As part of my role at Maersk Growth, the venture capital arm of A. P. Moller – Maersk, my team and I analyse the latest trends within supply chain tech and decarbonisation. One of the best places to get insights into the latest supply chain tech trends is Manifest, a conference covering innovation and transformation in supply chain and logistics.
Under the tagline “The Future of Logistics Is Here,” Manifest Vegas brought together the most comprehensive ecosystem of innovation and transformation stakeholders in supply chain management, including leading incumbent logistics service providers, startups, scaleups, shippers and investors.
Going into Manifest, there was a strong consensus in the industry that we will continue to see volatile global logistics as the economy, inventory levels and disruptions normalise after the challenges of the last three years. We will also continue to see reduced economic activity, tight labour markets and increased cost pressure.
At the same time, businesses are preparing for a paradigm shift in global trade, including supply chains driven by new inflection points, like the need for more resilience resulting in reshoring, diversification and regionalisation (redrawing our logistics maps). This will be combined with the critical need for more sustainable supply chains, new technology, ever increasing consumer demands, regulatory attention and geopolitics.
As a response to this, attendees discussed reimagining logistics in this new reality. Since Maersk Growth is on a mission to digitalise, democratise and decarbonise supply chains by backing new business models, technologies and founders, I will highlight a few of the core topics that particularly stood out to me.
Supply chain decarbonisation tops the agenda
One top priority that became clear across multiple panel debates, startups and incumbent initiatives was the critical need for decarbonising supply chains. It’s clear that logistics stakeholders will have to take concrete actions to merge physical assets with data and digital platforms to eliminate emissions.
Logistics stakeholders across the spectrum emphasised the need to reduce emissions using emissions tracking, supplier analysis and other solutions to prioritise impactful reduction initiatives. Full life cycle analysis, including considering natural resources and biodiversity, should also be taken into account in order to make holistic decarbonisation progress.
Thought leaders agreed that transportation electrification is a significant opportunity for the industry to reduce emissions. Electric vehicles and charging infrastructure, as well as fleet optimisation software, can revolutionise the transportation value chain. Hardware-as-a-Service (HaaS) models are also relevant in the mobility space, which can drive higher margins and customer lifetime value. Several leaders advised stakeholders to start engaging with utilities now (including grid infrastructure).
While non-electrifiable modes of transportation still require significant improvements, there’s been radical innovation in developing hydrogen, e-fuels and biofuels. However, they need industry support to succeed.
Leaders also highlighted that green concrete, steel and building materials for warehouses and infrastructure also require breakthrough innovation (13% of carbon emissions in logistics comes from warehouse buildings). This should be combined with implementing existing sustainable packaging and building energy efficiency systems to achieve truly green fulfilment.
Personally, I am a strong believer that logistics decarbonisation will be an opportunity of significant growth and higher margin business models.
New supply chain software categories
In terms of supply chain software, the most discussed topics were end-to-end visibility, including predicting milestones that might be missed in the supply chain. In regards to visibility, supply chain tech companies are in a unique position to help shippers with upstream visibility of suppliers and manufacturers. Not surprisingly, there is also a trend away from manual processes in managing warehouse, order and transportation systems towards fully automated workflows.
Shippers, startups and big tech were discussing the potential for building digital models of inventory and network simulations that can work with different constraints across multiple channels, allowing for collaboration on shared platforms. Based on the recent ChatGPT hype, Artificial intelligence (AI) models are being developed that can be used for supply chain management, but the key challenge is getting quality data to train these models. As AI models become more accessible in the coming years, it's important for logistics leaders to understand this space quickly.
Automation, robotics and autonomy drive efficiency
It was widely recognised that tight labour markets are here to stay, which in the opinion of speakers at Manifest, increases the focus on ROI, the need for warehouse automation and a collaboration between humans and robotics.
Two key trends that were especially discussed were micro fulfilment and omni-channel fulfilment. In addition to those two trends, businesses are also now using a Hardware-as-a-Service model where they pay for automation and robotics as a service, while being interoperable with agnostic integration layers and on-demand warehouse models.
On the exhibition side, several autonomous truck and last mile rover companies had their latest technology on display, with the promise for short term constrained area applications (e.g., yards, terminals, etc.) and medium-term hub-to-hub applications on highways with new autonomous corridors. Like automation, autonomy brings new business models such as Trucking and Capacity-as-a-Service, potentially changing current industry dynamics.
Omni-channel logistics and circularity as a key focus
Changing consumer expectations and channel preferences are also creating the need for new omni-channel strategies and increased emphasis on last mile and return logistics (up 50% last year). On the software side, this should ideally also come with better forecasting and demand sensing tools, incorporating more upstream and downstream data currently sitting in silos.
It was also argued that the move to Circularity or Supply Loops vs Linear Supply Chains will be one of the most significant product development opportunities within logistics. At its heart, circularity means moving away from the traditional way of making, selling, using, and throwing away products, towards a model where products are used for longer and waste is turned back into new products.
This is an area where there is a lot of potential for innovation, and as a VC investor, we have high expectations for innovation in the next year in reducing waste, repairing, reselling, refurbishing and recycling in industries like automotive, lifestyle, technology and retail.
The path ahead and how we move towards next-gen supply chains
There was clearly a strong feeling of momentum and optimism around innovating and creating improved customer outcomes at Manifest. I believe now is a great time to be in supply chain management—either as a challenger or an incumbent redefining itself. In my view, this momentum will be driven by the following factors:
- The digitalisation of existing companies and their development of cloud-based systems of record means we have yet to experience the true potential of supply chain digitalisation and optimisation. This is further supercharged by the use of logistics SaaS meeting HaaS in the context of decarbonisation, which will see great progress due to the learning rates in renewable energy.
- The concentration of experienced professionals and young digital talent at Manifest highlights a promising future for logistics and supply chain management. It’s worth noting that we only saw considerable VC investment in logistics starting in 2015, which increased significantly from 2018-2021, hinting at a strong acceleration of the talent pool in the industry and subsequent innovation.
- The shared call for increased collaboration between shippers, startups and incumbents in the industry is crucial to push it forward and continue to innovate, especially during times of economic uncertainty. This will be critical for bringing our industry forward and continuing innovation. For real end-to-end optimisation, we need solutions that align incentives and optimise results.
After attending Manifest, I believe that in the next ten years every company will be a “supply chain company” and will have to digitise and decarbonise to stay competitive. This will require starting from scratch and challenge existing assumptions.
Manifest delivered on its promise to showcase the future of logistics and was inspiring for those looking for new ideas. I look forward to attending again next year. If you want to talk more about supply chain technology and decarbonisation, please reach out to me or the team at Maersk Growth.
Jannik Pedersen is the Head of Strategic Insights at Maersk Growth, the Venture Arm of A.P. Moller – Maersk, where he leads the Insights team. Jannik and his team analyse the latest trends within supply chain tech and decarbonisation while overseeing Maersk Growth’s Core Engagement Model and marketing and branding activities.