How Tech is Shaping the Logistics Industry in Chicago

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How Tech is Shaping the Logistics Industry in Chicago

Chicago is an integral part of the logistics and transportation fabric of North America. Be it land, water, or air transportation- the Windy City is at the center of it all. Its geographical location and topographical features have made it the focal point of trade routes of the world’s biggest economy.

The city is home to many logistic giants such as Coyote Logistics and Echo Global and is a budding ground for tech-logistics startups like FourKites and Project44. It also headquarters some amazing software development companies. These players are constantly at it to grab a more significant chunk of the market share in an industry that transports through the city goods worth easily a trillion dollars every year. 

Earlier, the logistics industry revolved around resources. Players with an upperhand in assets such as trucks and warehouses naturally dictated the market, and it wasn’t easy to challenge them. Thankfully, technology proved to be the great leveler that the industry needed all along. It empowered young and upcoming businesses to get competitive and stay relevant. This has inevitably changed the power dynamics within Chicago’s logistics industry in recent years, and it’s a no brainer that technology will remain the kingmaker in the future as well.

Let’s dive deeper to understand how Chicago came to be such a significant logistics hub, and what its future looks like with the influx of tech in the logistics industry:

How Chicago Became a Logistics Hub

This city came into formal existence in 1837 – just one year after the construction of the Illinois and Michigan canal began. As expected, population and industrial activity boomed around the canal, and thus began Chicago’s foray into waterway transportation. In fact, the Port of Chicago is functional even to this day and is one of the largest inland seaports in the world.

However, waterways weren’t the only factor that played in Chicago’s favor. Its proximity to the mines and forests of Minnesota, Wisconsin, and Michigan meant it was easier to bring in resources to build and sustain the railroads.

Soon enough, Chicago became a central node in the railroad network of the continent. It was responsible for the distribution of resources across the country, which in turn helped in the construction of a modern America. After all, it wasn’t named the “hog butcher to the nation” for no reason.

Fast forward from early European explorations to now- Chicago is among the biggest logistics hubs in the world. The city attracts more prominent players from not just the logistics industry but also from many other fields. 

DHL, a global logistics giant, opened its innovation center at Chicago in 2019. This facility is the first of its kind in the country and third across the globe. Uber’s shipping division, Uber Freight, also announced to set up their headquarters in Chicago and is eyeing a $200 million in yearly investment. Other prominent players such as Google, Facebook, and Salesforce have acknowledged the vast talent pool and resources of the city by undertaking significant expansion projects. 

Tech’s Impact on Logistics Industry

Technology has revolutionized our lives within the small time frame of just a decade. It has changed our habits, perspectives, behaviors, expectations, and whatnot. Barely a few years ago, there was no way to track your shipped order and no telling when it’d arrive. Compare that to today – not only are you informed if the product is in transit or sitting in some warehouse, but you’re also given a near-precise date and time slot of its delivery. Now, that’s nothing short of a minor miracle on the tech front. And such tech wizardry can be seen more prominently across the logistics industry. They’ve used tech to bring about a lot of positive changes, along with a much-needed transparency. 

Let’s look at some of the major technological shifts in the Transportation and Logistics(TL) industry:

Physical Internet

The Physical Internet aims to replicate – you guessed it – the internet and create a network of hubs and transportation systems on a global scale. This move is expected to introduce more ease and efficiency in the logistics industry. 

When you send an email for instance, you rely on the internet to deliver it. And while doing this, you don’t concern yourself with servers or other technicalities at play in sending an email.. You simply hit send, and your message is as good as delivered. Similarly, the physical internet has hubs acting as  servers and waterways, aviation, or road transportation, etc. as the different methods of moving the freight. 

Physical internet

Source: https://www.etp-logistics.eu/

However, the only way to create such a global network overlay is to introduce standardization among the parties involved. This is where technology comes into the picture. Tracking, labeling systems, protocol compliance, and several other means for the Physical Internet to exist and operate efficiently – all depend on tech. 

Even though it’s just the eCommerce players that are currently showing interest in the Physical Internet, you can very well expect the other logistic giants to come aboard as natural methods of standardization evolve in the future.

Good read: How Simform developed a software solution for TransTMS, an integrated transportation company, to provide an end to end freight brokerage system.

Data Analytics and Machine Learning

As they say, data is the new oil. But unlike real oil, there is no dearth of data in the business of logistics. In fact, some of them are crumbling under mountains of data piling up every day. Supply chains usually comprise multiple players, and more parties lead to more documentation. To make matters worse, sometimes there are both digital and physical records associated with a shipment. 

In response to these problems, logistic companies are increasingly employing data analytics and machine-learning techniques to fight off analytical paralysis. For one, ML algorithms can quickly go through tons of physical documents and extract all the useful information. They are even used to filter out potentially dangerous language and characters in documents intended for legal use.

Data analytics helps map out the most cost-effective ways to ship goods. 40% of trucks on the road used to be empty at any given time, but freight carriers are now able to eliminate such redundancies with the help of data analytics.

Automation and Robotics

Automation and robotics have a terrible reputation thanks to sci-fi movies. And the common perception that automation will render people jobless certainly hasn’t helped their negative image. However, that’s only one side of the coin. It’s true that automation might take up some monotonous jobs, but it’d also pave the way for many new ones. Moreover, in order to keep up with customer expectations, transport logistics has no other choice but to turn to automation.

Amazon, IKEA, UPS, and Nike are among some big companies that have already embraced automation in their warehouses. These advanced, automated systems work round the clock to keep up with mounting business demands and are also less susceptible to errors. Moreover, automation in logistics isn’t limited just to product handling – it’s used for labor management as well.

‘Cobots’ are also finding more applications as we speak. These bots don’t replace the human workforce but rather enhance its productivity. Parking-assistance technology in your car is an excellent example of it. Needless to say, automation and robotics are set to play a massive role in the future of the TL industry.

Blockchain

This technology has been around since the 90s but gained popularity fairly recently. Bitcoin is one of its more known applications, but blockchain has so much more to offer.

It’s application- as a decentralized ledger system in supply chains, usually consisting of multiple parties- can make up for faster and leaner systems in logistics. With transparent records of each shipping container and the ability to update the status of shipment instantaneously, blockchain has the ability to cut down costs by a huge margin. 

With blockchain, you don’t need to rely on third parties and their approval for transactions. Instead, you can have decentralized ledgers at your service. They can be used to approve instantaneous transactions, detect counterfeits, and eliminate clerical errors. Companies such as Chronicled and ShipChain have already come up with blockchain-based solutions of the industry.

The Future: Chicago & Logistics Tech

We saw how Chicago flourished as a shipping hub, and how the logistics industry is being rapidly transformed thanks to new-age technology. Now, let’s take a gander at what the future holds for the two: 

Logistics companies in Chicago are especially in luck as they have easier access to present and evolving technology. Chicago has come to be something of a haven for tech startups. Plus, the City of Broad Shoulders has also attracted many current tech giants to its soil. 

There are several factors working in Chicago’s favor to have caused this. For instance, the city offers a rich talent pool and relatively cheaper real estate that encourages the tech startups to set up their base here. Unlike Silicon Valley or Manhattan, Chicago’s tech bubble isn’t limited to just one part of the city. This even distribution of tech avenues has played a key role in interweaving the local community with these tech companies.

With new tech businesses popping up across the city, the local logistics companies find themselves in a much better position to collaborate with the tech industry. Here are a few things that may transpire in the future as a result:

Autonomous Vehicles and Drones

Self-driving vehicles aren’t a far-fetched concept anymore. However, this space is more focussed on commuters at the moment and not so much on industrial transporters. But this is likely to change as the shipping industry can now see the overwhelming benefits of autonomous trucks. They would reduce time and even the cost in some cases. Before long, we might have entire fleets of trucks on the road, shipping goods from one location to another with minimal human intervention.

They even have futuristic solutions for the last leg of product delivery, which often leaves much to be desired from logistics companies. Since they need to cater to individual demands in this phase, it can be difficult to successfully fulfill them all on such a massive scale. The solution? In the future, we might see drones stepping up to the challenge and can deliver products anytime and anywhere. It goes without saying that this move will lead to increased customer satisfaction and more efficiency in logistics business.

Smart Startups

The future of the transportation and logistics industry may lie with new startups. Most upcoming logistics startups are focused more on tech rather than assets. These businesses aim to excel at digital competence and offer a valuable service to customers. 

For instance, Uber has started UberCARGO van service in Hong Kong, which is essentially Uber for goods. Similar startups are popping up in different parts of the world. They would rely on registered drivers and vehicles for product delivery. Another popular startup segment is freight forwarders – these companies help shipping containers find suitable clients and vice versa. No matter the concept, these businesses leverage technology to make viable and profitable business solutions

eCommerce Influence

eCommerce businesses are currently among the biggest customers of the shipping industry, and they could revolutionize logistics in a foreseeable future. With Amazon being the torchbearer of such changes, the eCommerce industry is modernising the way goods are shipped in a bid to enhance the overall shopping experience. 

The main focus of these businesses is to deliver products as soon as possible while providing a great deal of flexibility at the same time. It’s not a far-fetched idea that eCommerce businesses other than Amazon might also create logistics divisions of their own and start offering these services to other businesses as well. In this case too, tech’s in the driver’s seat.

Conclusion

Future trends can often be unpredictable. Yet there’s no denying that new-age tech will change the game for the shipping industry, and Chicago’s logistics businesses are first in line for the upgrade. 

So if you are a logistics company in Chicago, you’ll need to keep on your toes. However, we understand it’s not feasible for everyone to integrate tech into their business on their own. This is where Simform comes in. We have the expertise to provide you with all the technological step-ups your business requires. 

We are committed to help your effortlessly transition into the technology-driven future of Chicago’s logistics industry.

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Hardik Shah

Working from last 8 years into consumer and enterprise mobility, Hardik leads large scale mobility programs covering platforms, solutions, governance, standardization and best practices.

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