Panalpina Digital Hub: New business models for the logistics industry

Logistics service provider Panalpina has launched a new business unit, the ‘Panalpina Digital Hub’. The aim is to develop innovative technologies that could have a significant influence on shipping and logistics, and to develop new digital solutions for customers. More about this in the innoFRAtor interview with Luca Graf, the head of the ‘Hub’.

Luca Graf, Head of Panalpina Digital Hub

Panalpina has set up a new business unit: the Panalpina Digital Hub. What are the reasons for this move?

The Panalpina Digital Hub was launched for two key reasons. For one, the expectations of our customers are changing. What they experience privately or as a consumer – as a digital customer at Amazon, Uber, and other companies – they now expect from their business partners. With the Digital Hub, we are embarking on the search for and realization of innovative solutions for our customers. We want to provide a great digital customer experience while also making our services more efficient and therefore more economical. Both of these factors have always been a promise from Panalpina, one of the pioneers in the international freight business. Secondly, the digitization of the supply chain offers many opportunities to develop new business and thus growth for Panalpina. We are a globally operating logistics service provider with few physical assets. That’s why setting up new business models on a digital and fully automated basis is an obvious choice.

“The future of freight shipping and logistics is obviously not characterized by new types of transport, but rather by the digital transformation,” said Panalpina CEO Stefan Karlen at the opening of the Hub in June, 2018. Which technologies will most likely change or disrupt the logistics sector with the greatest impact?

By our estimation, they are the technologies we are focusing on in the Digital Hub: Blockchain, artificial intelligence or predictive analytics, IoT, and cloud computing. All of these technologies provide the opportunity to dramatically improve the customer experience while significantly increasing the efficiency of the industry as a whole. Of course, driverless and other automated systems will also offer great logistics potential. However, these are less relevant for Panalpina as an “asset-light” provider than other disruptive technologies.

Which trends can be identified, especially in the field of air freight?

In air freight, we are primarily seeing the opportunity to improve our services with the help of IoT applications. Customers today expect to be able to monitor their shipments at any time. They want to know where their goods are and what external factors they are exposed to during transport. These include temperature, humidity, lighting conditions, and shocks. We can also secure this data using blockchain technologies, strengthening trust in the supply chain and interaction partners. Likewise, our customers want to receive forecasts of arrival times and get proactive solutions should any interruptions or delays in the transport chain become apparent. Here, we can make the difference with forward-looking data analysis and the use of artificial intelligence.

What added value should the Digital Hub offer Panalpina’s customers?

The Panalpina Digital Hub builds a trend radar to regularly capture our customers’ challenges, while also finding technological solutions. We identify the challenges in workshops with our customers, exploring technological solutions through their proximity to digital ecosystems and close cooperation with start-up companies. As soon as we see a match, we test these solutions in pilot projects together with our customers. If these tests are successful, new services will emerge. At the same time, we systematically search the supply chain for new digital services that we don’t yet offer, and that can add value for the customer. This will not only create new services, but even new business models for Panalpina. In all of these projects, it is important to transfer what you have learned into the organization and customer interface in order to continuously improve.

Panalpina has recently joined the Blockchain in Transport Alliance (BiTA), an international forum for the development of blockchain standards for the freight industry. Members of the organization include FedEx, Gebrüder Weiss, JD Logistics, Uber Freight, and UPS.

Which innovative products and services are currently being worked on, and when should they be marketable?

We are in the process of building the team and initial pilot projects. By the end of 2018, we want to have developed and validated one new digital business opportunity, and designed and implemented two pilot projects. For the pilot projects, we will probably try a first-use case for the Blockchain technology.

You want to network closely with digital startups at the Panalpina Digital Hub. How does this work in practice, and which startups are of particular interest to Panalpina?

We will be very active in the digital ecosystem by participating in accelerator programs and closely monitoring the emergence of new startups and the development of more mature startups. It is important that we are an attractive partner for startups. Often, established companies cannot compete with the speed required to work with startups. We want to position ourselves accordingly with the Panalpina Digital Hub, and quickly test solutions for the challenges of our customers. We will also discuss partnerships and consider investments. Of particular interest are those startups which either work on solutions to our customers’ challenges, or which try to establish new business models in the logistics industry.

Interview conducted by Benjamin Klare
Photos: Bosch/Offenblende, Panalpina
Logo: BiTA