Flex Time

How is digitalization changing the logistics industry?

It is safe to say that there is a race to digitalize logistics. All of the big players are changing fast, with more than 40% of logistics industry executives saying they are seeing some digital change in core operations, according to McKinsey. There is also a slew of start-ups on the scene. You can follow the money trail to see that big bets are being made on logistics. Billions of dollars in venture capital funding has gone toward logistics and freight related start-ups in the last couple of years. Start-ups are tackling all aspects of the supply chain: inventory management, warehousing, trucking, sensors, supply chain visibility, and e-commerce and last mile. In fact, Agility recently announced a USD100-million investment in Shipa over three years. Change is real—and it is the present, not the future.

What major social and environmental upsides come from digitalization?

There is huge upside to digitization in the logistics industry. In fact, the World Economic Forum says that there are USD2.4 trillion worth of societal benefits as a result of digital transformation of the industry between now and 2025. I see environmental savings and empowering small businesses to participate in the global economy as particularly important areas. Technology can improve supply chain efficiency in ways that directly cut emissions. For example, around the world, 50% of trucks travel empty on their return journey after making a delivery. New platforms and business models allowing asset sharing can reduce both costs and carbon emissions by helping fill all those empty trucks. Agility has invested in “Uber for trucking” start-ups in Brazil and Saudi Arabia (Homoola) that does exactly this. Similarly, the implications of widespread adoption of green technologies in facilities and in trucking fleets is enormous. Take trucking as an example. Greenhouse gas emissions from heavy-duty vehicles are actually expected to surpass emissions from passenger vehicles by 2030 in countries like the US. Agility, through its corporate ventures team has invested in a start-up that has created a technology that can turn an existing trailer into a hybrid—reducing fuel consumption by a whopping 30%.

How do you see the digital outlook for Kuwait specifically?

I believe that digital offers many opportunities to diversify the Kuwaiti economy and create employment opportunities for our young people. We have the majority of the basic building blocks in place. First, connectivity—Kuwait is a connected country, smartphone penetration is one of the highest in the world, and the government continues to invest in infrastructure in this space. Second, we have a young and educated population—40% of our people are under the age of 25, and they are growing up as digital natives. They understand how to operate in a digital world. That said, I think that both the public and the private sectors need to continue to work together closely on skilling the population when it comes to digital leadership and entrepreneurship. I am not just talking about in the formal education system, but with real-world opportunities to apply their knowledge. Agility recently hosted a hackathon in Kuwait with its partner MIT Media Labs, sponsored by forward-thinking institutions like KFAS and KAFO, to do exactly this. We had more than 150 people apply for 50 slots, and then broke the group into teams that used data science to tackle real-world issues ranging from e-commerce to how to tackle Kuwait’s traffic challenges. It was an amazing experience.