The logistics industry is facing far-reaching changes due to the digitization of the freight forwarding business. Ironically, the globally leading German companies are approaching the tasks of the digital transformation rather hesitantly, so the assessment of the management consultants Oliver Wyman in a market analysis. In order to remain competitive in the long term, established logistics service providers should seek cooperation with innovative start-ups in their industry far more than before.
They are called Flexport, UShip, Uber Freight or Freight hub and are in the process of revolutionizing the logistics landscape. While billions have been invested in recent years in passenger mobility start-ups, such as Uber, BlaBlaCar or Flixbus, the logistics sector is now on the investors’ agenda, according to the study. Even if the newcomers are not yet known to many logisticians today, they are already changing the industry with considerable financial resources. According to the analysis of the management consultancy Oliver Wyman, the publicly known financing rounds of logistics start-ups alone amounted to almost eleven billion euros in the last ten years. On average, a new logistics start-up is founded every five days.
Innovative start-ups are in the process of completely digitizing the classic forwarding business, according to the authors of the study. They fragment the existing supply chains and revolutionize the efficiency and transparency of the transport business by combining an unprecedented amount of data. If the established providers did not react in time to the digital business models, the agile start-ups could soon become a realistic threat, according to the market analysis.
As the location of globally leading companies such as DHL, DB Schenker and Dachser, Germany occupies one of the world’s leading positions in logistics. In Germany alone, around 3 million people work in logistics, and the total turnover of the industry is over EUR 250 billion per year. Whether Germany remains the industry leader also depends on how logisticians succeed in digitizing their business. Many logistics companies find it difficult to keep pace with the pace of digitization, study authors note. Start-ups, on the other hand, are flexible and would not have to take account of established structures. And they master the same big data approaches as the personal mobility start-ups, for which Uber is the best-known example. The newcomers in logistics could become pacesetters in the industry.
The problem for Germany: The financing of innovative transport and logistics start-ups is currently taking place mainly in the USA and Asia. In both major markets, about 45% of global investments are made in logistics start-ups. Europe is only 5%. Venture capital companies from Silicon Valley, such as Kleiner Perkins Caufield & Byers or Andreessen Horowitz, play a key role here. These companies have recognized the potential for change in the digital transformation of logistics and are increasingly investing in this area. In 2016, the leading American venture capital firms spent more than EUR 250 million on logistics start-ups.
In Germany, rethinking is slow, says the study. The industry leaders DHL or DB Schenker have begun to invest very selectively in initial partnerships with start-ups. For example, DHL took over Streetscooter, a spin-off from RWTH Aachen University, which was to help develop cost-efficient electric delivery vehicles. DB Schenker is cooperating with the US freight exchange Uship in order to increase capacity utilization in land transport and at the same time increase its own innovative strength. The German logistics industry, in particular, remains cautious when it comes to investing and boosting the growth of local start-ups. According to the study authors, there are currently more than 30 interesting start-ups in logistics in Germany. The exchange with German logistics companies so far – if at all – only very hesitant.
From the point of view of management consultants Oliver WymanIt is usually not done with a pure equity participation in start-ups. An essential prerequisite for the successful investment in start-ups is the willingness to radically question and digitize one’s own core business. The start-ups are in a sense the catalysts for it. Enterprise organizations need to become much more agile with lean structures in decision making and accountability. At the same time, the development of big data and analysis skills should be accelerated. For the entire process of digital transformation, a roadmap with clear guidelines and timelines must be created. The start-ups could be involved as ideas suppliers for solutions and talent pools.