© Oliver Wyman

HOW START-UPS DIGITALIZE LOGISTICS – 2018THE ACCELERATION OF DISRUPTION

TRANS AKTUELL SYMPOSIUM

APRIL 2018

1© Oliver Wyman

An Industry destined for digitalization

High volumes

Low profitability

Need for but lack of

harmonized systems

New Digital

technologies

• High number of transactions every day

• Large amounts of data

• Opportunity for automation of processes

• Mostly commoditized industry

• Many logistics sectors with low profitability

• Few defined IT standards

• Frequently, multiple IT systems within one firm

• Increasing need to harmonize logistics IT with client IT

• Data-and software-driven technology, e.g. Big Data, Blockchain, ...

• Hard- and software-driven technology, e.g. Telematics, Drones, Robotics

2© Oliver Wyman

break-through of new, digital business models

Examples

DIGITAL

MARKET PLACES

E-FORWARDING

DATA-BASED

SERVICES

ASSET-LIGHT

DISTRIBUTION

AUTONOMOUS

TRUCKING

DIGITAL

WAREHOUSE

• Matching

• Optimization of utilization and routing

• Value-added services for truckers/ carriers

• Focused on standardized transport services

• Optimized UI/UX

• Automation of logistics processes

• Data infrastructure for SME logistics providers

• Commercialization of logistics data, e.g. insurances

• «Uber for Freight»

• Intermodal last-mile distribution

• Booking platforms for Platooning

• Fleet management for autonomous trucks

• Capacity management across multiple warehouses (on-demand)

• Automation of contract logistics services

Source: Oliver Wyman

3© Oliver Wyman

Digital and hybrid forwarding business models gain importance and (re-) define success factors

Digital forwarding revenues

in %

Future success factors

2030

~55%

~15%

95%

~30%<5%

2015

Semi-digital

models

Conventional

models

Fully-digital

models

• Customer Journey

• Speed and scalability

• Integration of players along the value

chain

• Short release cycles for new

applications and continuous

innovation

But also…

• Strong solution competency for

complex transport services

Source: Oliver Wyman

4© Oliver Wyman

Digitization requires developing new competencies

Next-best-offer/

Next-best-action

Digital

Payment

Dynamic

Pricing

Digital

MarketingTalent development

Agile/ cross-functional

Teams

Digital

leadership

Digital Organisation

And Governance

Big Data/

Machine learning

Modularisation/

API Development

Continuous

Integration

Agile (Software-)

Development

Digital

architecture

Data-

consolidation

Automation/

Robotics

Artificial

intelligence

Data security/

encryption

Sensor-

Technology

COMMERCIAL

TECHNOLOGY

METHODOLOGY

ORGANISATION

Examples

Source: Oliver Wyman

5© Oliver Wyman

Changing logistics competitive landscape

CARRIERS

• Direct sales via digital platforms –

vertical forward integration

• Optimization of asset-heavy core

business using digitization

E-COMMERCE

GIANTS

• Leveraging E-Commerce volumes to support

backward integration

• Digitalization of logistics

• Mix of partnership and in-house investments

START-UPS

• Focus on asset-light, data-based business

models

• Disintermediation of the logistics value chain

LOGISTICS COMPANIES

• More investments into digital business models

• Digital Transformation of the core business

DIGITAL

LOGISTICS

COMPETITION

Source: Oliver Wyman

of funding for logistics

start-ups in 2017

~$3.5B

7© Oliver Wyman

Online freight platforms

E-forwarding

Marketplaces (carrier-to-carrier) and

load matching platforms (shipper-to-carrier)1Freight

Forwarding

Manufacturing Sea and air freight1 Terminals Land transport Warehousing Last mile

3 42 5

7 8 9

Land transport

Autonomous linehaul trucking solutions

Self-driving enabling technology

Mobile solutions for drivers/fleets

Fleet management solutions

Alternative commercial vehicle tech

Warehousing

Virtual warehousing

Automation/robotics for

warehousing

Wearables supporting

warehouse services

Last-mile delivery

On-demand delivery platforms

Urban delivery

incl. station solutions

Autonomous last-mile delivery

(drones, robots)

Data flow

Supply chain visibility and steering

Transport management systems (TMS)

Supply chain tracking (incl. last mile)

Inventory management

Big data analytics

Security/transparency/risk mgmt

Product provenance (e.g., w/ blockchain)

Risk management

Asset tagging, incl. sensors

Financial services

Financial blockchain solutions

Supply chain payment platforms

Trade financing solutions

Integrated

(e-commerce)

logistics solutions

Maritime

Vessel /asset tracking

Route optimization

Ship-to-ship/ship-to-

shore communication

Initial start-up engagement

(total funding < $50M)

Emerging start-up engagement

(total funding between $50M - $200M)

Strong start-up engagement

(total funding > $200M)

Increasing start-up activity across the logistics value chain – nine main clusters of start-up activity to be distinguished

Note: Total funding by cluster extrapolated/ estimated

Source: Crunchbase, CB Insights, Oliver Wyman

8© Oliver Wyman© Oliver Wyman

Areas of funding, 2017

In %, selected large funding rounds1Start-up Lead-Invest. $MN

$110M

$25M

$20M

$13M

$12M

$62M

$25M

$25M

$30M

$300M

$1,200M

$9M

$15M

$4M

$15M

~$3.5B

12

3

4

5

6

8 9$20M

$24M

$60M

$30M

7

Online freight platforms 5%

Maritime 1%

Land transport 13%

Warehousing (incl. robotics) 13%

Last-mile delivery 53%

Integrated (e-com.) logistics 4%

Supply chain visibility & steering 6%

Security/ transparency/risk mgmt. 1%

Financial services 3%

$30M

$60M

$114M

Start-ups now engage across the entire logistics value chain and are aggressively expanding into new spaces

1. Not necessarily largest invesmtents

Source: Crunchbase, Oliver Wyman

9© Oliver Wyman

Logistics incumbents continue to compete with various types of companies for attractive start-up players

• Digitally integrating into clients’ supply

chains and production processes

• Optimizing own operations and

processes (e.g., warehouse robotics1)

• Tapping into fastest growing,

“disruptable” areas of logistics

• Identifying scalable, asset-light

business models, e.g., freight

forwarding

• Creating next generation logistics, e.g.,

in last-mile delivery (Amazon, Alibaba)

• Applying big data analytics, artificial

intelligence and machine learning in

logistics (Google, SAP, etc.)

Logistics incumbents Tech giants

VCs

• Intelligently connecting passenger and

cargo transport

• Developing autonomous driving solutions

• Defining integrated trucking

solutions/platforms

Mobility providers

Illustrative excerpt/Not exhaustive

1. Robotics includes drones, driverless technologies, augmented reality, warehouse robots

Source: Oliver Wyman

10© Oliver Wyman

A significant increase in the number of logistics start-ups has been observed since 2016 in the DACH region

Logistics start-Ups in DACH

Online freight platforms

26%

Last-mile delivery solutions

22%

Supply chain visibility and steering

17%

Warehousing incl. robotics

10%

Security and risk

management…

Other15%

2017

>40

~33%

~60

2016

Number of logistics start-ups by area of focusNumber of logistics start-ups

2016 vs. 2017

~ 60

Source: Oliver Wyman

11© Oliver Wyman

Logistics incumbents have taken on the challenge and have intensified investments into their Digital Transformation

OCEAN TRACKING & TRACING

• Providing near real-time shipment

status, allowing forecasting of freight

journey to facilitate disruption mgmt.

• Combinable with DHL Ocean Secure

for holistic product status transparency

(incl. temperature, humidity, shocks)

ROBOTICS

• Operating one of the largest fleets of

perception-controlled robots in

warehouse logistics in Europe

• Wireless transmitting of orders to

execution robots from material

management system

PLATOONING

5G NETWORKS RAIL CAR TELEMATICS

E-FORWARDING

• Deploying a “etouch” platform for

automated online, real-time quotation,

invoicing and tracking & tracing

• Designed for high volume standard

bulk

INLAND WATERWAY

FREIGHT EXCHANGE

• Establishing a digital freight

exchange for inland waterway

shipping

• Platform for additional services

such as inland waterway document

mgmt.

• Piloting 5G mobile data standard in

the port of Hamburg

• Data transmission between

infrastructure posts with up to ten

Gigabit/ second to optimize port traffic

and make it more secure

• Piloting of Platooning technology in

cooperation with MAN in spring 2018

• Preparing for fully autonomous truck

pilots within DB Schenker terminals

Focus on Central European incumbents

• Equipping VTG rail car fleet with

telematics units to introduce

geolocating, and external influence

monitoring (shock, external

temperature, etc.) to rail freight

Source: Company Information, Oliver Wyman

12© Oliver Wyman

Logistics players need to digitize their core business and develop new business models at the same time

Start-Up investments do not replace the need

for digitizing the core business

But: Start-Ups can help

a) to develop new business models

b) to accelerate the digitization of the core business

Source: Oliver Wyman