Logistics Obstacles To Be Solved By AI

The logistics market is considered one of the most powerful industries in the world. It is dynamically evolving and generating supply that meets demand, although not always perfectly.?

? Even in its current state, with a market capitalization of $8.9 trillion in 2023, the logistics sector is far from ideal, as it still has bottlenecks that are quite difficult to overcome using traditional methods.

According to analysts from Precedence Research, the industry’s value is expected to reach an incredible $21.91 trillion by 2033. And I believe I know what will serve as the key catalyst for this growth.?

By using artificial intelligence in all aspects of logistics, a brand can gain several advantages, including:

• Reducing operational costs.
• Improving staff and process productivity.
• Automating a significant portion of tasks.
• Gaining access to critical data.
• Overcoming current challenges in the segment.

This is just the tip of the iceberg.

The rest of the features and prospects are deeply embedded in the logistics foundation, unseen by the average user.

Today, I will talk not so much about the industry’s challenges, but about how artificial intelligence can address them.

If you want to access the full version of the study conducted at AdvantISS, please refer to the ebook.

Briefly about the sector’s bottlenecks

Logistics always balances costs and profits, trying to reduce the former and increase the latter.

However, this is not always successful due to external factors that indirectly affect business activities.

These include:

• A shortage or surplus of employees.
• Operational and transportation costs.
• External and internal risks to enterprises.

Additionally, there are global risks, constant turbulence in military, economic, and political areas, and rapidly growing competition.

AI can fully address all these challenges by neutralizing them and simultaneously creating new opportunities when used correctly.?

How can artificial intelligence improve logistics?

Experts at Precedence Research predict that the value of the AI market will increase to $2.57 trillion by 2032. I foresee even more positive dynamics for technology development, so I am almost certain the figure will be somewhat higher.

However, that’s a topic for another discussion.

? There are more and more LLMs, SLMs, and hybrid solutions that can be implemented in the infrastructure of the vast majority of business niches.?

All this provides brands with advantages while solving several critical problems, such as:

• Data security breaches due to cyberattacks.
• Environmental issues.
• Low delivery speed and failure to meet deadlines.
• High labor costs.
• High transportation costs.

Directly or indirectly, artificial intelligence can tackle these challenges and improve companies' productivity while reducing their costs.?

Data Security Breaches Due to Cyberattacks

Any business can become a target for internal and external attackers, leading to reputational and financial losses and reduced market positions. Often, the cause is insufficient protection of the company’s infrastructure.

AI will help to:

• Detect and eliminate vulnerabilities in the digital system, its individual components, modules, and APIs in advance.
• Monitor the platform's status and respond to all attempts of interference or information stalking.
• Model risks and test them proactively without impacting operational processes.?

Typically, the financial sector shows more interest in cybersecurity, but the logistics sector is also constantly targeted by competitors, fraudsters, and others. Therefore, AI can become the solution that preemptively protects your sensitive and corporate information.

Environmental Issues

According to the EPA, passenger transport alone emits over 4.6 metric tons of carbon dioxide annually in the US. Imagine the scale of harmful substances released into the atmosphere by freight trucks, of which there are about 13 million units (of various types and categories).

While AI won't reduce the number of diesel and gasoline vehicles on the roads, it will:

• Lower fuel costs by optimizing logistics routes.
• Control fuel quality and the condition of key vehicle components that affect emissions.
• Accelerate the mass production of "green" trucks or engines for conventional transport.

All this will ultimately reduce the amount of harmful exhaust emissions, positively impacting the planet's environment.

Low Delivery Speed And Failure To Meet Deadlines

It cannot be unequivocally stated that all cargo and parcels reach their recipients on time. The blame lies with human factors, lack of planning, external factors, and more.

Artificial intelligence can:

• Optimize supply chains, reducing transportation time to the destination.
• Predict demand and generate an optimal transportation schedule based on historical and current data.
• Reduce bureaucracy through the automation and digitization of business documentation processes.

Thus, the human factor in transportation processes is practically eliminated, and the overall productivity of providers is improved.

High Labor Costs

The larger the staff, the higher the costs for maintenance and training. For example, you cannot replace drivers with technology (at least not yet), but you can reduce the number of operational personnel.

Specifically, thanks to artificial intelligence, you can:

• Automate order processing, schedule creation, cargo distribution, and more.
• Automate warehouse equipment and loading/unloading processes of trucks.
• Eliminate intermediate managers from supply chains, with specialized bots performing their tasks.

No, I am not advocating for mass layoffs, but I see the potential for optimizing staff through the implementation of new technologies, particularly AI.

High Transportation Costs

The cost of transportation is high when considering current expenses for fuel, wages, and truck maintenance, not to mention additional services, equipment, and more.

Artificial intelligence will allow cost reduction in various ways, including:

• Optimizing routes and planning them to minimize fuel consumption and identify refueling points with the lowest prices.
• Reducing the number of employees in logistics companies in departments where comprehensive system automation of processes, particularly organizational ones, can be implemented.
• Lowering brand expenses by modernizing equipment, upgrading it to energy-efficient and autonomous options, and "greening" engines.

While AI won’t provide low prices for fuel and equipment, the technology will optimize costs by improving processes and minimizing expenses in this way.

In Summary

Artificial intelligence is a relatively young but already powerful, useful, and effective technology capable of optimizing processes and addressing typical challenges in the logistics industry. So if you haven’t started transforming your business yet, now is the time to do so.

? Want to learn more about modern logistics problems and ways to solve them with AI? Check out the relevant material from AdvantISS.

What do you think? Does artificial intelligence truly have such a bright potential in the industry? Share your thoughts in the comments!