Supply Chain Executives Warming Up to AI in Logistics
Artificial intelligence (AI) is gaining traction in the logistics industry, with supply chain executives showing increased interest in leveraging this technology. However, a recent survey conducted by Freightos, the online freight booking and payments platform, reveals that the real-world use of AI in logistics is still lagging behind the headlines.
The survey, which involved 55 respondents including importers, exporters, freight forwarders, and other logistics professionals, found that while 96% of the participants expect to adopt AI for supply chain management, only 14% were actively using or piloting AI projects for automating pricing or customer service. Moreover, a mere 7% of the respondents were categorized as current active users of AI.
Despite the low adoption rates, over half of the respondents believe that AI will have a major impact on logistics, while 43% predict a limited impact, and only 5% consider it to be merely hype. Interestingly, this last group consisted entirely of small and medium-sized businesses. Freightos’ chief product officer, Ruth Amaru, emphasizes the importance of the fact that only a small percentage of executives dismiss AI completely, although she admits that the number of active users is somewhat surprising.
Amaru explains that the logistics industry tends to be slower in adopting new technologies due to its complex and interdependent nature, involving multiple players. However, she suggests that the growing trend of automating key freight functions, particularly pricing, could accelerate the deployment of AI in logistics. In the past decade, there has been significant progress in digitizing freight systems for displaying available capacity and online booking. This advancement lays the foundation for the natural progression towards AI adoption.
The progress towards digitization and automation varies across transportation modes. The airline industry, for instance, has made considerable advancements in relying on automation, enabling customers to search for capacity, view pricing, and book online instantly through reservation platforms like Sabre and Amadeus. On the other hand, the ocean carrier sector has been slower in adopting automation due to the proliferation of proprietary systems and the reluctance to share critical data among competitors. However, there are ongoing efforts to establish an industry standard for data exchange to facilitate AI implementation.
Logistics professionals are primarily interested in applying AI to pricing, followed by shipping operations and customer service, according to the Freightos survey. Other areas of interest include e-mail insights, software engineering, sales, and managing exceptions. Pricing in logistics has become increasingly complex, and AI can provide valuable intelligence to service providers in setting optimal prices for their targets.
One of the biggest concerns surrounding the adoption of AI in logistics, as in any other industry, is its impact on human jobs. Surprisingly, the survey indicates that over half of the respondents anticipate a minor impact on logistics headcounts, with approximately a third expecting a major impact. Around 10% believe that AI will actually create jobs, while 5% foresee no impact at all. Larger companies appear to have a greater expectation of workforce impact compared to small and medium-sized businesses.
While the adoption of AI in logistics may seem slow, it is poised to play a crucial role in the industry in the coming years. However, some refinements and advancements in AI applications specific to logistics may be necessary for smoother integration and widespread adoption.
We need logistics technology companies to produce user-friendly and efficient systems, says Amaru. The adoption of each system makes it easier to adopt the next one. As the industry continues to embrace AI and digitization, it holds the promise of improved efficiency, cost-effectiveness, and better decision-making for supply chain management.
In conclusion, while there is a strong interest in AI among supply chain executives, the actual implementation of AI in logistics is still in its early stages. The industry’s slow pace of adoption can be attributed to its complex nature and the interdependencies among various stakeholders. However, with the ongoing digitization efforts and growing awareness of the benefits of AI in logistics, the industry is gradually warming up to this transformative technology. As AI continues to evolve and address the specific needs of the logistics sector, it holds the potential to revolutionize supply chain management and enhance overall operational efficiency.
