Every other year Munich, Germany, hosts one of the largest logistics exhibitions in Europe, which brings together thousands of exhibitors from dozens of countries. In 2019, the exhibition featured ten halls and outdoor space of 125,000 square metres. In total, 64 thousand visitors from 125 countries attended the exhibition.
Below is our interview with Vladimir Karachun, Head of Groupage Services Department, TELS, who tells about the ideas expressed by the participants of the exhibition this year, the changes in old trends and the possible new trends.
Vladimir, we have already had a long interview discussing the results of the previous Munich exhibition held two years ago (part 1, part 2). We can now compare the current situation with the trends then. Let’s start from logistics automation. How is this area developing? What is front and center in it?
Two years ago, digitalization in logistics (introduction of smart sensors to manage supply chains, trackers, specialized software products, etc.) was the hot topic, while this year artificial intelligence (AI) was front and center. Logistics is becoming smarter and more autonomous.
A large amount of data collected from machinery, equipment, drivers, shippers, other objects and participants makes it possible to obtain the analytics that was previously inaccessible. The possibility to teach artificial intelligence allows us to create solutions optimizing the supply chain, improving warehouse efficiency, etc.
Another strong trend associated with the training of neural networks in logistics is dynamic pricing. Artificial intelligence makes it possible to get quotes for instant shipments and reach instant agreements. Artificial intelligence allows to quickly process and take into account a large number of factors as well as make a commercial offer relying on analytics.
Another developing trend is the possibility for major market players to use smart contracts in logistics. For instance, one of DHL departments is developing a blockchain platform to attract medium and small companies there. The key possibilities of this are accelerated contracting and faster settlements between the parties of a trade.
A big problem in the market of logistics services still remains the shortage of skilled personnel. What issues were discussed in this regard? What do the participants of the market do to resolve the issues?
The lack of drivers and skilled employees was the mainstream topic in HR conferences at the exhibition. The logistics industry understands that it should do something to make the profession of a driver more attractive from salaries and working conditions to interaction at the ramp.
According to Eurostat, road transport is the main mode of transporting goods within the EU, which accounts for more than 75% of the total volume. The shortage of drivers has already become a threat to supply reliability. The Managing Director of Messe München reported that 21% of jobs in freight logistics currently remain vacant.
The German Federal Freight Haulage, Logistics and Disposal Association (BGL) analyzed the situation and found out that the shortage of drivers can be alleviated by improving the image of the profession and increasing the level of appreciation, i.e. pay levels. Likewise, industrial and commercial companies should implement the improvements in loading/unloading processes in their own best interests. The problems begin “with unpredictably long waiting time”, the lack of safe and appropriate parking spaces and unacceptable hygienic conditions.
Probably, the development of autonomous transport is holding back young people from choosing the profession of a driver. Do they really risk getting a profession that will become unnecessary in future?
It may be the reason. But at the same time it’s true what the participants of the conference said – “the autopilot did not replace humans in aircraft cockpits, so this will not be any different with trucks”. New technologies, autonomous driving and artificial intelligence will gradually develop driver’s profession into truck operators. Truck drivers will not only be driving, but will also accompany goods entrusted to them, will be responsible for handing them over to the recipient as well as for quality cargo securing and safe transportation.
The IRU also believes that increasing automation does not pose any threat to the profession of a driver: “However, there will be more driver assistance systems in trucks, so their tasks will change. The profession may develop more into a technology-based logistics manager thus becoming more attractive to technically savvy millennials”.
Besides the payment and organizational issues, raising public awareness of the situation aiming to attract young people (including women) plays an important part in solving the problem.
Logistics companies are already trying to adapt to changes in the labor market through their business models considering employees’ preferences to include work-life flexibility (flexible schedules and individual part-time hours), organize workplace ergonomics. Companies should do more to improve their attractiveness as an employer. Today corporate culture is to rethink the image of logistics as a male-dominated industry. Attracting, training and employing qualified women opens new opportunities.
Now it’s getting clear why the EU is steadily tightening Mobility Package regulations despite the protests of carriers from Eastern European member states.
BGL expressly welcomes all the innovations in the Mobility Package as a way helping reconsider driver’s profession as a difficult job associated with men. The obligation for trucks to return to the country of registration and the obligation for drivers to return to their families were assessed particularly positively.
This year warnings against free access of China to the European logistics market began to leak into European media. Sometimes opinions sound in a way that China’s investments has allegedly “bought up” all Africa, it’s getting close to Europe – having in mind China’s huge investments into European ports and its willingness to invest into the new Silk Road railway infrastructure. What was discussed in this regard in Munich?
The new Silk Road initiative is obvious in transport logistics, and Chinese companies are constantly searching for partners in Europe. The number of exhibitors from China doubled from 30 participants to 64 in 2019 over 2017. New companies like Sinotrans, China Railway Container Transport and Yuxinou Logistics joined in. China moved from the 10th to the 6th place among the leading exhibitors.
What about Brexit topic?
It’s a thorny subject for the European Union but it was discussed along with the other issues. Over 11K trucks use Dover-Calais route, so if new border rules are introduced, there might be traffic disruption with longer waiting time.
Annual extra checks of 10.5K vessels are possible. This will require hundreds of additional staff to carry out customs, veterinary and other checks.
A large logistics company arranged a simulation study to see the effects of Brexit on vessel terminals in Rotterdam. The results of the study allowed to make buffer parking places for trucks. These measures will be effective only if all the participants of the supply chain will be in close cooperation.
Besides, Britain made investments into the new digital reporting system. Trading companies doing business in the UK will have to register their goods there. This will affect about 4200 companies.
According to the survey conducted by the Institute of Directors (IoD) among 1200 business leaders in January 2019, every third company had relocation plans.
Many logistics experts feel relaxed despite the Brexit. The recent survey of 2680 exhibitors at transport logistics exhibitions showed that 38% of respondents were prepared for any case, 50% – would not be directly affected by this and only 12% of the respondents were afraid of serious consequences of hard Brexit. Small and medium-sized companies are particularly worried as they might face considerable losses.
Interview conducted by Aleksander Zhikin