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Jaidyn Farar

AI in Logistics: Trends To Keep an Eye Out For

by Jaidyn Farar

When ChatGPT was launched in late 2022, it catapulted artificial intelligence (AI) into the spotlight. Since then, new AI tools have sprung up left and right. Virtually every industry is buzzing with news of—and questions about—AI, including the logistics industry.

“How can AI improve the supply chain?”

“What AI tools will help streamline shipping and logistics?”

“Is AI going to take my job?”

James Sutton, chief analytics officer at Elevate and Summit Advisory Team, shares his answers to these questions on a recent Unboxing Logistics episode. He starts by saying that most businesses haven’t yet tapped into the full potential of AI when it comes to shipping and logistics. “The supply chain industry is lagging,” he remarks, “but there's a ton of opportunities in that space.”

The numbers agree. One survey of supply chain professionals found that while 96% believe the industry will be changed by AI technology, only 14% have adopted (or are piloting) AI solutions.

But research also shows that becoming an early adopter will pay dividends. According to McKinsey, AI-enabled supply chain management can improve logistics costs, inventory levels, and service levels.

James points to three areas where AI will soon become invaluable.

3 uses for AI in shipping and logistics

AI tools can help businesses choose the right carriers, track packages more efficiently, and forecast demand more accurately. 

1. Choosing the right carriers

If your business wants to adopt a multi-carrier shipping strategy, you shouldn’t do it alone. Many shipping platforms (including EasyPost) rely on AI to choose the best carrier and service level for each shipment you send, optimizing for quick delivery times and low costs.

James explains how it works: “[The systems] leverage millions or billions of tracking events in order to detect a confidence level that a package will get delivered on a required date, and then they select the cheapest [option].”

2. Package tracking

One of the biggest opportunities James sees for AI is package tracking. Right now, most packages are tracked using tracking numbers and barcodes. Barcodes get scanned at each hub a package passes through, allowing businesses and customers to monitor their progress. The system works, but AI can make it better. 

James envisions a future where companies use IoT (Internet of Things) and Bluetooth technology to pinpoint the exact physical location of every package they send. The data these devices collect could then be passed through AI programs. The programs would be able to optimize route planning, predict delays, provide more accurate delivery times, and even enhance security by pointing out unusual patterns or anomalies in package movement. 

3. Demand forecasting

Finally, AI will change the way businesses approach demand forecasting. By processing large sets of sales data, considering factors such as seasonality, trends, and external influences, it can identify patterns that might be challenging for human analysts to recognize.

“The whole hype cycle around ChatGPT is interesting because it's changing the landscape on how users are going to get insights from data,” James says. “The idea of being able to … ask [a question], and then having a large language model who knows my data answer [the question] is super intriguing.”

Is AI going to replace logistics jobs?

This is a much-debated question in most industries. Some predict that AI will wipe out jobs by the thousands, and others claim it won’t have much of an effect (at least, not anytime soon). James is in the latter camp, believing that while AI technology may eliminate some jobs—such as manual data entry—it also opens up exciting possibilities. He predicts, “There are going to be new jobs in order to make these [technology tools] powerful.”

What about ChatGPT?

What about the platform that jump-started the AI hype a little over a year ago? While generative AI programs like ChatGPT can’t necessarily handle advanced logistics tasks like dynamic carrier selection or route optimization, they’re a great way to get familiar with AI and simplify some of your day-to-day responsibilities.

To get started, simply open up ChatGPT (it’s free to create an account) and start asking questions. Pay close attention to the answers, sorting through the helpful information and things that feel off. You can even present ChatGPT with hypothetical scenarios, asking it to make predictions or suggestions. 

One word of caution, though. James warns, “We need to be skeptical about AI. Just because the computer says it, doesn't mean it's right. Everyone needs to operate under a certain level of skepticism and still trust your understanding of the business. Just use this as a way to make yourself better, faster.”

Step into the future with AI

A truly AI-centric shipping and logistics industry might still be a long way in the future. But as you stay up-to-date with the latest logistics trends, keep an open mind when it comes to artificial intelligence, and start using it where it’s currently available, you’ll set your organization up for success.

To hear more of James’s thoughts on the future of AI in logistics, listen to this Unboxing Logistics episode.