Artificial intelligence and machine learning (AI/ML) have emerged as critical technologies for logistics providers looking to digitize their business processes. According to the Supply Chain Digital Transformation Enterprise Survey 2024 conducted by 451 Research, logistics specialists are increasingly recognizing the potential of AI/ML, with generative AI leading the way. However, concerns about data handling remain a top hurdle. In this blog post, we will explore the growing importance of AI/ML in the logistics industry, and how it can drive efficiency and enhance customer service.
AI/ML: A Game-changer for logistics providers
AI/ML technologies have been around for some time, but recent advancements, particularly in generative AI, have sparked widespread interest. It is crucial for logistics providers to understand that generative AI is just one form of AI/ML that holds promise. Predictive AI and video analytics also offer significant potential for long-term improvements. To fully leverage AI/ML, technology suppliers must guide logistics providers in identifying the specific business processes they aim to improve, and explore how AI/ML technologies can help achieve those goals.
Key players in the shipping and logistics industry
The survey included participants from three subsectors that play crucial roles in the distribution of goods in supply chain operations:
1. Shippers: These are organizations that manufacture goods and collaborate with logistics providers and carriers to ensure the smooth transportation of their products. Examples include major retailers like Apple Inc., Walmart Inc. and General Motors Corp.
2. Transportation carriers: These organizations handle the physical transportation of goods, whether by road, ocean, air or rail. They include shipping giants like A.P. Moller – Maersk A/S, trucking vendors like Schneider National Inc., and parcel delivery specialists like United Parcel Service Inc.
3. Third-party logistics providers (3PLs): These organizations assist shippers in arranging the transportation of goods. They include providers like Kuehne + Nagel International AG, freight forwarders such as DHL International GmbH, and freight brokers like C.H. Robinson Worldwide Inc.
Generative AI: From Hype to Value
AI/ML adoption and concerns
The survey revealed that AI/ML adoption is increasing among logistics providers. In fact, AI/ML adoption saw a significant rise from the previous year, with 43% of respondents reporting its use, up from 36%. This increase can be attributed to the catch-up that AI/ML is doing compared to other impactful technologies like cybersecurity, cloud computing, and internet of things connectivity.
However, concerns about data management remain the primary challenge in adopting AI/ML. Nearly 60% of respondents cited data-related concerns as their top hurdle. Data privacy and security ranked as the number one concern, followed by data access and integration, and data quality. These concerns outweighed challenges such as budget limitations and a lack of skilled personnel.
Generative AI: enhancing customer service and freight tracking
Generative AI, which generates useful content based on large datasets, is a hot topic in the logistics industry. Approximately 56% of logistics providers reported either evaluating or adopting generative AI. Another 37% expressed interest in exploring it within the next two years. When asked about the potential applications of generative AI, half of the respondents mentioned improving customer service, while 46% highlighted freight tracking and lead-time analysis.
Conclusion
As logistics providers embrace digital transformation, AI/ML technologies are becoming indispensable. Generative AI, predictive AI, and video analytics offer immense potential for improving efficiency, customer service and freight tracking. However, addressing data-related concerns is crucial for successful AI/ML adoption. By partnering with technology suppliers and carefully considering their business processes, logistics providers can unlock the full potential of AI/ML and revolutionize the industry.
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