. This
buy? How will they build their supply chains plan is still nascent with many of the tradi-
around batteries? And what are they going tional manufacturers due to the relatively
to do with the batteries once they reach small percentage of the market.
end-of-life and need recycling?
2: GOVERNMENT POLICIES
For a car manufacturer to become a bat- What can make or break the development
tery-producer would consume large of the battery electric vehicle market is
amounts of capital that can be applied to how governments choose to regulate it.

18
 Insight provided by Greg Slawson
VP Global Vertical Lead – Automotive, DSV Panalpina

The optimistic projections for the market and that you fill up like you fill up the tank
are reliant upon governments deciding to in an internal combustion engine car today.
incentivise buying battery electric vehicles That means existing infrastructure of gas
instead of traditional vehicles. Tax incen- stations could be repurposed for hydrogen
tives that make it realistic for the average cars. Even the time it takes to fill a hydro-
consumer to buy an electric car are essen- gen car and a traditional car are similar, so
tial for the market to see the critical mass it would be an easy switch for consumers.
that leads to maturity. We have seen sales The problem with hydrogen, still, is that
skyrocket when new tax incentives for converting water into hydrogen is a very
battery electric vehicles have been imple- expensive process. In addition, hydrogen is
mented, and conversely, we have seen sales hazardous, and would people be OK with
drop dramatically when incentives have essentially driving a hydrogen bomb?
been taken away.
Autonomous vehicles are attracting huge
Infrastructure will be another important investments, research, and attention today,
driver for consumers’ willingness to invest and it is safe to assume that they will be
their money in battery electric. Today, if here within the next five to ten years in
you are going to drive a couple of hundred some way. Among the biggest challenges
kilometres in a battery electric vehicle you are the moral decisions that are essentially
will need to plan ahead in order not to run coded into the vehicles. The code needs to
out of power along the way. Even in de- determine what decision the car will make
veloped infrastructures, battery charging when the choice is continuing forward and
stations are fairly few and far between. hitting a pedestrian or swerving into a bus
That makes it a hassle for consumers – and to the right. How do we prevent bias in the
a purchase demotivator. If governments decision-making of the car? But there is no
decide to invest in better infrastructure for question that when the majority of cars on
battery charging, it could tip the scale in the streets are electric and communicating
terms of making consumers switch. with each other without human interfer-
ence, traffic will be a lot safer.
3: COMPETING TECHNOLOGIES
What if another technology emerges that A plus for battery electric vehicles is that
make battery-powered electric vehicles old they go hand in hand with the development
news? of autonomous vehicles. The architecture
of electric vehicles will be a lot easier to
One example of such technology is the retrofit into autonomous vehicles compared
breakthrough in hydro-electric vehicles. to retrofitting traditional cars. But just how
Hydrogen is a fuel that you have in a tank, this future is powered up, is yet to be seen.

19
S TA R T- U P S

Fail to plan. Plan to fail.

Studies show that 90% of start-ups fail.1
Many of them because they neglect to focus on
going to market – including logistics.

Interest in start-ups has grown steadily they’re unlikely to forgive mismanaged

over the past decade with investors now, expectations. That’s why start-ups need
more than ever, willing to take a chance on to understand logistics in order to succeed
a new idea. According to Statista, start-up and bake in capital for the right supply chain
funding across all industries grew by at least setup. That might include inventory man-
50% worldwide between 2012 and 2017.2 agement, manufacturing setup, trade rules
Many companies are jumping at the chance understanding or customs compliance, and
to find cost-saving solutions that can help they need to find out what it will cost and
them become more competitive in increas- what the right way to do it is. How do they
ingly volatile market conditions. do that best? By engaging with the profes-
sionals who give them options that are fit
So far, so good. The problem lies however for purpose.
in planning. Many start-ups are set up by
young talent with great ideas, using invest- Many start-ups think that working with a
ed funds for research and development, third-party logistics company is a complex
prototyping and press – the fun stuff. But and inefficient solution, but that may not
when it comes to reaching the market with be the case. A solid inventory setup and an
their product, many start-ups neglect to efficient distribution method are some of
set aside funds, or simply don’t know what the goals that a 3PL can help you achieve.
it takes logistically, to get their product At DSV, we have a service called DSV Start-
delivered to their customers. up - a team dedicated to helping start-ups
with their logistics setup.
That’s why having a focus on the people
you are trying to reach with your product, In today’s global market, not being able to
including how to reach them, is crucial. reach a customer sitting on the other side
of the planet can make all the difference
THEY WANT IT ALL. between success or failure.
AND THEY WANT IT NOW.
With consumers’ increasing demand to have
speedy, low-cost delivery as standard,

20
 Insight provided by Sigal Mannheim-Katzovich
Managing Director, Israel, DSV Air & Sea, DSV Solutions

Tips for getting started

on a logistics setup:

Select a strategy
For example, if a value proposition for your product is fast delivery times, then
spend more on logistics. If your strategy is to offer a low cost, then compromise
on lead time and focus on cheaper transport options.

Plan
Good sales forecasting and operations planning will help you understand
when you might need new equipment or overtime. Analyse your shipping
needs carefully, and plan for full truckload shipping when possible.
You may also need contingency plans in case there are deviations.

Keep track of costs

Know how much you spend on each aspect of your logistics and supply
chain. You can’t control costs if you don’t know where you’re spending.

Find a partner
Many start-ups don’t have the time to negotiate or get quotes from several
suppliers. Finding a reliable professional 4PL partner to manage your transport
can make a profitable and efficient difference in the long run.

21
 A
ARTIFICIAL INTELLIGENCE

Artificial intelligence
in logistics
The days of artificial intelligence being a reserve
of science fiction are long gone. AI is steadily
making its way into many aspects of logistics.

VEHICLES
Though driverless trucks and ships are
expected a little further down the line,
AI-assisted driving including assisted braking,
lane-assist, and highway autopilot is already
being applied to increase efficiency and safety.
AI can monitor hundreds of sensors and is able
to detect problems before they affect the
vehicle in operation.

TRAFFIC
There are projects exploring the possibility of making traffic management systems more
dynamic and responsive through the use of AI. AI algorithms will be able to predict
changes in traffic enabling metropolitan mobility managers to make faster and more
informed decisions on signal timing, suggested routing, and capacity allocation.

22
A I
Insight provided by Thomas Prinds Meyer
Manager, DSV Innovation Lab, DSV Panalpina

PREDICTIVE REPORTING
By processing historical data to predict likely future activity, companies
can begin to make more accurate shipment predictions and increase
visibility in their supply chains. Importantly, AI can enable companies
to get notifications if a delivery is deviating from the plan, giving them
time to make adjustments.

BUSINESS PROCESSES
Many resource-heavy manual and repetitive business
processes in e.g. finance, procurement, training, and human
resources are being replaced by software robotics. AI can
help Robotic Process Automation (RPA) learn from human
decisions and make better ones by blending the rule-based
systems of RPA with the dynamic learning of AI.

WAREHOUSES CUSTOMS
Using historical data and forecasts, AI will enable With AI’s self-learning capabilities, language processing and
visual perception, it will be able to process customs docu-
automatic sorting, counting, moving and other ac-
ments quickly and automatically. The complexity of customs
tivities in warehouses. With visual perception, robots
declaration means that human involvement will always be
will be better able to manoeuvre the warehouse
necessary, but to a lesser extent.
space, which will increase the number of tasks that
can be automated.

23
DID YOU KNOW ?

The largest cargo

aircraft in the world is
the Antonov An-225
Mriya, which can take
off with a maximum
weight of 640 tonnes

24
 That’s about 95 elephants

(Source: Antonov Airlines)

The first air cargo flight

took place in 1910 when a Wright Model B aircraft flew
105 km (65 miles) to deliver 91 kg (200 pounds) of silk
from Dayton to Columbus, USA.

25 (Source: Freightos.com)
REPORTING

Mine yo
Find yo
Your supply chain r
show you more than just ho
It also needs to show you

26
our data
our gold
reporting needs to
ow well things are running.
u where you can improve.

27
REPORTING

The ability to understand the minutiae who employ an international network of

of a supply chain is proving invaluable trade lanes and varying shipment modes
as pressure from customers to get may benefit from an advanced dashboard.
things right is escalating – whether
those customers are B2B or B2C. We Finding the gold in your performance
expect goods to be delivered faster, data means getting beyond the basics.
more flexibly, and at an ever-lower You of course need to know that orders
cost. The result is a critical need to are received in the right quantity and at
optimise supply chains – constantly. the agreed-upon time. But with a com-
plex network, a top list of best and worst
Just a few years ago, even large companies performing trade lanes in terms of lead
relied on gut-feeling rather than facts to time may reveal where your supply chains
make important decisions regarding their need to improve. And by relating the figures
supply chains. In fact, many still do. The to market data, you may even get an idea
difference between then and now is that of whether you are performing better or
in the past there was plenty of data and all worse than your competitors.
the right ideas, but so much time went into
mapping the data and correlating endless It is all about putting your supply chains’
spreadsheets that getting to the next stage performance into perspective. Companies
of insight was difficult. Loads of data, but that outsource parts of their supply chain
not so many conclusions. may benefit from reporting that presents
the median and the distribution of transit
Now however, technology can do more of times per trade lane and transport mode
the heavy data lifting, giving analysts more to identify reliability and variability. You
time to unearth and make use of insights. can use the insights for better just-in-time
This has given businesses the opportuni- planning purposes, to agree on realistic
ty to go from being reactive (this is what performance targets, and to actively target
happened) to being proactive (we can make the sources of variability – and ways to
this happen). address them. And maybe a top 10 of the
best performing suppliers can give you an
UNCOVER THE GOLD idea of which ones to increase or decrease
Firstly, the supply chain reporting setup your business with. The point is that by
should match the size of the supply chain, relating insights to each other, patterns and
so some companies will do just fine with trends emerge that become nuggets of
basic data sets and graphs, while others gold in the search for improvements.

28
 Insight provided by Felix Schlegel
Product Manager, Customer Reporting, DSV Panalpina

EXAMPLES OF REPORTING GRAPHICS ANALYSIS PARALYSIS

But with more choices of metrics and the
ability to relate them to each other, you also
run the risk of over-complicating things.
TOP 10 SHIPPER You need to prioritise and summarise your
COUNTRY BY SHIPMENTS
figures, or it can lead to what some call ‘pa-
ralysis by analysis.’ That is when overana-
SG 367 Shipments AR 53 Shipments
lysing a situation causes decision-making to
US 161 Shipments PL 42 Shipments
become paralysed – meaning that nothing
GB 128 Shipments NZ 16 Shipments
gets decided, let alone implemented. It’s a
HK 120 Shipments IN 14 Shipments
dynamic you may recognise from when you
AU 103 Shipments DE 13 Shipments keep scrolling through Netflix to find the
right movie - and end up choosing nothing.

The ability to keep things simple, when they

are in fact complex, is critical to logistics re-
porting. Playing a key role in that is the vi-
sual presentation which can help users find
TOP 10 TRADE LANES what requires their attention. For example,
BY SHIPMENT
a traffic light system – green, yellow, red –
SGSIN-AUSYD can immediately draw attention to critical
SGSIN - AUMEL developments, while graphs and curves can
GBLHR - HKHKG make trends easily decipherable.
AUSYD - NZAKL

USORD - JPNRT As your supply chain becomes more com-

HKKKG - INMAA
plex with today’s increasing demands, you
AARAOL - BRLMR
need a reporting system that easily tells the
story of your performance, and by always
HKHKG - NZAKL
knowing where you need to improve, you
AIR 0% 20% 40% 60% 80% 100% 120% 140% can make the right decisions about your
OCEAN
ROAD
supply chain.

ON TIME SHIPPING
Have the orders departed

25%
on-time according to specified
ship date?
COMPLIANT
EARLY
LATE

29
3D PRINTING

The next phase

of 3D printing
The raw materials used in 3D
printers are now so refined they
are accelerating the advancement
of 3D printing technology.

3D printing technology has developed

incredibly swiftly over the past decade.
Whereas before it might have cost upwards
of €1 million for an average model, you can
now purchase a cheap 3D printer that can
produce surprisingly good results for a few
thousand euros. At the same time, the
ingredients, or raw materials, that go into
the printer have become a game-changer
for the technology.

Plastics, metals, ceramics, and composite

materials are examples of the ingredients
that a 3D printer needs to create an output.
Since more and more companies see the
value of using 3D printers in their supply
chain, the development of the raw materi-
als industry has accelerated. With improved
raw materials come ever more possibilities
for 3D printing.

30
 Insight provided by Erik van Wunnik
Director Product Development, DSV Solutions

Spending on 3D printing 25
22,7

worldwide in 2018, 2019

20
and 20221
Market size in billion U.S dollars. 13,8
15
11,4
* Numbers are projected

(Source: Statista) 10

2018 2019* 2022*

The new raw materials are stronger, more plastics for manufacturing purposes. After
corrosion resistant, weather resistant, can changing its recipe (i.e. the model used to
take more heat, are more flexible, detailed 3D print), and using an upgraded type of
and have better feature resolution. They raw material, their 3D printed plastics are
create possibilities for more varied design, now certified for use in the food industry –
colours, durability, and biodegradable pro- opening up more possibilities for the com-
duction, and that means a lot more func- pany. In short, using better raw materials
tional possibilities for practically any indus- can open up more doors for 3D printing.
try. From automobile manufacturers using
3D printed parts that save fuel by weighing With refined raw materials and costs con-
less than their fake counterparts, to Nike tinuing to decline, 3D printing is entering a
printing lightweight cleats for shoes – the phase that could take it from being just a
opportunities are plentiful. talked about piece of technology to be an
essential component in logistics.
An example from our own world at DSV is a
customer that uses 3D printers to produce

“ In short, more 3D printing business

”
cases are starting to make sense.

Erik van Wunnik

31
P R E D I C T I V E A N A LY T I C S

An
overlooked
hurdle
to unfolding
predictive
analytics

32
Predictive Analytics is about using data to
spot patterns and act accordingly. Your
organisation is probably on top of data
collecting and crunching – but if you don’t
also take the change management part
seriously, it can put the brakes on your
project.

Success in the logistics industry is depen- TRUST ISSUES

dent on the ability to manage time and Creating a great analytics model requires
resources well, which is why investments understanding the business it concerns,
in new ways to gain a competitive edge finding and cleaning data, predictive mod-
have been abundant. Predictive analytics elling and testing. Once a model has been
is one of those ways, and while it is already built, the data scientists will understandably
making a difference for companies such as be in the mood for celebration. But that
Amazon, Tesla, and Netflix, there are still may be premature – because at this point
huge steps to take, and gains to be made, another big challenge begins.
for logistics.
In order to benefit from your data
A study by the Council of Supply Chain analytics, you need to make the model
Management Professionals shows that useful to the organisation. That requires
more than 90% of shippers and third- building a sustainable process around the
party logistics firms believe that data- model that people can work with – and
driven decision-making is vital to supply indeed want to work with. Even more
chain activities.1 Areas of logistics that have important is the commitment from the
been, or will be changed include inventory top of the organisation to commit to the
management, ETA calculations and reporting. project. Incidentally, a recent study asked
CEOs about their concerns about adopting

33
P R E D I C T I V E A N A LY T I C S

artificial intelligence in their organisations – considers leaving. Convincing account man-

and more than 76% cited increased vul- agers that they should trust the forecast
nerability, disruption to business, potential was the first big ‘change’ step. That meant
for biases and lack of transparency as key showcasing the predictive model and the
concerns.2 forecast to the organisation over and over
again and getting people to use it in their
The challenge of changing behaviour was daily work.
no less great when DSV applied predictive
analytics to improving the customer expe- We did it by teaming up with four pilot
rience. countries in our organisation who received
weekly predictions manually during the
PREDICTING CUSTOMER DEFECTION first year. The aim was to get solid proof
At DSV we use predictive analytics to pre- that the concept worked and then show
dict when certain segments of our custom- the rest of the DSV that defection forecast
ers are considering leaving us. It enables us was worth the effort. The pilots showed a
to find out if there are areas that we can combined improvement in customer reten-
improve upon so that the customers choose tion of around 20% and a good increase in
to stay. turnover from retained customers. We had
our proof.
We started creating the model by gathering
data from key sources – finance, claims, Today, the model is an effective and au-
transport management systems, bookings tomatic tool widely used in DSV – but by
and more – and then, like the ingredients no means without limitations. Success of
in a dish, we cleaned and parsed the data. DSV’s customer defection forecast is 20%
By analysing and correlating the data and due to data analysis and advanced ana-
testing vigorously over many weeks we lytics and 80% because of the people and
built the model from 74 different variables culture that use the results to improve the
using XGBoost Trees (a type of algorithm). experience for our customers. So, to ensure
When the model had reached a high level of your organisation gets the most out of your
accuracy in its predictions, the challenge of predictive analytics, be prepared to push for
creating a real change in behaviour began. change.

The predictive model sends a ‘warning’

(with more than 85% accuracy) to account
managers that a customer is dissatisfied or

34
 Insight provided by Pia Elmue
Senior Product Manager, Customer Analytics, DSV Panalpina

Successful deployment of machine

learning and advanced analytics requires
getting all six elements right

6
CHANGE
MANAGEMENT
5
Get incentives and
DESIGN IT KPIs clear
STRUCTURE
Communicate and
4
Engage and consult train the organisation
ADVANCED stakeholders and
ANALYTICS SMEs Get feedback and
share best practices
3
Test and define Establish automated
DATA proper models and dataflows and calls
EXPLORATION analytical tools to action
2
Gather relevant
BUSINESS external & internal
PROBLEM & data
GOAL
Analysts uncover
data insights

CONTINUOUSLY EVALUATE AND IMPROVE

FOUNDATION:
1 EXECUTIVE SUPPORT AND FOCUS

(Source: Pia Elmue)

35
M U LT I C H A N N E L

The pillars Multichannel fulfilment is firstly about

understanding customers’ behaviour –

of seamless what, where, when, why and how they

purchase products. Secondly, it is about

e-fulfilment creating a system that makes the shopping

experience seamless.

THE CUSTOMER IS KING 2.0

To create a seamless
You are buying shoes online. You find the
e-fulfilment experience right pair, but you want to try them on at
that delivers on the de- the store. You go to the store, try the shoes
mands and expectations of on and buy them – but later you regret

today’s customers, you’ll your decision as the colour is not quite

right. So, you send the shoes back after
need a unified system and having made a returns case on their web-
the data flow to support it. site.

All those steps are expected by the cus-

E-commerce sales are expected to continue tomer to go smoothly. If they’re told on
skyrocketing over the next few years, with the website that a certain size is available,
a recent projection suggesting they will they will be disappointed to find that size
reach up to $4.9 trillion worldwide in 2021 out of stock when visiting the store. If they
from a projected $3.5 trillion in 2019. The can’t use the website or app for returning
projection adds that e-commerce, at its the shoes, of if they contact your customer
current trajectory, will have a 17.5% share service and don’t get the right information
of all retail sales in the world by 2021.1 – you may never see that customer again.

One consequence is that the lines between The adage of the customer being king is
online and “bricks and mortar” shopping doubly true now. They know what they
behaviour will continue to be blurred, and want, and they know when they want it.
shoppers will increasingly use multiple Any mistakes will not be quickly forgiven.
channels to buy what they need and want.
A recent study showed that 74% of US CLARIFYING COMPLEXITY
consumers on occasion make purchases on- A large part of the multichannel fulfilment
line after seeing the product at a retail store exercise is about managing data. You start
while 15% do it regularly.2 the process of breaking down the complex-
ity by analysing the data flows to and from

36
 Insight provided by Erik Biemans
Manager, DSV Multi-Channel Fulfillment, DSV Solutions

your channels to your content management any other fulfilment elements all need to be
systems (such as your customer service connected.
system). The key to a seamless solution has
two main components: WHAT DOES YOUR CUSTOMER SEE?
Many sales-driven companies are great
1. One single database at strategy, planning, building as well as
Having just one database that all promoting their products and services but
employees involved in fulfilment use and forget two crucial elements in the customer
draw data from is crucial. If Customer experience: delivery and care. It’s those two
Service looks at one system, while Logis- key elements can make or break a custom-
tics looks at another, the end customer will er’s experience with that company.
likely experience discrepancies between
what they are told. You need a single point It all comes down to integrating the entirety
of entry. of your supply chain into one strong front
end. You may have multiple procedures, pri-
2. Connection between data orities, interests, systems and suppliers, but
base and channels what the customer should see is one unified
The data flow from the main database to company that provides a pleasant shopping
sales channels, e.g. the shopping app, needs experience.
to be precise and to have no latency in both
directions. Order handling, delivery, financial
transaction, marketing reporting as well as

Integrating all your supply chain

elements into one strong front end

YOUR CUSTOMER BUT IN REALITY YOU

SEES ONE BRAND HAVE MULTIPLE

Procedures
Priorities
Interests
Systems
Suppliers

37
DID YOU KNOW ?

The biggest warehouse in the

world is the Boeing Everett
Factory in Washington, USA,
which measures 400,000 m2

The global size of the market

for industrial robots

38
 3 That’s about
3 times the size
of Alcatraz Island.

(Source: Wikipedia.org)

is projected to reach $73.5 billion in 2023

– up from $33.1 billion in 2016.

39 (Source: Statista)
D I G I TA L F R E I G H T B R O K E R S

Brokerage
boom
Q&A The emergence of digital freight broker-
age platforms is a trend predicted to increase
in the coming years. How does a traditional
freight forwarder like DSV view this develop-
ment? Group Chief Information Officer Jesper
Riis weighs in.

In recent years, a growing number of start-ups have eyed-up

the road freight brokerage process aiming to simplify what is a
rather complex system through digital interfaces. A recent study
projects the digital freight brokerage market to reach $54.2
billion by 2025.1

40
Q: What do these digital freight brokers Q: What are your first thoughts about
offer? their emergence?

Jesper Riis: They essentially offer plat- JR: Well, it’s a complex market, and we
forms, usually apps, that match shipper work with many of them actually. For
demand (the need to transport a prod- instance, we put cargo up on freight ex-
uct) with carrier supply (truck capacity). changes which are one type of digital bro-
Advanced algorithms then match carriers kerage platform. We also develop our own
and loads based on origin, load type, price, solutions to supply the demand that there
timing, and destination. A little bit like is. But of course, it’s a development and a
what hotel portals do in the hotel indus- market that we monitor closely because
try or what flight portals do for passenger some of them compete with us.
flight booking, digital freight brokers try to
aggregate forwarders and carriers to ease
freight booking.

“ They’re a bit like the proverbial swan, their front pages

look great above the water, but behind them – below the

”
surface – run a lot of manual processes.

Q: From what I understand there are visualisation). As I said, we use freight

several players in the field, doing exchanges to move excess cargo particu-
broadly different things. larly in Europe. Tool providers usually don’t
engage with freight forwarders like DSV
JR: Exactly. The market is extremely directly. Instead they will convince the ship-
fragmented, but they can roughly be per that the shipper will benefit from using
categorised into groups of freight exchang- their platform. If a tool provider becomes
es, tool providers, and digital resellers *(see very big and takes over the commercial

41
D I G I TA L F R E I G H T B R O K E R S

responsibility, they, in effect, become a dig- Q: So how disruptive are these

ital reseller which competes more directly start-ups to the industry, really?
with DSV. As for digital resellers, they es-
sentially act as freight forwarders alongside JR: It is important to remember that even
established forwarders. The primary differ- though many of them get a good amount
ence is that digital resellers’ main service of capital to develop their ideas, they still
offering is the connection to a customer. have a long way to go to create the proper
efficiency in the backend to sustain a prof-
itable business. They’re a bit like the pro-
verbial swan, their front pages look great
above the water, but behind them – below
the surface – run a lot of manual processes.
And, as they’re so young, if things do not
go as planned for their users, then their
support systems are not yet at a point
where they can deliver the type of custom-
er service that the traditional players offer
their customers.

FREIGHT TOOL
EXCHANGES PROVIDERS

Freight Exchanges connect freight forwarders or carriers with cargo Tool providers focus on how they c
to freight forwarders or carriers with excess capacity. supply chain. For example, they ma
The two parties agree outside the freight exchange to perform the that allows the shipper to overview
services and at what rate. The freight exchange does not hold any freight forwarders and carriers, as w
commercial relationship to the shipper of the goods and focuses location of all their shipments acros
primarily on the matching of cargo with capacity. and trade lanes.

Tool providers generally convince th

benefit from using their platform. In
freight forwarders to integrate with
precondition of doing business.
42
 Insight provided by Jesper Riis
Group Chief Information Officer, DSV Panalpina

Q: The new platforms have gained Q: What does the future hold for
momentum because they offer fast digital platforms?
booking speed, a user-friendly pricing
and bidding functionality, and visibility JR: Digital platforms will undoubtedly
of shipments. Is that something become more advanced in the future – in
traditional freight forwarders can learn logistics and everywhere else – as data
from? and data crunching becomes faster and
more extensive. Algorithms will become
JR: Absolutely. We can’t deny that they’ve more advanced, and we will be able to
illuminated a need among our customer more precisely estimate time of arrival for
base, and it’s something we’ve also shipments, for example. Every player in this
addressed. For example, we have developed industry, including us, must stay on top of
myDSV which is a modern, easy-to-use, this digital development to give our cus-
and fast booking platform that offers visi- tomers the best possible experience.
bility for our customers and was developed
alongside our customers. We are expanding
its functionality all the time to match the
needs of the market.

DIGITAL
S RESELLERS

can help the shipper optimise their Digital resellers essentially act as freight forwarders alongside
ay offer a web-based platform established forwarders, but they usually do not offer any other
w their engagements with various service besides the connection to a customer. In their platforms
well as track the status and they invite e.g. DSV to make quotes for transport between A and B
ss freight forwarding companies for signed up customers X, Y, Z to pick and choose from. The digital
resellers own the customer relationship with the customer which
relegates the freight forwarder to only perform the transportation.
he shipper that the shipper will
n turn, the shipper will require
h the Tool Provider platform as a

43
S U P P LY C H A I N O P T I M I S A T I O N

Supply chain segmentation

starts with a C
Supply chain segmentation is about Let’s look at a fictitious company we’ll call
matching what your customers want The Fashion Retailer. The company sells
with how your supply chain is put men’s black socks and women’s summer
together. To do it right, you first need dresses. They have basic and luxury lines for
to know your customers well. each of their product categories, and they
sell through different on and offline chan-
It’s a bit like a doctor who gets the nels. The Fashion Retailer needs to match
diagnosis wrong – no matter how well he the right supply chain performance attri-
performs the subsequent operation he will butes to the requirements of its customers.
not cure the patient. If you don’t start your
supply chain segmentation by correctly Step 1: UNDERSTAND CUSTOMER
analysing your customers’ needs and wants, DEMAND
you are likely to end up with a supply chain The first step in the supply chain segmenta-
design that over-services some customers tion journey is to understand the demand as
while under-servicing others. well as the supply side. The main differences
in our example of men’s black socks and
women’s summer dresses can be sum-
marised as follows:

PRODUCT MEN’S BLACK SOCKS WOMEN’S SUMMER DRESSES

DEMAND • Low demand variability • High demand variability

• High demand predictability • Low demand predictability
• Low variety/SKU count • High variety/SKU count
• Low price and low margin • High price and high margin
• Never out of stock/replenishment • Replenishment only if the product sells
• Long shelf life • Short shelf life

SUPPLY 100% make-to-stock Initial launch make-to-stock

Replenishments (if any) on
make-to-order basis

44
 Insight provided by Erling Johns Nielsen
VP and Global Head of Supply Chain Innovation, DSV Panalpina

As you can see, The Fashion Retailer’s two Step 2: ASSIGN PERFORMANCE
product categories have quite different de- ATTRIBUTES
mand and supply characteristics, and they The next step is to assign the right supply
therefore require different supply chains chain performance attributes to each supply
with different capabilities and supply chain chain. Before we do that, let’s take a closer
metrics. look at the main ones (SCOR metrics)1:

ATTRIBUTE STRATEGY

(RL) RELIABILITY Consistently getting the orders rigtht, product meets quality requirements
CUSTOMER

(RS) RESPONSIVENESS The consistent speed of providing products/services to customers

(AG) AGILITY The abilityto respind to changes in the market (ecternal influencers)
INTERNAL

(CO) COST The cost assosiated with managing and operating the supply chain

(AM) ASSETS The effectiveness in managing the supply chain’s assets in support fulfillment

The most important performance attributes tomers for each product. And your supply
for The Fashion Retailer’s line of men’s black chains need to be aligned to these value
socks are reliability and low cost, driven by propositions.
the ability to forecast demand easily, and
the requirement to remain competitive for a Step 3: APPLY NEW PRIORITIES
low margin product by keeping costs down. A thorough analysis will lead you to a set of
priorities that need to be applied to each
The capabilities required for the supply of your supply chains. This includes a wide
chain for a high margin women’s dress with variety of variables such as the amount of
a high degree of unpredictability and short revenue that each product generates.
seasonal demand are quite different. If you
want an agile supply chain, where you can Segmentation will help you to reduce com-
increase or decrease your supply quantities plexity in your supply chains, and there are
very quickly, you need the shortest possible strong opportunities for finding synergies
lead time. This will have huge implications by leveraging volume across segments to
on where you source, transport, and store reduce costs.
your products.
Network design is becoming easier with
Each of The Fashion Retailer’s supply chain new tools that crunch variables faster than
designs will have different capabilities and ever before. But if you don’t examine what
different price points. In other words, your your customers require from your supply
segmentation should be driven by each chains correctly at the outset, then you
value proposition that you offer your cus- won’t cure the patient.

45
S U S TA I N A B I L I T Y

Political
steps
important
to faster green
transition

46
Comment With transport being one of the most
carbon-intensive activities, individuals and business-
es are increasingly seeking more and faster change.
Speeding up the sector’s transition towards greener
alternatives is a shared responsibility that needs to
include political steps.

If you had been cryogenically frozen in one of the most harmful greenhouse gases.
1990 and woke up again today, you might Movement towards lower emissions is
wonder what all the fuss about climate happening in both transportation of people
change is about. Back then you probably and transportation of goods. But slowly.
weren’t too bothered about your new jeans
having an environmental footprint. IMMEDIATE VS. LONG-TERM
CONCERNS
Today, human-driven environmental impact For logistics, the complexity and cost of
is a growing concern, and so is the desire altering supply chains are barriers to faster
for action. A 2019 survey from the UK said results. For example, a lot of companies
that 80% of respondents were ‘fairly’ or focus on reducing capital they have tied up
‘very’ concerned about climate change – a in stock. So instead of buying 10,000 pairs
rise from 74% in 2018.1 A study from the of jeans, moving them by sea transport and
US showed that 72% of respondents deem storing them in a warehouse (make-to-
global warming ‘personally important’. The stock), a company will calculate precisely
surge in concern, said the study, is mostly how many they will sell week by week and
down to natural disasters such as hurri- plan their manufacturing and transports ac-
canes, melting glaciers, and heat-fuelled cordingly (make-to-order). That behaviour
wildfires bringing climate change closer to can lead to more frequent use of air trans-
home. 2 port – with a higher CO2 cost. On the other
hand, some of the 10,000 jeans made-to-
Transport has a significant impact on the stock might never be sold and end up being
environment as a major consumer of ener- destroyed. This is also negative for the
gy. Most vehicles and aircrafts emit CO2 – environment and illustrates that air trans-

47
S U S TA I N A B I L I T Y

port sometimes can be the right choice for solutions is needed. It could include sub-
the environment. sidies for companies that choose environ-
mentally friendly ways of operating, tax
At the same time, companies are under breaks, incentives to support investments in
pressure to drive down costs while still green technology, or making infrastructure
maintaining high service levels for increas- decisions that accommodate sustainability.
ingly demanding consumers, and so far, that
has outweighed concerns for the environ- Studies show that incentives work. Data
ment. Consumers are now also demanding from the European Environment Agency,
environmentally responsible behaviour from for instance, shows that emissions of CO2
the companies they purchase from – and from new passenger cars have dropped in
not just low prices, same-day deliveries and several European countries where a range
endless choices.3 That is why many compa- of tax breaks, subsidies and other incentives
nies have started to integrate sustainability have been used towards consumers.4 If we,
into their overall strategies – not just out in the same way, want logistics companies
of concern for their reputation, but also to to make the right green choices, similar
reduce waste and energy consumption. This political steps are needed.
is where long- and short-term concerns
begin to align. A good example of potentially effective
action is the International Maritime Organ-
Consumers also feel the struggle between isation’s ruling that from 1 January 2020,
immediate needs and long-term concerns marine sector emissions in international
when they have the option to pay extra waters must be lowered significantly. The
for environmentally ‘safe’ products in the regulation means that sulphur content in
supermarket or when they chose modes of all marine fuels must be limited from the
transportation. Sacrifices need to be made current 3.5% to 0.5%. The marine sector is
by both consumers and companies, but responsible for half of global fuel oil de-
they also need to be facilitated by political mand.5
action.
There are no signs indicating that the rise in
LEVEL PLAYING FIELD awareness and concern for the environment
The green transition is a shared responsibil- is stopping, so it makes sense for business-
ity, but it is difficult to imagine a company es to incorporate greener alternatives into
making big investments for the environment their strategies. A critical component for
that its competitors are not making. That’s better green results, however, are strong
why political frameworks incentivising all political steps that reach across borders and
the players in an industry to choose green industries.

48
 Insight provided by Jesper Petersen
Senior Director, Group CSR, DSV Panalpina

New investments in clean energy worldwide

from 2004 to 2018, by major region (in billion U.S. dollars)6

400

300

200

100

0
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018
Investment in
billion U.S. dollars

APAC AMER EMEA

(Source: Statista)

49
ROBOTICS

Wired co-workers
Case story Automation and robotics have become an
integral part of DSV’s business at its warehouse facility
just outside Toronto in Canada.

1. BATCH PICKING 2. TRANSPORT BY AGV 3. SCANNING AT I

STATION

Pickers collect items in totes and AGVs transport the totes to the Workers scan each
place them in automated guided induction stations using tracks in the them into individua
vehicles (AGVs). warehouse floor.

50
 The challenge two years ago was how to On average, the warehouse had 600 people
deal with explosive growth in DSV’s large pick-packing orders in a process with a high
3PL e-commerce business for consum- degree of complexity and speed. Orders
er goods. It was clear that the additional had a random nature to them, which made
demand and congestion in the warehouse it difficult to predict and plan for an efficient
would not be an efficient long-term solu- slotting of inventory in the warehouse –
tion. a situation that was compounded by the
forecasted growth rate

INDUCTION 4. AUTOMATED SORTING 5. PACKING

item and induct Pouches are placed in a carrier The sorted pouches are transported
al pouches. system that where they are sorted to the packing stations where orders
and sequenced by order. are finalised and shipped to
customers.

51
ROBOTICS

DATA-DRIVEN SOLUTION the expected future growth of our custom-

“We had to step back from the challenges er. Taking all this together helped us build
to see the solutions for the future. When visibility and bring value to our customers”,
we did that, we found that even within the notes Chanona, who oversaw the project.
randomness, there was a pattern in the data
that emerged,” says Rob Chanona, Manag- TECH-SAVVY TEAMWORK
ing Director of DSV Solutions in Canada. The road to a tech-savvy solution brought
together DSV’s team with technology
“To determine the best solution, we relied suppliers to determine the best possible
on data, experience and our knowledge of solutions based on proven data.

“ It was important for us to let the data lead the way,

”
rather than our preconceived notions
Rob Chanona

“It was important for us to let the data Where data defined the path, the team
lead the way, rather than our preconceived developed an implementation plan that best
notions,” says Chanona. “We got excellent suited the facility. The engineering team
insight into the buying patterns of custom- analysed the human factors such as walking
ers from the historical data, and that then patterns, time usage and other processes in
enabled us to predict capacity requirements the warehouse to find the best-fit technology
several years into the future.” that could support the new growth in an
existing footprint.

52
 Insight provided by Rob Chanona
Managing Director, Canada, DSV Solutions

WORKING WITH ROBOTS where fluctuations and seasonal volume

To create synergies between its people, changes are inherent. Managing constant
work flow and automated processes, DSV change with a future-state vision was key
went after employee engagement as a key to success.
part of the implementation. “When our
people saw the benefits first-hand, they “The implementation required a lot of
understood how the new automated ro- change management. We had a large group
botics could help us work both smarter and of people that needed to get used to
more efficiently,” says Chanona. working in a new way, and everyone knew
that one objective was to decrease labour.
Ultimately, DSV decided to implement a I was hugely impressed with how the staff
balanced system of twenty automated went through the transition period,” says
guided vehicles (AGVs) to autonomously Chanona.
transport batch-picked orders along the
warehouse floor to various hi-tech induc- “What started as a huge challenge brought
tion stations. Orders are then scanned by the team together to embrace the change
operators and placed into an overhead and collaborate with ideas and experiences.
carrier pouch system, where they are New ways of working created excitement,
sorted autonomously and sent to pack- and I believe that this new high-tech
out stations where they are completed for environment is a much cooler place to
shipment to customers. work,” adds Chanona.

Previously, human operators used to pick The result for DSV’s warehouse facility
directly from shelves and take items to was greater efficiency and resilience to
packing stations. Now, time is saved by changes in customer needs and growth –
having robots do the transport to those where workers and automation now work
stations. hand-in-hand as partners. Just as valuable,
though, are the experiences that DSV learns
THE ONLY CONSTANT IS CHANGE from this operation that we can use in our
E-commerce is a fast-moving business, many other warehouses going forward.

53
CARGO JOURNEY

What happens
to your cargo?
1 SHIPPER
Once we have your booking, we collect your
1
cargo and it starts its journey.

2 EXPORT HAULAGE
2
We take it to our handling terminal, usually
by truck, rail or a combination of the two.

3 EXPORT TERMINAL
We consolidate your cargo into containers
ready for export.
6
4 ORIGIN PORT
The cargo arrives at the port of loading.
We handle export customs clearance here
by preparing and submitting your documen-
tation to the customs authorities. Once the
customs have approved the export, the
container is sealed and loaded onto the ship.

5 AT SEA
The cargo is shipped to the destination port.
On long sea routes, most ships call at
several ports on the way to drop off and
pick up more containers. While the ship is at
sea, we as freight forwarder, or a customs
broker, prepare the required import doc-
uments and submit them to the customs 9
authorities at the destination port.

54
 6 DESTINATION PORT
The container is unloaded by crane and then
a forklift will move it to a secure area where
the actual customs clearance procedure
3 takes place. If the customs authorities want
to examine the goods, the customs seal
may be opened, the container opened, and
the products checked. Sometimes this pro-
cedure takes place using x-ray equipment.

Local customs ensure that duties, taxes,

4 and any fees related to international traffic
and trade are paid. Port officers can also
5 inspect cargo to protect the destination
country from animal and plant diseases.

7 DESTINATION TERMINAL
The cargo is transported from the port to
the destination terminal where the contain-
er is unloaded and your goods prepared for
the last leg of their journey to you.

8 IMPORT HAULAGE
8 7 Your cargo is transported to the consignee.

9 CONSIGNEE
Our work is complete, and your cargo has
been delivered..

55
F O U R T H - PA R T Y LO G I S T I C S

10 ways
to reduce
transportation
costs
1. OPTIMISE YOUR NETWORK 2. SOURCE THE RIGHT CARRIERS
DESIGN Finding the right carriers for your supply
The performance of a supply chain depends chain flows and securing the most
on its design. Your goal is to create the favourable conditions can save you costs.
most efficient means of moving your Important factors include transport market
products and at the same time maintain intelligence, the sourcing strategy, and
your desired service level. Important procurement capabilities. The use of a
decisions are related to the basic set-up of logistics procurement tool by trained
the network, such as who is paying for and professionals, for instance, enables you to
organising transportation (Incoterms®) and initiate bids along single and bundled lanes,
the use of cross dock locations and pool analyse bid responses (also scenario based)
points. and facilitate multiple bidding and
negotiation rounds.

56
A good reason to engage a lead logistics
(or fourth-party logistics) provider is that they know
how to find ways to keep reducing transportation costs.

The ten focus areas that we have compiled

here are based on our work at DSV Lead Logistics.
In our North American and European organisations,
we have skilled people who use advanced tools to
design, manage and improve intelligent supply
chain solutions.

3. SELECT THE RIGHT TRANSPORT 4. CONSOLIDATE SHIPMENTS

MODES You can reduce costs by fully utilising the
You need to select the transport modes you capacity of your transport equipment, e.g.
use in your supply chain for each shipment by combining multiple orders for the same
properly. This is about having the right customer, or creating milk runs by pick-
business rules in place for basic transport ing up goods from multiple origins and/or
mode selection (road, air, sea, train or delivering to multiple destinations. Exten-
intermodal) and the trade-off between sion of time windows and aligning pick-up
transport modes (e.g. less than truckload and delivery schedules will increase the
vs. full truckload). Reduction of premi- possibilities to consolidate shipments. Also,
um freight while respecting service levels collaboration with other shippers could be
should also be considered. considered.

57
F O U R T H - PA R T Y LO G I S T I C S

5. CHOSE THE RIGHT EQUIPMENT 7. OPTIMISE TRIP PLANNING

The type of equipment you use for a spe- You need to plan in detail the optimal trips
cific shipment has an impact on your costs. that occur within your network. Your opti-
There are many different types of trucks, misation efforts could include direct deliv-
containers, trailers and other equipment eries, pool point shipping and/or back-haul-
such as stand-drop trailers, mega volume ing. Also, combining regular shipments with
trailers, double trailers and light trucks. return shipments can reduce your transpor-
tation costs.
6. OPTIMISE CONTAINER, PALLET
AND LOAD DESIGN 8. SELECT THE RIGHT CARRIERS
The number of products and orders that You may have contracted multiple carriers
fit in a truck or container is determined by for the same lane, so your choice of carrier
packaging, pallet builds and load builds. can have an impact on your costs. If you
Optimising packaging and pallet builds have not contracted any carrier for a spe-
while taking your transportation needs into cific lane, or your current carriers have no
consideration should be discussed with your capacity, you can request spot quotes from
supply chain partners. Dedicated tools can various carriers using dedicated platforms
assist in calculating the optimal positioning and optimise costs in that way.
of goods in a truck or container.

3PL

4PL
SUPPLY CHAI

58
 Insight provided by Rob van Doesburg
Director, Design & Implementation, Lead Logistics, DSV Panalpina

9. AUDIT YOUR CARRIER COSTS 10. MAKE SURE CARRIERS DELIVER

Properly auditing your carriers means you AS AGREED
can make sure that invoiced costs are in line You need to make sure that your carriers
with agreed costs for the various ship- comply with your agreements and deliver
ments. Your attention should especially be the quality and service they have prom-
focused on application of the correct rates, ised. The costs and performance of each
on service failures, and invoicing of ancillary individual carrier need to be monitored and
charges and fees. discussed during business review meetings,
and improvement actions should be agreed
upon to save costs in the future.

A manufacturer that operates

some or all of its logistics processes.

1PL
An asset-based carrier which
owns the means of transportation.

2PL
SERVICES

A provider of logistics processes

on behalf of manufacturers and
distributors

A non-asset based, neutral supply

chain orchestrator who assembles
resources, capabilities, and
technology to design, build and
operate more intelligent supply
chains.

IN SPECTRUM

59
CYBER SECURITY

Phishing for
weak spots
If security is only as strong as the weakest
link - consider emails a potential Trojan Horse.
That’s why smart companies are investing in
awareness training. The first line of defence.

In transport and logistics, emails are a With studies showing that 10% of phishing
central communication channel, and studies emails that make it to inboxes are opened
show that the number of emails flowing in – and links clicked – the risk of a breach is
and out of companies will continue to rise undeniable.1
despite the arrival of several new communi-
cation channels. PAYING ATTENTION PAYS
Having your data hacked can be costly. Just
While most fraudulent emails are caught by ask Maersk (their hacking experience in
the finely-masked security systems, many 2017 allegedly cost them between $200-
still get through – and the days of easy-to- 300 million). That’s why ensuring your
spot phishing emails from Nigerian princes employees can spot what is fake is essential
are over. Today, fraudulent emails can look in avoiding phishing or malware attacks.
like they came from a trusted colleague,
client or even your bank. One of the ways phishing emails can be
spotted is by looking at details like the
sender’s email address (if your bank is
yourbank.com, and the email comes from

60
 Insight provided by Thomas Zakarias
Senior Director, Group IT Compliance, DSV Panalpina

yourbenk.com, beware), the call to action not. If the number of people opening your
(e.g. “send us money to this account”), fake phishing email, and clicking on the link
or the general spelling and visuals. Being inside, is the same in both groups, you may
vigilant for anything out of the ordinary, need to retrain the first team – or review
even from people you know, is important. your training material.
Training your employees to notice these
details will help your team avoid a worst- Besides training and testing, your techni-
case scenario. cal setup will help you filter out spam and
phishing emails to minimise the risk. Large
“I WOULD NEVER FALL FOR THAT” cloud-based solutions have shown to help
The best way to ensure your team knows many SMEs take large steps towards a safe
what to look for is through experience. email environment. Finally, it is impossi-
That’s why many companies have begun to ble to completely avoid successful phish-
conduct A/B testing where a fake phishing ing attacks, and companies must enforce
email is created and sent to two groups of additional security measures. One example
employees: a group that has received IT being multi factor authentication for user
security training, and a group that has logins which contributes greatly to an
improved security level.

10% of phishing email recipients open the email2

90%
14,500,000,000

14.5 billion spam emails of phishing

are sent every single day3 happens via email1

61 (See sources on page 65)

INVENTORY MANAGEMENT

Inventory optimisation
is basically a balancing act
Balancing service and inventory stock
levels requires analysing the movement
patterns of your stock items, classifying
the items and using your data to make
more accurate predictions.

Your children won’t be happy if you run stock rotation (avoid high inventory levels)
out of milk one morning. But on the and to optimise stock availability (make
other hand, keeping too much milk in sure they always have stock to supply their
the refrigerator means you are bound customers). Achieving a stable relationship
to throw some out now and again when between working capital, operational costs
it goes bad. and the perfect service level can make the
difference between a making a profit and
Finding this harmony is the everyday con- making a loss.
cern of supply chain managers who want
to strike the right balance in their inventory These days, having the right data available
levels. Their two main goals are to increase is a prerequisite for inventory manage-
ment. Data analytics help you to see the big
picture of your inventory, and thus make
important adjustments in the details.

62
 Insight provided by Piet van Dyk
General Manager, Supply Chain Innovation, DSV Solutions

Step 1: DEMAND
It all begins with some hard business deci- To begin profiling your demand, take a
sions regarding your products. Maybe you look at your historical demand patterns
have had ‘flops’ in your product portfolio that and classify your articles based on those
need to be phased out or ordered as ‘special’ patterns. Your articles could be divided into
in your inventory. Maybe you have a ‘cash normal, slow, regular or irregular demand.
cow’ that needs a more prominent place in At the same time, your classification must
your stock strategy. This of course comes include demand size per time internally, and
down to the performance of your products demand size per customer order. The com-
and your product strategy. In fashion for bination of these classifications provides
example, some items will sell steadily most the best prediction methodology for each
of the year, while others are very seasonal. individual article.

Step 2: FORECASTING
You need to choose the right forecasting The prediction methods can be strength-
method based on the article classification. ened with qualitative information on mar-
It matters a great deal which of the proven keting campaigns and planning to increase
methods you choose – such as exponential the forecasting accuracy. In addition, it is
smoothing, moving average, autoregres- important to enrich the forecast data at a
sive or Box-Jenkins. Your forecasting model customer level during new product intro-
should be able to automatically predict the ductions and promotions. If your customer
vast majority of the Stock Keeping Units base consists of a few large companies,
(SKUs) in your product portfolio automat- customer demand fluctuations have a
ically. significant influence on your planning. It is
important to be able to adapt quickly to
these changes.

Step 3: OPTIMISATION
The results of your forecasting analyses methods for classification and forecasting.
should be checked against your current As supply chains become more complex,
inventory management process to find the so does inventory optimisation. Within the
right areas for optimisation. Your outcome above basic steps lies a science of complex-
could be a new inventory strategy for ity that requires advanced software and the
each item and each location that you have, right experts in order for the whole busi-
ensuring you have a dynamic stock position ness to master them. But once you strike
and re-order level. After that, your focus the right inventory balance, you will see it in
should be to continually improve your your bottom line.

63
REFERENCES

INTRODUCTION DID YOU KNOW? “TRUCKS”

1 https://www.imf.org/en/Publications/WEO/ 1 https://www.statista.com/statis-
Issues/2019/10/01/world-economic-out- tics/268157/ranking-of-the-20-coun-
look-october-2019 tries-with-the-highest-road-quality/

2 https://www.prnewswire.com/ 2 https://www.dieselforum.org/news/new-
news-releases/global-logistics-mar- technology-clean-diesel-trucks-with-near-
ket-to-reach-us155-trillion-by-2023- zero-emissions-now-make-up-33-of-all-
research-report-published-by-transparen- trucks-on-u-s-highways
cy-market-research-597595561.html

3 Transport Intelligence report: Total Logistics

2018 BLOCKCHAIN
4 http://reports.weforum.org/digital-transfor- 1 https://www.statista.com/statis-
mation/understanding-the-impact-of-digi- tics/647231/worldwide-blockchain-tech-
talization-on-society/ nology-market-size/

2 https://www.hyperledger.org/resources/
publications/walmart-case-study
REALTIME
3 https://www.maritime-executive.com/arti-
1 https://www.statista.com/statis- cle/new-jv-develops-blockchain-systems-
tics/294171/online-and-in-store-pur- for-port-of-shanghai
chase-and-shipping-preference-north-
america/

ELECTRIFICATION
TRADE 1 https://qz.com/1620614/electric-car-
forecasts-are-all-over-the-map/
1 https://en.wikipedia.org/wiki/Chi-
na%E2%80%93United_States_trade_war 2 https://www.statista.com/statis-
tics/827460/global-car-sales-by-fu-
2 https://www.scmp.com/comment/opinion/ el-technology/
article/3018712/us-china-trade-war-has-
produced-more-losers-winners

3 https://www.reuters.com/article/us-best- START-UPS
buy-results-tariffs/best-buy-ceo-says-
more-china-tariffs-will-impact-u-s-shop- 1 https://www.forbes.com/sites/neilpa-
pers-idUSKCN1ST1GH tel/2015/01/16/90-of-startups-will-fail-
heres-what-you-need-to-know-about-
4 https://www.bloomberg.com/graph- the-10/
ics/2019-new-economy-drivers-and-dis-
rupters/vietnam.html 2 https://www.statista.com/statis-
tics/882609/growth-startup-fund-
ing-by-industry/

64
DID YOU KNOW? “AIRCRAFTS” DIGITAL FREIGHT BROKERS
1 https://gizmodo.com/the-worlds-larg- 1 https://ww2.frost.com/news/
est-cargo-plane-can-swallow-a-737- press-releases/digital-freight-broker-
whole-511093454 age-grows-top-service-revenue-opportu-
nity-truck-service-gains-traction
2 https://www.freightos.com/air-cargo-got-
wright-9-incredible-air-cargo-facts/

SUPPLY CHAIN OPTIMISATION

3D PRINTING 1 https://en.wikipedia.org/wiki/Supply_chain_
operations_reference
1 https://www.statista.com/statis-
tics/590113/worldwide-market-for-3d-
printing/
SUSTAINABILITY
1 https://www.statista.com/statis-
PREDICTIVE ANALYTICS tics/426733/united-kingdom-uk-concern-
about-climate-change/
1 https://blog.technavio.com/blog/top-10-
logistics-trends 2 http://climatecommunication.yale.edu/
wp-content/uploads/2019/01/cli-
2 https://www.statista.com/statis- mate_change_american_mind_decem-
tics/821592/worldwide-artificial-intelli- ber_2018_1-3.png
gence-implementation-in-companies-con-
cerns/ 3 https://www.forbes.com/sites/sarah-
landrum/2017/03/17/millennials-driv-
ing-brands-to-practice-socially-responsi-
ble-marketing/
MULTICHANNEL
4 https://www.eea.europa.eu/highlights/tax-
1 https://www.statista.com/statis- breaks-and-incentives-make
tics/379046/worldwide-retail-e-com-
merce-sales/ 5 http://www.imo.org/en/mediacentre/hot-
topics/pages/sulphur-2020.aspx
2 https://www.statista.com/statis-
tics/896584/frequency-cross-chan- 6 https://www.statista.com/statis-
nel-purchasing-omnichannel-shoppers-usa/ tics/661252/worldwide-new-invest-
ment-in-sustainable-energy-by-region/

DID YOU KNOW? “WAREHOUSES” CYBER SECURITY

1 https://en.wikipedia.org/wiki/Boeing_Ever- 1 https://www.carlyleobserver.com/news/
ett_Factory local-news/phishing-how-many-take-the-
bait-1.23082108
2 https://www.statista.com/statis-
tics/728530/industrial-robot-mar- 2 https://www.propellercrm.com/blog/
ket-size-worldwide/ email-spam-statistics

3 https://cybersecuritysummit.
org/2019/01/09/email-continues-to-ac-
count-for-90-of-phishing-attacks

65
 www.ds

66
sv.com

67