Transport and Logistics Trends 2019

Five forces transforming the industry in Central and Eastern Europe

68%

of transport & logistics CEOs surveyed expect that changes in core technologies of production or service provision will be disruptive to their business*

*PwC CEO Survey 2018

65%

transport & logistics CEOs surveyed expect changes in distribution channels impacting their business*

*PwC CEO Survey 2018

Complexity of modern transport and logistics

There is no doubt that the transport and logistics sector is undergoing an important transformation as new technological solutions come into everyday use, driven by market trends. At no point in recent history have we witnessed such a large degree of political, economic, social, technological, environmental and legal changes influencing this segment of the economy.

As complexity of modern transport and logistics grows, it is more and more difficult to understand what should be the short vs long term focus and what to invest in. This is why we have made an attempt to identify the key forces transforming the T&L segment.

Based on analysis of trends, as well as evaluation of maturity and the potential impact of emerging transport and logistics solutions, we have concluded that the primary forces transforming transport & logistics are:

  • Digitalization,
  • Shifts in international trade,
  • Software-driven process changes,
  • Changes in markets’ domestic commerce,
  • Machine-driven process changes.

In order to better understand the current situation, as well as the future direction of the industry’s transformation, we have analyzed each of these 5 forces in detail, taking into account their driving trends as well as the maturity of solutions emerging in the market as a response, and compiled our key observations in this Trend Book.

Key trends in transport and logistics

#1 Digitalization

Digitalization is already happening, visible in business processes ranging from administration, through operations to contracting. Today digitalization is no longer about simple Information & Communication Technologies or ERP in the work places, but about devising completely new business processes and models, including integrations across the value chain. It is more about leveraging the possibility of moving the point of purchase as well as important elements related to service provision into the digital environment.

54% of companies surveyed expected that digitalization would increase their revenues (PwC Global Digital IQ Survey 2017). Businesses can also use digitalization to:

- simplify their processes,
- redesign their services, products and business models and
- reduce the impact of talent gaps.

Digitalization can be expected to reshape the way consumers interact with business, which is already visible in the online and mobile ordering of transport, ranging from personal transport services, through taxi services, to car sharing and public transport ticketing. Such services may even soon cease to be viewed as innovative.

#2 Shifts in international trade

Shifts in international trade are already visible, e.g. in the rapidly growing numbers of train trips from China to the EU. Growing China-EU trade volumes (both directions), new investments along trade routes and land transport (acting as an alternative that’s faster than ocean freight and cheaper than air freight) will likely reshape international logistics in Eurasia. New trade routes will open and existing ones will expand, as emerging economies become more connected to the global economy.

Shifts in international trade are driven by:

- establishment of free trade agreements,
- emergence of trade wars and barriers to trade resulting from regulations,
- globalization of transport businesses,
- infrastructure development (especially in rail and road as well as through the Belt and Road Initiative supported by the government of China).

T&L companies will undoubtedly benefit from the modernization of railways, highways, telecommunication and other facilities such as hubs located along emerging trade routes. The “new silk road” corridors between China and the EU are expected to grow rapidly over the next few years. Such developments will lead to a lowering of the costs of transport and will enable the creation of new services. These investments and the opportunities for creating new services can together be referred to as “New Trade Route Solutions”.

#3 Software-driven process changes

Software-driven processes changes are expected to grow dynamically over the next few years, generating even larger benefits for business, but at current stage these solutions still need to find their way into the mainstream. The evolution of base technologies, such as Artificial Intelligence, the Internet of Things, Big Data Analytics or Blockchain/DLTs and the pressure on business effectiveness they generate, will create a favorable environment for the development of such solutions.

The following solutions are expected to reshape T&L as software-driven process changes:

- Intelligent Transportation Systems
- Robotic Process Automation
- Predictive solutions (e.g. for maintenance and deliveries)
- Blockchain and all Distributed Ledger Technologies
- AI solutions 

Companies can be expected to implement them to build cost and quality advantage and a better insight into passenger and cargo flow, enabling consumers to experience better convenience and stay ever more informed about (and connected to) transport services.

Substantial changes in markets’ domestic commerce can be expected over the next few years, fuelled by optimistic economic growth forecasts, development of eCommerce markets and the sharing economy and increasing M&A activity in the T&L segment. Solutions in this area will also be driven by changing consumer expectations and an ageing society. All these changes will create a push for new services as well as different value-chain integrations between producers, including ​e-tailers and T&L companies.

There are a number of new solutions that companies can explore due to changes in domestic commerce to provide consumers with more affordable and innovative services, enabling more convenience in online shopping as well as new possibilities to share resources for everyday use:

- Leading brands looking towards opportunities for growing their sales online
- eCommece businesses investing in logistics
- CEP companies designing tailor-made solutions for eCommerce
- Sharing economy
- Logistics consolidations

Among other benefits, machine-driven core process changes can be expected to increase the efficiency of transport and logistics services. Solutions in this area require investment in new technologies and thoughtful implementation.

Machine-driven process changes will be enabled in the longer term by the development of base technologies (including advancements in electro-mobility) and changing regulations. They will also be shaped by an emerging focus on environmental sustainability.

With wider application of the following machine technology solutions, T&L companies can benefit from increasing work efficiency, the automation of core operations and possibilities to fix bottlenecks and design new services:

- Robotization
- Electro-mobility
- Augmented Reality and Mixed Reality devices
- High speed Rail (HSR)
- Last Mile Optimization

To consumers and employees, machine-driven process changes will mean interacting less with people and more with machines in the future, but ultimately, will also result in a greater availability of flexible services.

Contact us

Michał Mazur
Partner
Tel: +48 502 184 684
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Grzegorz Urban
Director, PwC Poland
Tel: +48 519 507 386
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Tomasz Sączek
Vice director, PwC Poland
Tel: +48 519 506 503
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Maciej Starzyk
Manager, PwC Poland
Tel: +48 502 354 543
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