Transport and logistics: The role of private 4G/5G

A deep-dive into the transport and logistics sector

This report is a deep-dive into the transport and logistics vertical for private 4G/5G (P5G) cellular networks. It is intended to be both a specific examination of an important sector of opportunity for P5G and a more general example of the complexity of major industrial sectors, especially campus-based or larger-scale dedicated environments. It also covers opportunities for MNOs, and some of the public 5G angles, with additional references to alternative wireless networks such as Wi-Fi and satellite connectivity.

Often technology product and marketing executives think of industry sectors as monolithic (“finance”, “retail”, “oil and gas”, etc.), typically aligning with familiar industry classification codes. The truth is that each industry has multiple sub-sectors and varied site types, numerous applications, several user-groups, arrays of legacy systems and technology vendors, and differing attitudes and affordability of wireless solutions. This is especially true of transport and logistics, where railway stations share only limited technology or use case overlap with airports, or distribution warehouses.

The transport sector is further complicated by its overlap with the public sector – not only does it constitute an important part of countries’ critical national infrastructure, but in many cases major transport firms have a history of state ownership, or are still owned and run by governments today.

There are also numerous sector-specific regulatory angles, which often translate to conservatism about technology, and a tendency to develop custom solutions and standards. Investment cycles can be very long and sometimes politicised, with assets often expected to be in place for decades. On the positive side, the strategic importance of transport can mean that the sector receives special attention in areas such as spectrum allocations.

Enter your details below to download an extract of the report

Definition of the transport and logistics sector

There are numerous transport and logistics sub-sectors and site types covered in this report. Although there are some common features and market drivers, there are also clear differences in locations’ physical size and layout, as well as equipment and application platforms, legacy/alternative wireless technologies, regulatory oversight and technology conservatism.

Multiple sub-sectors for transport / logistics vertical

The key domains covered include:

  • Transportation hubs, which refers to sites like ports, airports, stations and railyards. They vary significantly in size.
  • Logistics, which relates to the centralised facilities for shipping, storage and sorting of containers and packages, such as warehouses and fulfilment / distribution centres. It also encompasses the wide-area / global transport of containers, packages and bulk products on trucks, trains and ships.
  • Transport networks including rail networks, metropolitan transit and light-rail systems, and road networks.

There are also often hybrid sites, such as FedEx’s huge logistics hub sites next to Memphis and Indianapolis airports.

In addition, there is also significant overlap with various other sectors, such as major manufacturing sites. For instance, aerospace manufacture and maintenance typically occurs at combined factories/airfields such as Boeing and Airbus’ facilities. Similar combined operations occur in ship-building and train production. Mining, steel and cement companies may even have their own private rail-lines, from remote sites or industrial zones, to multi-modal transit hubs at ports or cities.

For logistics sites, it should be noted that many facility owners also have large retail networks (such as Costco and Walmart), or other sites such as Amazon’s AWS datacentres. Those ancillary operations and their specific applications are not directly included here.

For metropolitan transit, various transport-related facilities may be under the ownership or control of local government and municipal bodies. Similar overlaps between transport-related sites and government occur for military, public safety and other agencies.

Transport / logistics intersects with several adjacent verticals

Sector trends and drivers affecting private networks

This report is not the appropriate venue for a full analysis of the transport and logistics industry, which is made up of multiple sub-sectors, as discussed above.

However, the demand for private networks for these sectors is ultimately driven by a number of top-level national and global changes, in addition to certain local factors such as political support for new metro transit systems, “free ports” or enterprise zones, or efforts to modernise railway networks.

Broadly speaking, these all create a greater requirement for connectivity, control and information flows – which then translates to more 4G and 5G networks, as well as Wi-Fi, fibre and wide-area network services. There are also various new greenfield infrastructure projects, which lend themselves well to ground-up design of fit-for-purpose communications systems.

Some of the key megatrends spanning all aspects of logistics and transportation include:

  • Automation and robotics: As discussed throughout this report, transport hubs and warehouses are becoming much more automated. Although mechanisation via port cranes, baggage-handling systems and automated guided vehicles is not new, the systems are being enhanced rapidly. In particular, sorting or control systems, robots and other forms of automation are using wireless video cameras for detecting packages, enabling remote-control by tele-operators and many other uses.
  • Data and analytics: Transport and logistics companies are at the forefront of data-rich applications, from digital twins of jet engines and rail locomotives, to optimised scheduling and packaging of goods in fulfilment warehouses. Better-connected equipment, IoT sensors and video input can improve turnaround times, reduce shipment errors, reduce energy consumption and much more. Passenger-led transportation should face fewer delays, more dispersed crowds and improved customer service.
  • Predictive maintenance and asset management: Transport systems are capital-intensive. The cost of downtime for a vehicle – or critical system in a warehouse or airport terminal – can be huge. There is a huge opportunity for using networked information and sensors to enable predictive maintenance – i.e. fixing emergent problems before they become critical, or scheduling regular maintenance when it is needed rather than just based on a generic schedule. For instance, anomalous readings from vibration and temperature sensors can give early warnings of issues. There are also obvious safety benefits in areas such as aviation and maritime fault-diagnosis.
  • Improved employee safety and productivity: There is far less tolerance of industrial accidents than in the past. Using automation and better information, transportation and logistics firms are looking to increase worker productivity at the same time as improving safety. This spans many aspects, from ensuring safe distances between workers and vehicles, to rapid reaction to any incident, plus improved recordkeeping and training. Reliable communication is essential, using both voice (often push-to-talk) and an increasing need for video communications and mobile access to enterprise application.
  • Climate change and decarbonisation: Over the next decade, many transport and logistics businesses will face profound change as the planet heads towards net zero carbon emissions. Ports, airports, distribution centres and other sites are likely to need new electrical sources such as wind and solar, onsite battery storage, maybe hydrogen facilities and fleets of electric (often autonomous) site vehicles and machines. Connectivity will be needed for all of this, plus energy use monitoring, control, data-collection and reporting.
  • Geopolitics, re-shoring and supply-chain resilience: Recent events such as the US-China trade war, the COVID pandemic and the Russia/Ukraine war have highlighted the risks of global (and often fragile) supply chains to disruptive external events. Traffic and passenger levels at many airports fell to 20% of pre-pandemic levels or lower. While demand is now recovering in many places, other issues have emerged as well – from economic fluctuations, to fuel price inflation and staffing shortages. As well as localised production, shipping and logistics will need to be much more efficient, automated and connected in order to re-route shipments, store inventory and deal with new paperwork and compliance requirements.
  • Cybersecurity: Transport hubs and warehouses are part of national critical infrastructure. The rise of automation and cloud-based functions poses security challenges as well as gains from efficiency. Old IT, network and operational systems will be strengthened or retired if they have vulnerabilities, while networks will need extra resilience and redundancy. Wireless networks may be used as backups in case of failure of fibre or other links.
  • New business models and vertical integration: Many transport companies are looking to extend their reach into adjacent industries, or via vertical integration within their own domain. Companies such as FedEx and UPS, as well as eCommerce players such as Amazon, have their own fleets of planes and on- or near-airport warehouse facilities. Rail companies are exploring new mixed use retail and office properties integrated with stations. Some are deploying dedicated energy infrastructure, ranging from solar farms to hydrogen electrolysis. All these facilities may be built as greenfield developments, with the project considering the latest connectivity options for IoT or other uses.
  • Enhanced customer / passenger experience: Both individual travellers and freight shippers have an expanded set of choices for travel and transport of goods. They make decisions not just on price, but also reliability / predictability, as well as up-to-date information about status and disruptions. There are expectations for easy Internet access, online portals for reservation and check-in, use of digital sign-boards onsite, accurate cargo tracking and condition-monitoring, simpler border and customs processes, and safe/secure travel environments. They also expect multi-modal transport to be made easier, with interchanges made more convenient and transparent for both goods and personal travel.

Transport / logistics megatrends and implications for connectivity

Source: STL Partners

Table of content

  • Executive Summary
    • Overview
    • Recommendations for traditional mobile operators
    • Recommendations for transportation operators
    • Recommendations for logistics companies
    • Recommendations for regulators and policymakers
    • Recommendations for vendors
  • Introduction
    • Definition of the transport and logistics sector
    • Sector trends and drivers affecting private networks
  • Use cases for 4G/5G in transport and logistics
    • Scale of transport sites and private networks
    • General use cases for private 5G in transport / logistics
    • Sector-specific issues and use cases for private networks
  • Building and running transport private networks
    • Supply-side evolution
    • Private vs. public cellular networks in transport
    • New service provider classes and delivery models
    • The vendor landscape
    • Regulatory and policymaking considerations
    • Wi-Fi, satellite and other wireless technologies
  • Conclusions and recommendations
    • Conclusion and long-term futures
    • Takeouts for traditional MNOs and telcos

Enter your details below to download an extract of the report

DataSpark: Lessons on building a new telco (data) business

Data analytics as a new business

This case study looks at DataSpark, an autonomous business unit of Singtel (www.dsanalytics.com) and evaluates the benefits of creating a separate organisational structure within a telco to provide technology and support for the development of analytics, AI and automation as a new business. It is created after conversations with Shaowei Ying, Chief Operating Officer of DataSpark. The company’s activities include both the creation of internal capabilities and data monetisation capabilities for external customers.

DataSpark was formed in 2014 at a time when not many telcos were actively exploring new data business opportunities. The unit consisted of a small group of data professionals with skills around, particularly, location data. Singtel’s CEO was a strong supporter of leveraging telco data to establish competitive differentiation and therefore tasked them with looking at various location-related external monetisation opportunities. It was considered natural to create internal use cases for the data to defray the cost of the data preparation. In particular, the same mobility intelligence was of use to radio network planners optimising their network roll out using not just congestion, but now subscribers’ mobility patterns, too.

Enter your details below to request an extract of the report

DataSpark’s progress to date

Telcos’ external monetisation units, such as DataSpark, are not yet large enough to split out the revenues in their reports and accounts. However, in the 2018 and 2019 Management Discussion and Analysis DataSpark’s progress was reported to include:

  • Activity to bring mobility data to sectors such as transport and out-of-home media in Singapore and Australia
  • Partnership in out-of-home advertising with large players taking a data-as-a-service solution to optimise their assets
  • Provision of insights including first party enterprise data in the consumer goods sector to deliver new use cases in advertising and retail store inventory optimisation
  • Recent support for governments in predicting spread of Covid-19, including understanding the socio-economic impact of the virus.

Service example: COVID-19 insight for the Australian local government

COVID-19 data analytics innovation

Source: DataSpark

Table of Contents

  • Executive Summary
    • Two diverging strategies for a small, independent data unit
    • Scaling up the data business as an integrated unit
  • Introduction
    • DataSpark’s progress to date
  • DataSpark’s approach to building a data unit
    • What services does it offer?
    • Go-to-market: Different approaches for internal and external customers
    • Organisational structure: Where should a data unit go?
  • How to scale a data business?
    • The immediate growth opportunities
    • Following in others’ footsteps
    • Building new capabilities for external monetisation
  • Assessing future strategies for DataSpark
    • Scenario 1: Double down on internal data applications
    • Scenario 2: Continue building an independent business

 

Read more about STL Partners’ AI & automation research at stlpartners.com/ai-analytics-research/

Enter your details below to request an extract of the report

5G impact on transport and logistics: $280bn of benefits in 2030

The challenges facing the transport and logistics industry

The transport and logistics industry is a fundamental sector that acts as the backbone to a country’s economy, and plays an essential role underpinning other core sectors such as manufacturing and retail. Challenges and opportunities facing the transport and logistics industry are also closely tracked and influenced by national and local governments, who are often responsible for investments in supporting transport infrastructure (e.g. roads, rail networks etc.).

As the movement of people and goods across the world increases, the industry is evolving to meet these demands. However, it faces challenges in doing so. The logistics industry has been under significant pressure for some time. Capital and fixed operating costs are high, and companies are struggling to differentiate. Despite growing demand, many firms are suffering from eroding margins. The UK market exemplifies these issues, with revenue growth across the industry low or negative. The COVID-19 pandemic has exacerbated these issues and thrown up unforeseen challenges, with the airline industry being particularly badly hit.

UK top 100 hauliers reported operating margin

Declining logistics margins

Source: FTA Logistics Report 2019

Although the rise in online retail and growing international trade have helped to stimulate the industry, there are still pain-points that are hindering growth. These include volatile diesel prices, driver shortages, and increasing pressure from governments and the general public to be more environmentally friendly.

The focus for the majority of the industry is therefore on cost-cutting and improving operating efficiency. For many companies, investing in new technologies provides an opportunity to transform their operations and drive efficiencies. There is significant scope to do this since the industry as a whole is generally not as digitised as other verticals, and because there is room to make improvements to currently under-utilised assets. For example, in the UK, 30% of goods vehicles on roads are running completely empty, and the freight vehicles that are carrying goods carry an average of 60% of their potential capacity.

UK logistics industry focus is cost-cutting and efficiency

Cost-cutting and efficiencies in logistics

Source: FTA Logistics Report 2019

As well as looking to improve efficiencies, safety and environmental impact are key areas of focus for the transport and logistics industry and government stakeholders:

  • Safety: enhancing safety of transport, particularly road transport, which is the most widely used, is an ongoing goal for the industry. Doing so benefits society as a whole, with fewer casualties due to road traffic accidents, for example, but also directly benefits transport and logistics companies through a positive impact on their branding and a decrease in insurance premiums. The industry is adopting new innovations and technologies such as ‘black box’ driver monitoring and/or alerts to improve safety.
  • Environmental impact: the drive to become greener is increasingly paramount. The industry is currently responsible for almost a quarter of the world’s CO2 emissions , and 14% of overall emissions. Road vehicles are responsible for the majority of this, contributing to nearly three-quarters of global transport emissions. As the population becomes more environmentally conscious, governments are passing regulations and setting sustainability targets to try to reduce emissions and consumption of non-renewable energy sources. For example, the United Nations has adopted 17 Sustainable Development Goals (SDGs) that aim to reduce inequality while tackling climate change. The industry must adapt to these regulations, and large players are taking steps to improve their practices. Logistics heavyweight DHL has committed to zero emissions by 2050 and in the shipping industry, the International Maritime Organisation (IMO) have declared they will halve carbon emissions in this time period.

Enter your details below to request an extract of the report

The role of technology in driving efficiency

For the industry to address these challenges and achieve efficiencies, it will need to adopt new technologies.

The catalyst for digital transformation will be data – in particular the generation of richer and more comprehensive data and the analysis of this data to produce insights to better inform decision making. The figure below shows the four pillars of technology that will drive improvements in efficiency.

The four pillars of technology that will help in driving efficiency

Digital pillars for efficiency

Source: STL Partners

Digital transformation: Transport and logistics lags behind

The need to digitise is not only driven by internal ambitions for greater efficiency in operations, but also by external pressures as customer expectations change. Requirements for last mile experiences in particular are evolving, as customers become accustomed to shorter and more flexible delivery times and greater visibility of the delivery process. Their cost expectations are also changing, with these improvements being expected for a smaller fee or even for free.

Despite the impetus to transform, the logistics industry lags behind other industries when it comes to digital transformation. There are two core reasons for this:

  • The degree of automation is limited
  • There is a reluctance to share information

The role of 5G networks in digital transformation

5G especially holds the potential to help drive digitalisation and address some of these challenges, both through enabling new and improved use cases and in its role in helping to catalyse the digital transformation journey. As 5G is rolled out, it could have a significant effect on supply chains, the wider transport industry and society more generally. This report explores the benefit of 5G to the industry and consider the actions that need to be taken by the industry, by governments, and by telecoms operators to reap the benefits.

Report findings are based on extensive research into the impact of 5G on the transport and logistics industry, including 10 interviews with enterprises and telco executives and an industry survey with more than 100 participants in both developed and developing markets.

Table of contents

  • Preface
  • Executive Summary
    • 5G can provide $280Bn of benefits to the transport and logistics industry
    • 5G’s unique capabilities enable new and enhanced use cases
    • However, there are challenges to adopting 5G
  • Introduction: A major industry under increasing pressure
    • The challenges facing the transport and logistics industry
    • The role of technology in driving efficiency
    • Digital transformation: Transport and logistics lags behind
    • The role of 5G networks in digital transformation
  • The impact of 5G on the transport and logistics industry
    • What is 5G?
    • 5G’s relevance in transport and logistics
  • New and improved use cases and applications enabled by 5G
    • Real-time routing and optimisation
    • Automated last 100 yards delivery
    • Connected traffic infrastructure
  • 5G impact: Increased productivity to drive $280bn rise in GDP
    • It’s not just about money: 5G’s socio-economic benefits
  • Next steps for the T&L industry
    • The role of governments
    • Collaboration with the telecommunications industry
  • Conclusion

Enter your details below to request an extract of the report

Recovering from COVID: 5G to stimulate growth and drive productivity

For the accompanying PPT chart pack download the additional file on the left

————————————————————————————————————–

Related webinar: How will 5G transform transport and logistics?

In this webinar, we share learnings from 100+ interviews and surveys with industry professionals. During the presentation we will look to answer:

  • How will 5G accelerate digital transformation of the transport and logistics industry?
  • What are the key 5G-enabled use cases and what benefits could these deliver?
  • What must change within the industry to unlock this transformation?
  • What is the role for telcos – how can they work with industry leaders to increase adoption of 5G and build new revenues beyond core communication services?

Date: Thursday 10th September 2020
Time: 4pm BST

View the webinar recording

————————————————————————————————————–

The 5G opportunity and value to verticals

In October 2019, STL Partners published research highlighting the benefits 5G-enabled use cases could unlock for industries. Our forecast predicted a potential $1.4 trillion increase in global GDP by 2030 across eight key industries.

In this short paper we look to update these numbers and explore new insights and conclusions based on two key factors:

  1. STL Partners has produced new research on the impact of 5G on the transport and logistics industry. This has led to more granular insight on the unique benefits and use cases for this vertical.
  2. COVID has changed the global landscape. It has increased demand for some 5G use cases, such as remote patient monitoring or video analytics solutions that determine if the public are respecting social distancing, but has also brought about economic uncertainty. We reflect these nuances in our updated figures.

5G enabled use cases could increase GDP by $1.5 trillion by 2030 – an increase from our original forecast

Source: STL Partners

5G’s impact on transport and logistics: Fresh analysis and new use cases

In 2019, we deep-dived into the 5G opportunity within two key verticals: healthcare and manufacturing. We have since performed a similar deep-dive on the transport and logistics industry, consisting of primary research with experts in the industry. We interviewed 10 enterprises, solutions providers, and members of 5G testbeds who were focused on transport and logistics, as well as surveying 100+ individuals who work in the industry to test the impact they predicted for three key 5G use cases. We will shortly be publishing a full report on these findings in detail.

We have revised our estimation on the impact of 5G on the transport and logistics industry. In 2019, we predicted 5G enabled use cases could increase the GDP value of the transport and logistics industry by 3.5% in 2030. We now believe the impact could be as high as 6%, though importantly some of these benefits are indirect rather than direct.

New forecasts show a bigger impact to the transport and logistics industry

Source: STL Partners

The three 5G-enabled solutions newly explored in detail in our study were:

  • Real-time routing and optimisation: Sensors collect data throughout the supply chain to improve visibility and optimise processes through real-time dynamic routing and scheduling;
  • Automated last 100 metres delivery: Using drones or automated delivery vehicles for the last ‘hundred yards’ of delivery, where the delivery van acts as a mobile final distribution point;
  • Connected traffic infrastructure: Smart sensors or cameras are integrated into traffic infrastructure to collect data about oncoming traffic and trigger real-time actions such as rerouting vehicles or changing traffic lights.

Benefits from these use cases include fewer traffic jams, more efficient supply chains, less fuel required and fewer accidents on the roads.

COVID has changed the landscape and appetite for 5G services

COVID-19 has caused a global economic slowdown. There has been a widespread fall in output across services, production, and construction in all major economies. Social distancing and nationwide lockdowns have led to a significant fall in consumer demand, to business and factory closures, and to supply chain disruptions. The pandemic’s interruption to international trade has far exceeded the impact of the US-China trade war and had a major impact on national economies. Lower international trade, coupled with a precipitous fall in passenger air travel, has also caused the air industry to enter a tailspin.

Table of Contents

  • Preface
  • The 5G opportunity: Updated forecast on value to verticals
  • 5G’s impact on transport and logistics: Fresh analysis and new use cases
    • Increased productivity through more efficient roads: An impact beyond transport and logistics
  • COVID has changed the landscape and appetite for 5G services
    • COVID has impacted the GDP of every country – and outlook for recovery is still unclear
    • Operators’ 5G strategies and roll out have also been impacted
    • Appetite for 5G-enabled healthcare services has been accelerated
  • Conclusion: Where next for the industry?

Telcos and enterprise verticals: 5G is not the only opportunity

Introduction

This report outlines key challenges within selected industry verticals, and how telcos can help resolve them with three emerging networking technologies – 5G, IoT and edge computing.

This research builds on many previous reports:

Enterprise services evolve alongside communications and information technologies

The early days of 2G/3G

  • Basic M2M connectivity
  • Early versions of private networks, bypassing the internet for sensitive data transfer

Improving mobility and capacity with 4G and fibre

  • Better connectivity drives demand for video-conferencing and more sophisticated UCaaS
  • Mobile and fixed data connectivity is powerful enough to enable greater enterprise mobility and support the shift towards cloud-based services
  • Different verticals increasingly require bespoke solutions for unique needs – which are easier to deliver through the cloud

Enter your details below to request an extract of the report

Greater flexibility and frictionless experiences with 5G, IoT and edge computing

  • Increasing complexity of connectivity, IoT, cloud and IT ecosystems are driving demand for flexible yet seamless solutions:
    • Mobile connectivity across geographies without onerous roaming charges
    • Seamless mobile connectivity across multiple networks and technologies, especially in remote areas
    • Frictionless remote set-up of IoT devices shipped directly from manufacturer to live environment
    • Ability to migrate to new technologies seamlessly (e.g. public sector move from TETRA to cellular)
    • All of the above controlled and monitored on user-friendly, cloud-based dashboards
  • The shift from product to service-based business models means a growing number of enterprises want to embed connectivity into their offer to customers
    • i.e. demand for greater control over wholesale connectivity solutions
    • remote maintenance, asset-tracking, etc.

5G applications will arrive at different times…

evolution of 5G technology eMBB, URLLC, private 5G, massiv IoT

Source: STL Partners

…in the meantime, other technologies can help address enterprise needs

The interdependencies between 5G, IoT and edge computing

Source: STL Partners

The problem with 5G for enterprises

  • Most enterprises are not looking at 5G in isolation, but as one of many technologies that will help resolve pain points around efficiency and innovation. The Internet for Things (I4T) and edge computing are two other key technologies that many enterprises need, and which telcos could potentially provide
  • In the long term, STL Partners does not expect 5G connectivity on its own to deliver growth for telcos. So to grow enterprise revenues, telcos should also develop I4T and edge computing solutions
  • But developing expertise in 5G, I4T and edge computing will be expensive and complex to manage
  • Therefore, telcos should start by targeting their investments to meet specific enterprise pain points

This report helps telcos assess how to target their investments by highlighting key pain points in a selection of industry verticals, and how relevant 5G, I4T and edge computing are for solving them.

Sectors with strong demand for all three technologies hold the highest potential value, but this will be difficult for telcos to capture owing to strong competition in I4T and edge computing from other technology companies.

This report covers a selection of verticals that STL Partners has developed knowledge of through research and consulting activities: manufacturing, construction, utilities, agriculture, transport, automotive, healthcare, and sports, media and entertainment. 

Enter your details below to request an extract of the report