AI-driven automation in the logistics and freight industry

The logistics industry keeps our world moving day in and day out. At $5.96 trillion, it is one of the largest sectors in the world. It's one of the industries that is poised to benefit greatly from developments in AI. We conducted research to understand the biggest opportunities for automation and how companies are leveraging AI today.

Large opportunity for automation

According to McKinsey, implementing AI has helped logistics companies improve costs by 15%, inventory levels by 35% and service levels by 65%. This comes as no surprise given the nature of the industry. The industry continues to trail other sectors when it comes to digital transformation. It is an operationally heavy sector with lots of rules, moving parts and regulations. This makes it ripe for disruption with AI.

Based on our research, we believe the following are the biggest opportunities for logistics companies and freight forwarders.

Document processing

Logistics and freight companies deal with a lot of documents. The most common documents are the bill of lading, customs declaration forms, packing lists and invoices. There are many variations of these documents depending on the mode of transport and the origin / destination. These documents need to be produced, checked and then entered into several systems like a transport management system. AI can do all of this for teams. This reduces manual errors and frees up time for other, more valuable tasks.

Better customer service

The freight and logistics industry is a highly competitive industry. Responding quickly and providing a high-level of customer service goes a long way in winning business. AI is helping companies by allowing them process quotes faster and respond to customers quickly. Some companies are going to the extent of leveraging AI to provide a 24/7 customer service experience for their customers. AI is able to answer many of the questions before these are passed on to the customer service team. This allows for a better customer experience and reduces costs for the business. Other players are leveraging AI to help their operations team find answers faster so that they can respond to customers more efficiently.

Route optimisation and planning

Companies are using AI for route optimisation and planning. Some companies have been able to reduce fleet costs by up to 20% on fuel alone while significantly improving delivery efficiency. These systems analyze multiple variables simultaneously - including traffic patterns, delivery windows, vehicle capacity, driver schedules, and real-time road conditions - to determine the most efficient delivery routes. The technology goes beyond finding the shortest path; it creates intelligent delivery sequences that maximize the number of stops while minimizing resource usage. For logistics managers, this translates to tangible benefits: reduced fuel consumption, decreased vehicle wear and tear, improved driver productivity, and enhanced customer satisfaction through more accurate delivery times. Perhaps most importantly, route optimization software provides end-to-end visibility of all resource movement, enabling managers to track performance metrics in real-time and make data-driven decisions that further improve operational efficiency.

Warehouse operations

Warehouse operations can benefit from AI particularly given the advancements we're seeing in vision based models. Dimensioning technology, combining high-quality cameras and precise scales, now automatically measures, weighs, and photographs cargo in seconds, replacing time-consuming manual processes that were prone to errors. These systems can reduce processing time by several minutes per item while improving accuracy in inventory counts. AI-driven inventory optimization goes beyond basic stock management, using predictive analytics to forecast demand patterns, optimize stock levels, and reduce both stockouts and overstock situations. The technology also revolutionizes picking and packing processes, with advanced algorithms optimizing picking routes and robotic systems working alongside human workers to enhance efficiency. This automation not only reduces labor costs but also provides real-time data integration with warehouse management systems, enabling better space utilization and more accurate billing. For warehouses handling high volumes, the return on investment is particularly rapid, with some facilities reporting the ability to reassign up to six forklift operators to other tasks after implementing automated systems.

Financial operations

Freight and logistics companies deal with a lot of bills and invoices. Logistics companies transact over email and phone with parties, leaving the Finance team with a lot of paperwork to process. Many of these costs are also not finalised until after the shipment is complete. For example, if a shipment is waiting at a port for longer than it should have, the final payment will need to be adjusted. AI can help finance teams by reconciling data across documents, proactively flagging discrepancies and help process payments faster. Companies are applying this on the accounts payable side to pay vendors, and to receive payments faster from their own customers.

Where do you start?

If you are a logistics or freight company, the AI landscape can be a little overwhelming right now. Customers often ask us where they should start. We recommend starting by identifying the biggest lever of change for your business. As the person on the ground, your team will be best placed to articulate what will move the needle the most. Pick the highest value item that you think can drive the business forward. Define a clear metric to measure impact. For example, if you believe winning business is a priority, choosing to reduce the time to quote may be a good way to get started. Once you do this, you can narrow the scope of possible solutions and then pick the one that best works for you.