IoT Blog
IoT Blog

IoT in Logistics Fuels Shipping Industry Growth

by Benoit Tournier, Director of Marketing, Transportation
The ability of companies like Amazon and eBay to sell anything that people want has spurred hundreds of other niche retailers, while pushing brick-and-mortar shops to amp up their online retail offers. But this doesn’t happen in a vacuum. The ecommerce market has changed the very nature of shipping and delivery practices, spurring a need for improved logistics and technology. 

This is an extremely complicated web. The pressure of ecommerce puts a priority on 2-day, next day, and even same day delivery with more visibility on the shipment status. In addition, every company and retail business puts an emphasis on returns for unsatisfied customers. The shipping companies themselves—whether private or public—are also upping their customer service offerings, allowing customers to pay extra for delivery within a specific window of time. 

The incredible e-retail shipping boom has necessitated a concurrent boom in solutions provided by the Internet of Things (IoT). Connectivity provides the ability to shop for anything, anywhere, with real time management of each step of the delivery process, creating a need for a cohesive and connected infrastructure to handle the mind-boggling logistics. When it comes to our new world of shipping, the Internet of Things (and its underpinning connectivity) doesn’t only improve operations’ efficiency, it is enabling as well new operating models, and finally fueling the growth of the global shipping industry. 

Whitepaper - Blog CTA - IoT Will Disrupt the Logistics Market

Packages From Here to There
It’s hard to overstate e-retail’s impact on shipping and logistics. Over the last decade, even with economic downturns, global shipping companies have seen annual growth of 6-10%. While that growth slowed somewhat in 2016, the overall trajectory remains on a dramatic upward climb. Between now and 2040, the volume of cargo (by weight) shipped via truck will see a 43% increase from 13.2 billion tons a year to 18.8 billion tons. Railways are projected to see an increase of 37%, while air cargo is expected to grow by an incredible 250%. 

These figures are all interconnected. Freight, which is increasingly comprised of small and light packages, travels both nationally and internationally. It’s not uncommon for a parcel to travel by air, to train, then by truck. In fact, when it comes to individual packages, it’s always the truck that takes it the “last mile,” with the end of the line being a delivery driver who runs the package to the door. 

There is the possibility that packages will ultimately be delivered by drone, but right now, those are complementary to the truck, and can be used by the driver in certain circumstances (like if there is a wild dog). Right now, a driver with 400 packages in a truck (with or without a drone) makes more sense than a drone carrying a single item.

It is a relentless process of logistics, both on a global and hyperlocal level. Companies are tasked with getting the right package to the right home or business at the right time. They must ensure that each package is scanned and delivered accurately, signed for (if necessary.) Then, it moves on to the next stop. The underlying technology is still in development, but already, we’ve seen a dramatic evolution in the shipping and delivery industry. 

The IoT Tools That Enable a Logistics Revolution

As the IoT improves its capabilities, shipping efficiency will improve, while logistics will become more expansive. Right now, we are familiar with the handheld device that every delivery driver utilizes. They scan an item after it is delivered, or after they get a signature, and it essentially checks the delivery off a list. 

But what happens when it is “checked off?” A signal is immediately sent to a main data storage center (generally, cloud-based), which sends a notification to the party that received it. It lets them know that their package has been delivered (this happens even if you sign for it). This triggers a notification to the sender, alerting them to the fact that the process is complete. It is an immediate process and a crucial part of the modern shipping industry model. 

There is no room for a disconnect between the customer and the seller. Any delay can cause customer service complaints and a loss of business, which trickles down into discontent with the shipper. The benefit of connection, though, enables the ecommerce customer service team to access real-time information about their parcels. 

These handheld terminals increasingly provide route optimization and delivery instructions, collapsing the logistics process management from one device. As the IoT becomes more sophisticated, it is easy to imagine a scenario where you have a package that’s not delivered due to an inability to get a signature; this could conceivably trigger a rerouting process that could enable another delivery attempt later in the day. This can even be coordinated with an attempt to contact the recipient to reschedule the delivery.

The IoT extends to the very packages themselves. These can be enabled with RFID or BLE beacons-based tracking that obviates the need for scanning, saving time at every stage of the process. Instead of manually scanning parcels, the information will be automatically sent to the cloud. These RFID or BLE tags will also save any potential headaches since shippers will receive notifications if there is a sorting error. This technology will enable further automation, simplifying the warehousing procedure. 

The logistics model and its connectivity requirements are equally complex. There are a few main points that companies must consider when thinking about partnering with a Mobile Network Operator. 

  • Scalability of Architecture. Logistics involve an increasingly diverse range of devices and applications. Wi-Fi, Bluetooth, and vehicle telemetry require support for standard protocol. It is easier to add more trucks to the enterprise system through the IoT and web API, but this demands an IoT management platform designed specifically for the IoT. That platform must offer centralized management, with over-the-air (OTA) diagnostics and software upgrades. This paves the way for remote provisioning and mobile network subscriptions. 
  • End-to-End IoT Security. It’s a global process. As more devices are connected, companies need to use intelligent modules and routers so that it becomes easier to enforce security policies. With more processing power, bandwidth, and storage, these modules can support security components such as private keys, advanced authentication, and OTA software updates.
  • Resilient Mobile Connectivity. Business-critical applications can’t be interrupted. This means that resilient mobile connectivity has to take into account: 1) geographic and carrier boundaries; 2) evolving network technologies; 3) how to maintain quality where signals are weak, especially rural or underground locations; and 4) cross-border areas where it isn’t always appropriate to use the strongest network. 

To keep up with changes in shipping, logistics companies need to partner with IoT companies. We’re in a more connected world, and the expectations for shipping are rising from buyers and sellers alike. Start with Sierra to make sure that you build the right IoT network to fuel your logistics, and read our white paper, Why the IoT will Disrupt the Logistics Market.