Logistics trends for the remainder of 2022

The last few years have been challenging for the world of logistics. It is well known that digitalization and technological advances have changed the way we do things from one end to the other, and even more so in the logistics sector, where globalization has a strong impact. Therefore, many of the trends in logistics are influenced by these and can be considered guidelines for our following strategies before the end of the year.

1. Increased demand for 3PL and 4PL services
   According to various experts at McKinsey & Co, the global market for logistics providers will reach $1.1 trillion in the next six years. Therefore, those 3PL companies that provide warehousing in multiple locations will be in greater demand. This would mean efficient last-mile logistics with more services and much faster.

2. The need for specialized personnel
   For some years now, the skill set required for people to work in the logistics sector has been focused on the latest technologies. Therefore, some of the most sought-after profiles will be experts in process automation, Big Data, and AI. The most valued profiles will be those who can develop intelligent environments using IoT and bring differential value to the organization.
   
3. The capacity crisis will continue
   At the moment, there is too much demand and too little capacity. This crisis has been looming for years and has only been exacerbated by the growth in shipping volumes due to the COVID-19 pandemic and the holidays during the last months of the year. It will take time for capacity to catch up with demand. Companies will need to make the most of their power by closely monitoring asset utilization and prioritizing shipments, where good shipment management will determine the survival of freight forwarders.
   
4. Mergers and acquisitions will increase
   Both carriers and customers invest in visibility through mergers and acquisitions, expanding vertically and horizontally. Currently, transaction value increased by 86% year on year in the second half of 2021. A clear example is the acquisition of Senator International by Maersk, a German freight forwarder with almost 40 years in the market.
   
5. Increased investment in infrastructure
   New ships, trains, aircraft, and ports are needed. If we could complete and build the supply chain infrastructure overnight, it would alleviate much of the capacity crisis. Still, unfortunately, it will take time to catch up with the infrastructure we need.

However, we can take hope that actions are being taken at different strategic points to drive this forward. Smart ports are booming, and there are more and more industrial developments in ships and machinery. This is closely linked to new regulations on environmental protection and green logistics. For the time being, although it is a move that is already in action, we must work as best we can with what we have and wait for the investments to come.

There are still several points to work on, but these trends in logistics are just around the corner, and it will be vital for our survival to take them into account. The good news is that according to BCG, the response to these trends in 2022 has been more favorable than estimated, and we are likely to be able to cope with today’s system.

Logistics operators: how many types are there? (1PL, 2PL, 3PL, 4PL, and 5PL)

Hiring logistics operators has long since become a common practice. The increasing complexity of logistics processes and the rise of e-commerce businesses have led most companies to turn to specialized intermediaries to delegate functions over their supply chains.

In this context, it is essential to know what types of logistics operators you can hire if you want to delegate some processes of your distribution chain.

What are logistics operators?

Logistics operators are logistics companies that function as suppliers who take on the responsibility of managing one or more tasks in the supply chain of a contracting company. The aim of this process is that the contracting company can devote all its efforts to its business area while delegating its logistics area to a supplier specialized precisely in logistics.

In this way, the contracting company does not need to invest resources in developing its own logistics platform, acquiring a transport fleet, or training its staff in complex logistics tasks. Instead, it is more cost-effective and productive for the company to outsource to logistics operators that already have the infrastructure, transport, and logistics staff to be in charge of the supply chain wholly or partially.

Among these activities that you can delegate to different types of logistics operators are the following:

• Storage of goods.

• Inventory management.

• Logistics transportation and physical distribution of goods.

• FTL and LTL freight forwarding.

• Picking and packing.

• Reverse logistics.

• Shipment and reception of goods

Let us now look at what the different types of freight logistics operators consist of:

1PL logistics operators: In the particular case of 1PL (first-party logistics) logistics operators, these are not suppliers per se but are the companies themselves that decide to take charge of their land logistics without subcontracting to a third party. In this sense, the 1PL logistics operator is the company that directly stores and transports its goods autonomously.

2PL logistics operators (second party logistics) provide the means for the storage and transport of goods for the contracting companies.

3PL logistics operators (third party logistics) are providers that have their warehouses and transport fleets. They also assume responsibility for managing these resources as part of the logistics services they provide to the contracting companies.

4PL (fourth-party logistics) operators, also known as lead logistics providers or LLD (Lead Logistics Provider), are providers that take over the management of the entire supply chain of the contracting companies (beyond just warehousing and transport).

The 5PL (fifth party logistics) operators are the latest and most advanced link in logistics outsourcing. These providers are characterized by the fact that they have sufficient capacity to manage multiple global supply chains. In this sense, contracting companies do not assume responsibility for their logistics, as they delegate 100% of their supply chains to 5PLs.

Ultimately, all companies need to optimize their supply chains in one way or another. The same is true for logistics operators, who need to improve their processes to offer increasingly efficient services.

Greenwashing by Coca-Cola: “Circular seas” & Zero emission transport.

First of all, it is worth remembering that greenwashing, used by large corporations as a strategy to clean up their image, is known as greenwashing. It is a tool to exploit consumers’ growing environmental sensitivity within a fundamentally unsustainable business model. Less than a decade ago, many large companies that now promote themselves in eco-friendly campaigns were radically opposed to energy transition policies. The “greenwashing” can appear in many forms, for example, in the indications, the adjectives, the colors, and the symbols used to create a false impression that a product is “greener” than it is not.

Limiting temperature rise by 1.5 degrees is vital. According to the Paris Agreement, Coca-Cola announces its plan to achieve it: it will be net zero emissions by 2040 across its value chain.

Over the years, this company has become one of the most polluting globally. According to the environmental movement Break Free From Plastic (BFFP), conducted in 2019, Coca-Cola is the largest plastic polluter. This is not the first data on the unsustainable production of the soft drink company, which produces 200,000 plastic bottles per minute.

Considering that more than 90% of the emissions generated by Coca-Cola are those over which it has no direct control (ingredients it uses, packaging, refrigeration equipment, transport, and distribution). With the conviction that the battle against climate change requires working together, CCEP will do everything possible to reduce them by joining forces with its strategic suppliers.

But what is “Circular Seas”? A project co-financed by The Coca-Cola Foundation of Coca-Cola in Spain to clean up our coasts and oceans. The ultimate goal, set for 2025, is to collect the equivalent of 100% of the cans and bottles marketed, bet on innovation in sustainable and recyclable packaging, and promote the culture of reuse and recycling. Specifically, for 2018 it is proposed to collect 250 tons of waste, 25 of which will be PET plastics. “Coca-Cola’s social and environmental commitment is not new, and our goal is to achieve carbon neutrality by 2040, ten years ahead of the European target,” says Carmen Gómez-Acebo, Sustainability Director Iberia Coca-Cola Europacific Partners (CCEP).

But guess what? Yes, you thought right. Circular seas are only a fantastic idea. Coca-Cola did not change ANYTHING in their production process to AVOID producing these cans instead of trying to “clean them” from the ocean.

Furthermore, In December of the same year (2020), Coca-Cola renewed its delivery vehicles, which carried its products through the streets of Spain with a slogan that read, “We reduce emissions with…. ecologically improved vehicles”. The multinational company fell into greenwashing. The magazine Ballena Blanca did a fact-check on this campaign. The trucks and vans had only renewed the engine to Euro VI. In other words, they continued to be diesel and to release polluting gases into the atmosphere.

But what can we say to Coca-Cola?

• Environmental problems cannot be solved with advertising solutions.
• The legal responsibility of the packager refers to all the packaging he places on the market.
• Deposit, return, and refund systems encourage the return of used packaging to the collection system and facilitate its reuse or recycling.
• Greenwashing seriously harms the work of environmental professionals.

Focusing a corporate advertising campaign on a manifest breach of a legal responsibility demonstrates the company’s limited capacity to incorporate environmental commitments into its discourse. Thanks to the famous Coke Leak, it is not in vain that we know that the soft drink multinational works against the measures related to health and the environment that European governments are trying to promote. The fact that this is not a media scandal shows the multinational’s control over the media.

Logistics, transport, and the decarbonization of the planet

How can the logistics & transport keep up with the goals of COP26 and the 2030 vision?

In November 2021, I started my internship as a “Junior Business Development Consultant” at SOLATOM. A Valencian Start-Up dedicated to developing new technologies to offer 100% green hydrogen at lower costs than what is already in the industry and available to the customer

Although my current position makes me function more as a strategic mind, my study background has been 100% focused on logistics. So, I asked myself, how will the hydrogen industry affect and support logistics as we know it today? Can this be an answer to respond to some of the 2030 sustainability goals? How can this help to reach the COP26, where nations took a range of decisions in the collective effort to limit global temperature rise to 1.5 degrees. Furthermore, how can we do this? One of the ideals would be, reducing CO2 emissions.

Thus, what is hydrogen? Hydrogen gas is the most abundant chemical element in nature and is a versatile, light, and highly reactive material. Green hydrogen is obtained through a chemical process known as electrolysis, which uses an electric current to separate hydrogen from oxygen in the water. With hydrogen, we can attempt the real deal: Decarbonization.

The decarbonization of the economy and transport is a process that cannot be postponed in the medium and long term, hopefully giving more prominence to green hydrogen.

Logistics-focused hydropower plants aim to generate and supply green hydrogen to heavy road transport fleets, intercity bus fleets, and light industrial vehicles.

They could also serve other sectors such as railways and the chemical industry. Recently, the Spanish government announced the National Hydrogen Strategy, which includes the allocation of more than 1,500 million euros from European funds for hydrogen-related projects. Moreover, if its production becomes 50% cheaper by 2030, as predicted by the World Hydrogen Council, we will undoubtedly be facing one of the future fuels.

In this sense, at the end of 2021, the European Commission presented the ‘Sustainable and Intelligent Mobility Strategy.’ This document includes an action plan of specific political measures, with the main milestones for the next three decades to reduce greenhouse gas (GHG) emissions related to all modes of transport by 90 percent by 2050.

The graph presented below (Figure 1) shows the potential demand for hydrogen:

Figure 1

 I consider it essential to highlight some of the most critical positive aspects of the use of green hydrogen in logistics:

1. Compared to battery-only vehicles, there are improvements in sustainability, operation, and safety. This is achieved by reducing batteries (reduced weight and life-cycle environmental impact) and eliminating the need for electric charging and recharging infrastructure.
2. Elimination of environmentally polluting gases such as those produced by diesel or gasoline.
3. Ability to decarbonize transport. Sector considered so far as “difficult to abate” in fighting climate change.
4. Apart from renewable energy, the only raw material in a green hydrogen plant is water (H2O). Water is a low-cost renewable resource whose cycle is not altered.
5. Increased safety for personnel. Hydrogen is not harmful to workers, unlike, for example, lead-acid batteries, which are used in most warehouses.
6. Ease of storage. Allows for subsequent use for other purposes and other times than when produced.
7. It is strengthening Spain’s energy and technological independence and the European Union.

Decarbonization of the planet is arriving, and as you can see, without a doubt, green hydrogen is one of the most effective solutions for this.