Global Megatrends and Industry Division I
Updated: Sep 1, 2022
Moving people and freight by land, sea, air or space together with warehousing, storage and transport support services are covered in this industry division. Of note are the international differences – in India’s NIC (National Industrial Classification) these economic activities are categorised in “Code H”, across Europe their NACE ("nomenclature statistique des activités économiques dans la Communauté européenne") classification system also uses “Code H”, and for the USA - their NAICS (North America Industry Classification System) uses codes “48” and “49”. Compare this to Australia’s ANZSIC (Australia and New Zealand Standard Industrial Code) use of “Division I” – which is the reference used for this series.
As we have seen with other industries, so there is with this one. Much change has taken place, and will continue to take place. And, in a similar fashion to other articles in this series, the focus will be on two significant global megatrends – climate change and computerisation – and the impact they are having on this industry division. Where the timeframe of analysis is over the next 10 years or so. Where the subject of the analysis is career prospects and business prospects. In all, these are the insights from a futurist as to what could unfold for the transport, postal and warehousing industry
About the global megatrend of climate change
At a high level we can easily list the ways that the rising atmospheric concentration of green-house gases has changed our world – greater number of hot days, longer summers, an increase in ocean temperatures. But we also need to be aware of what changes have been wrought at a localised level. For example, in some areas of South America precipitation has risen by 35% over the last 50 years.
However, unless there is significant and globally systematic reduction in the volume of global GHG emissions (currently sitting at about 50 billion tonnes of CO2e annually), then precipitation will continue to rise in intensity, ocean levels will continue to rise, and temperatures will continue to rise. Impacting life as we know it (eg. on current projections, the total area of the earth’s surface that is uninhabitably hot will grow from 0.8% today to 19% by 2070 – affecting up to 30% of the global population in the decades ahead)
About the global megatrend of computerisation
As processing power has increased over the decades, so has the functionality of computers. For example, data networks can transfer more data more quickly, and visual effects for movies and games have become more intricate. Another area that has benefited from these processor improvements is that of artificial intelligence.
With subfields of machine learning, neural networks and deep learning, the aim artificial intelligence is as the name suggests – to mimic the capabilities of the human brain. But as our brain is not only extremely complex (90 billion neurons and 100 trillion synapses) and only requires a relatively minor amount of energy to run (12 to 25 watts – half that of a standard laptop), the implication is that widespread availability of artificial general intelligence is years away.
However, as the ability of computers to store and process increasing amounts of data rose so did the complexity of the tasks they could perform. It was in 1997 that IBM’s “Deep Blue” beat chess grand master Gary Kasparov – a game on an 8x8 board that is highly rules based with a total 10123 possible moves. Almost 20 years later, in 2016, DeepMind’s “AlphaGo” beat 9-dan Go professional Lee Sedol – an abstract strategy game played on a 19x19 board with a total of 10360 possible moves.
Whereas Deep Blue won using the brute force of high speed decision making, Alpha Go won using highly developed artificial intelligence techniques. A trajectory of improvement that will continue unabated.
The impact of these two influences
What of the impact of climate change megatrend upon the transport, postal and warehousing industry?
Moving people and freight requires energy, it also requires machinery and infrastructure to do the moving. In the case of freight it may require some form of storage facility, and for both people and freight support services are required.
With decarbonisation of energy sources being a common response to climate change, the transport sector of this division is responding in simpatico. Together with the improved performance and market acceptance of electric passenger vehicles, battery powered trucks, courier vehicles, buses and ships are moving well beyond the trial stage. Hydrogen fuel cells, particularly when the hydrogen is produced using a renewable energy powered electrolyser, are gaining traction as an alternative source of energy to stored electricity.
While both forms of energy are being trialed for air transport, barriers with respect to energy density are currently limiting prospects of carbon-free flight. Although there is an abundance of entrepreneurial activity in this space.
The machinery of transportation (and postal/courier services), the trucks, buses and ships is also being affected. The simple scientific principle of the power to weight ratio Is leading to lighter construction materials and hence greater energy efficiency.
The infrastructure that transport uses and the efficiency of operations will increasingly be affected by a changing climate. From changes in wind, rain and snow patterns affecting delivery reliability, to the degradation and rebuilding of road, rail and port infrastructure as regional climate conditions shift, the effectiveness of these aspects of the supply chain will continue to be challenged.
As an aside, a common framework used in the transport sector as it grapples with climate change is demoted by the acronym “ASI”. Avoid travel, shift to another mode or improve the efficiency. This formula assists with decisions about sustainable transport – reducing GHG emissions, reducing energy consumption, and reducing congestion in transport routes.
And then there is warehousing. With 1 in 100 year flooding events occurring more frequently, these facilities are being forced to move to 1 in 500 year flood locations. Another factor driving the location of warehouses is the move to reduce transportation and distribution distances. A third factor, which affects both location and operations, is the energy profile of facility construction and management activities.
And then there is global megatrend of computerisation.
We implicitly understand that there are a lot of routine jobs in this industry division, and because computers are good at doing routine things – the trend will always be about replacing humans who do repetitive manual and cognitive tasks with computerised replacements.
For examples of this consider the warehouse management systems that have become increasingly complex in recent years – the robots that do a lot of the work in Amazon’s fulfillment centres and Ocado’s warehouses. Consider too the improvements in shipment tracking systems, where, until relatively recently, you could only track parcels by phoning an operator and quoting a number.
So, where will the increasing processing capability of computers take transport, postal and warehousing?
Just as we’ve seen driverless passenger vehicles rise in prominence in recent years, so will driverless trucks and shipping. With regulatory changes being explored in the USA, and peak bodies in the EU calling for similar action, the surmounting of barriers to adoption together with the maturing of land and sea technology will see these machines in more common use.
We’ve seen postal services around the world meet the longer term trend of digital disruption by introducing digital identity services, improving the efficiency of parcel delivery services, escrow services for e-commerce, and payment and remittance services. Framing, then, postal services as a trusted broker and service provider between governments, citizens and corporations, the challenge will be to maintain the reputation of being trustworthy.
Particularly in the sense of data collection and the use of artificial intelligence.
Another two challenges ahead for the postal sub-sector, as well for transport and warehousing, are in route optimisation and demand prediction. Both of these will be overcome (solving complexity on a massive scale is a problem that quantum computing can solve).
Finally, digital simulations using the concept of the digital twin will help solve efficiency bottlenecks. For a digital twin of a complex system, where that system could be say a warehouse or a set of logistics routes, can be reconfigured and tested virtually before physical changes are commissioned.
So. As with other industry divisions, we can see that the global megatrends of climate change and computerisation the impact the transport, postal and warehousing industry for the foreseeable future. Climate change will primarily be felt in terms energy sources, whereas computerisation will mainly have an impact upon the efficiency and responsiveness of all operations. Important to note is that because this industry division supports other industry divisions, their responses to these two megatrends will in turn have an impact upon transportation, postal services and warehousing.
What are your prospects
From the preceding, and from a career perspective, there are several observations that can be made:
If you are more the “get it done” type: you’ll be maintaining and/or using machines with electrical and hydrogen power sources and with greater digital functionality
If you are more the “thinking” type: there’ll be more data and a greater need to analyse data from a systems perspective in order to manage operations, customers and regulations
If you are more the “creative” type: you’ll have new forms of transport to introduce. You’ll be assisted in your tasks by AI-based optimisation and prediction software
If you are more the “helper” type: you’ll be needed to support stakeholders across the supply chain with change and with maintaining their viability
If you are more the “leader” type: you’ll need to be very comfortable with leading people in an industry that will become more disrupted by weather events and with competitors that are becoming more efficient and responsive due to computerised and automated operations
If you are more the “structure” type: you’ll be faced with not only changing regulations, but also changing market dynamics
Overall, from a career perspective, in the years ahead you’ll need to comfortable with an industry that in many ways is being significantly challenged by these two global megatrends. Not only will the challenge come from within the industry, but the other industries that it serves.
And from a business perspective, like with other industries, when it comes to responding to climate change it is all about mitigation (ie. shifting focus to reduce risk) and resilience (ie. fortification to handle risk). And, when it comes to computerisation, its all about automation and using data. So, for those operating within the retail industry, likely business prospects are along the following lines:
Mitigation: relocate warehousing facilities, diversify transport modes and routes
Resilience: reduce energy usage, upgrade transport infrastructure
Automation: electrify machines and equipment, increase sensor density
Data analysis: expand data sources, implement optimisation and prediction
Overall, and quite obviously, for businesses there are both risks to be aware of and opportunities to exploit in the change that is happening.
The transport, postal and warehouse industry, like all other sectors of any economy, is being affected by the global megatrends of climate change and computerisation. Not only will these phenomena continue to change the industry, but because this industry is in many ways the connecting tissue of other industries – what happens in other sectors will influence it. Competition, regulations and other responses to these megatrends will cause change from within. Whereas change will be imposed upon the industry by external sectors as they respond to these same forces.
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