Drivers, Risks, and Implementation of Digital Transformation in Logistics Enterprises

Release date:

2023-08-18

Author:

Jinhua Logistics

Amid the global wave of the digital economy, digital transformation has become a buzzword across industries. For businesses, it has emerged as a pivotal issue—crucial not only for current growth but also for their long-term survival.

Recently, the Smart Logistics Branch of the China Federation of Logistics and Purchasing officially released the “…”. “2023 Logistics Industry Digital Transformation Research Report” (hereinafter referred to as the “Report”). Amid the global wave of the digital economy, digital transformation has become a buzzword across industries. For enterprises, it has emerged as a critical issue that shapes both current growth and long-term survival. Drawing on feedback from more than 150 companies nationwide, the Report finds that over 70% of respondents have formulated digital transformation strategies and initiated related initiatives; however, the vast majority remain in the early stages of transformation. Specifically, more than 42% of surveyed firms are currently implementing digitalization in core business functions such as warehousing, transportation, and last‑mile delivery, or within single operational scenarios, and still require substantial resources to fully complete their digital transformations.

Cost reduction, efficiency improvement, and quality enhancement have become the primary drivers of enterprise digital transformation.

With the vigorous growth of the digital economy, logistics—acting as the vital link between production and sales—has led an increasing number of logistics enterprises to recognize the need to keep pace with the digital transformation of industries and accelerate their own digital transformation. According to the report, driven by a combination of policy support, market competition, and the imperative for cost reduction, efficiency improvement, and quality enhancement, the digital transformation of logistics firms is gaining momentum. Notably, cost reduction, efficiency gains, and quality upgrades have emerged as the core drivers propelling this digital transformation.

Macroeconomic Policy: « The “14th Five-Year Plan for the Development of the Digital Economy” sets forth that by 2025, the added value of core digital industries will account for 10% of GDP.
Cost reduction, efficiency enhancement, and quality improvement: The accelerated development of smart manufacturing, new retail, and the industrial internet is placing new demands on logistics companies’ service efficiency and digital capabilities. Enterprises urgently need to embrace digital transformation to meet customers’ diversified needs and address rising operating costs.
Industry Competition: In the post‑pandemic era, with economic downturns and weakening freight demand, market competition has intensified, prompting companies to leverage digital technologies to reinvent their core competitive advantages.

Four major risks are hindering the digital transformation of logistics enterprises.

For logistics enterprises, digital transformation is a long-term process fraught with challenges, and even the slightest misstep can lead to failure. More than half of the surveyed companies report that the pace and outcomes of their digital transformation fall far short of their plans and expectations. Among the key obstacles hindering digital transformation, the top four are: information and data security risks, insufficient financial resources, excessively long investment payback periods, and complex internal organizational structures. Notably, concerns about information and data security rank first, exceeding… Sixty-three percent of surveyed enterprises view this issue as the primary obstacle and source of concern in advancing digital transformation. As corporate digitalization deepens, data accumulates throughout business processes, and the associated risks to data security—during collection, storage, use, transmission, and sharing—are becoming increasingly severe. More than 60% of respondents report that their organizations lack sufficient awareness, technology, and capabilities in data security management, raising significant concerns about data‑security governance.

Digital transformation requires substantial investment, encompassing not only the ongoing procurement of advanced hardware and the development of software systems, but also employee training, the recruitment of digital talent, and the restructuring of organizational frameworks. Among the two options related to funding for digital transformation, the vote shares for each were both at… Around 50%, reflecting enterprises’ concerns about current capital investment and future sustained funding. Digital transformation entails a comprehensive overhaul and upgrade of all aspects of an organization—processes, structure, business models, and more—and poses challenges in terms of organizational change as well as the enhancement of employees’ skills, workforce composition, and digital capabilities. More than 60% of respondents indicated that complex internal mechanisms and resistance to change are among the key obstacles in the transformation process.

Logistics digital transformation focuses on the practical implementation of mature technologies.

During digital transformation, enterprises align their strategies and use cases with cutting-edge digital technologies and solutions—such as cloud services, big data, and unmanned equipment—to drive progress. Among these, cloud services deliver significant value across a wide range of logistics‑related digital applications, serving as a critical enabler for organizations to achieve their digital transformation goals, surpassing… Fifty percent of surveyed enterprises reported deploying various cloud‑based solutions, including public, private, and hybrid clouds. Meanwhile, unmanned equipment has played a pivotal role in boosting efficiency across warehouse and logistics operations and addressing labor shortages, leading to broader adoption; more than 30% of respondents indicated they have implemented such technologies as AGVs, autonomous forklifts, automated storage and retrieval systems, automated picking systems, and human‑assisted delivery vehicles. As for cutting‑edge technologies like blockchain, artificial intelligence, and digital human‑body simulation, their industrial applications remain in the exploratory phase and are still far from large‑scale deployment.

Today, as the global economic landscape and supply chain dynamics undergo rapid restructuring and digital technologies unleash groundbreaking advances, the logistics industry is confronting unprecedented challenges. How can it break through these obstacles? Digital transformation is undoubtedly one of the most critical pathways. More digitized and intelligent operational management, coupled with digitally driven innovative products, are vital for companies to bolster their core competitiveness and navigate an increasingly diverse and volatile competitive environment. Survey findings confirm that digital transformation in the logistics sector is accelerating; however, amid declining demand, intensifying competition, and insufficient profitability, enterprises face significant hurdles in this journey. To move forward, companies must step up their efforts, strengthen top-level design, and drive comprehensive transformations across strategy, operations, organization, and mindset. By leveraging new technologies and business models, they can achieve breakthrough innovations, reduce costs, boost efficiency, enhance quality, and ultimately create greater value for future competitiveness.

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Focus | With an oversupply of trucks and a shortage of cargo, drivers are facing mounting cost pressures—how can the slump in road freight rates be reversed? Industry insiders suggest fostering collaborative governance among governments, the industry, and digital platforms.

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