Breakout Opportunities in Asia for Smart Logistics

By: Dr Ding Hongwei, General Manager, Cainiao Technology

The eCommerce and cross-border trade boom in Asia has spotlighted the region as a global logistics hub, with much potential for further growth. In fact, it was forecasted that more than half (57 percent) of the global e-commerce logistics market growth between 2020 and 2025 will happen in this region alone.

As the sector expands, the demand for digitalization and technological investments within the logistics sector is expected to increase, indicating growth opportunities for businesses. Coupled with mounting pressures put forth by consumer demands for better, faster, and cheaper logistics services, companies need to evaluate the operational processes in their value chains to remain agile.

Although the supply chain disruptions marring the global economies today have accelerated digital adoption, there is still much room for greater efficiency, productivity, and sustainability. Asia is at the forefront of an economic resurgence yet, the disparity between markets is still quite significant when it comes to digitalization. Adopting emerging technologies is a strategic imperative to empower the sector and instill greater supply chain resilience.

Leveraging technology to deliver greater sustainability in logistics

The rapid growth of eCommerce and its supporting logistic functions has inevitably resulted in an enormous increase in waste generation. With government authorities, regulatory bodies, activist groups, and consumers placing a greater emphasis on sustainability today, it is safe to say that prioritizing sustainability is no longer an option, but an imperative.

Recycling stations at Cainiao Post across China

This is precisely why at Cainiao, we are incorporating sustainability into our business processes and encouraging green practices across our operation spectrum. This includes the development of eco-friendly packaging and driving nationwide recycling programs via Cainiao Post stations located in communities and campuses.

To drive greater impact and deepen the permeation of green practices into every aspect of the value chain, one surefire way is to marry technology with green logistics. One way this can be achieved is using smaller electronic shipping labels and AI smart packaging algorithms to assign parcels to right-sized carton boxes help to reduce paper consumption.

Cainiao’s electronic shipping labels affixed to parcels

During the Double 11 Global Shopping Festival in 2021, the use of electronic shipping labels in Cainiao warehouses saved an equivalent of 3,700 square meters of forest area and the AI smart packaging algorithm reduced approximately 15 percent of packaging materials for 250 million parcels.

This data alone dispels the misperception that going green will hurt the bottom line for businesses. On the contrary, these new technologies are able to improve overall efficiency and productivity, as well as reduce waste and energy consumption.

Wider adoption of autonomous vehicles

The pandemic has shifted consumer preferences for contactless delivery options. For logistics companies to continue increasing customer satisfaction levels, greater focus needs to be placed on last mile logistics. However, this is the most expensive element of the delivery journey. This can be attributed to the many facets involved, such as moving the parcel from the warehouse to the delivery vehicle, and from the vehicle into the customer’s hands.

Cainiao’s logistics robot making deliveries in China

But all is not lost — autonomous delivery can be the panacea for the costliness and timeliness of last mile logistics. And we are seeing traction when it comes to its adoption. Globally, the market is forecasted to be worth S$6.6 billion (US$4.9 billion) by 2030. Zooming into Asia, several markets such as Singapore, China, and Japan, have also adopted autonomous delivery to provide safer contactless services for consumers. In addition to saving time, autonomous delivery can also reduce overall logistics costs for the retail industry by up to 90 percent.

Case in point, Cainiao’s deployment of over 350 autonomous robots in China during Alibaba’s Double 11 Global Shopping Festival 2021 delivered more than 1 million orders to consumers in a short time span.

Utilizing augmented reality technology to enhance experience

The augmented reality (AR) and virtual reality (VR) domains can accentuate and create immersive experiences — which is precisely why it has exploded in popularity in the last couple of years. But that is not all it is good for. In logistics and supply chain management, AR has been proven to improve operational efficiencies and location tracking accuracies by reducing the need for human contact.

In a logistics environment such as smart warehouses, employees can greatly improve picking efficiency, reduce picking error rates, training time and cost with the use of AR glasses. AR technology and equipment can also replace traditional navigation systems to provide dynamic real-time navigation when delivering parcels.

On the other hand, VR allows companies to simulate, optimize, and conceptualize infrastructural design for warehouses and freight transport, saving time and costs. With the rise of hybrid work environments and physical space constraints, companies can also utilize VR technology to conduct employee training. This allows them to create immersive scenarios in warehouses, trucks, and more. Quality and safety modules, and even operational classes on equipment use, can be taught virtually with the help of AR and VR.

As the industry recovers from the pandemic, companies will be better positioned to navigate the uncertainties of the global logistics challenges with these smart technologies. It is time to envision the future of logistics management and leverage cutting-edge technologies to bring it to the next level.

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The logistics arm of Alibaba Group. Follow us for content on smart logistics and supply chain management