Who will win the clash of economic systems?

Undersecretary Dr Herbert Zeisel, head of the sub-department ‘research for digital transformation’ (Forschung für den Digitalen Wandel) at Germany’s Federal Ministry of Education and Research, is an experienced and thoughtful expert. He has seen many technological trends come and disappear again. But this time, things are different: ‘Digitisation is not just another trend – it describes an all-encompassing transformation that we have to confront.’ As the ‘global leader in logistics’, Germany needs to be particularly vigilant. This is because digitised logistics are a game changer for a successful industry. ‘It means completely new business models, new communication structures and also new competitors’, emphasised Dr Zeisel when he spoke at the Hellmann Innovation Day in Osnabrück at the end of March 2019. Surprisingly, the transition to digital logistics is taking place by means of algorithms that are sometimes 30 years old or even older. However, the technologies, the quantities of data and, in particular, the computing capacities that are necessary for these algorithms to actually realise their full potential have only recently become available.

According to Zeisel, the possibilities of artificial intelligence (AI) are the main trigger for the disruptive changes that are expected in the logistics world. At the same time, he qualifies this statement, saying: ‘Today’s artificial intelligence is not the terminator from the movies, the robot that can decide everything on its own. Today’s AI is still a long way away from that.’ And yet, we should not underestimate the extreme effects it will have on society, Zeisel warns: ‘We have to learn to deal with what is being done with all this data.’ Which company holds which personal and even confidential data? Who controls what happens with this data? Are we as individuals or even as medium-sized companies completely at the mercy of global corporations? We need to find answers to these questions today, especially from a European perspective. The first Hellmann Innovation Day, which attracted around 150 participants, provided a suitable platform for this discussion. The multinational logistics service provider had invited renowned speakers from the worlds of politics, science and business. They provided comprehensive insights into trends in urban logistics and digitised logistics.

This is important because in addition to the technological challenges, there are also many political and social questions. Dr Zeisel makes no secret of his opinion: We have been in a battle of economic systems for a long time. Trade wars, customs disputes and more are clear indications of this. On the one side, we have the US technology companies, which are committed to maximum freedom in the development of new technologies and in the use of external data. On the other side, we have China’s state economy, which wants to challenge the United States’ position as the world’s leading economic power. And the ‘old world’ with its old values stands in between.

Issues such as data protection and the security of our data are in danger of being undermined in this economic war – as are the achievements of the social market economy, Dr Zeisel warns: ‘In Europe, we need to find our own way to remain competitive and preserve our values. There is currently no sign of a winner in this clash of economic systems.’ According to the expert, this means it is all the more important to oppose the United States and China with a third position: ’We have to set our own standards for how we handle data. To achieve this, we should form a coalition of the willing.’ In addition to Europe, the undersecretary includes Japan, Canada and the Asian economic powerhouse Singapore among the potential members of this alliance. Only the coming years will show how realistic this idea is.

Irrespective of the political direction and Europe’s values, the transformation of digitised logistics is continuing unabated – and doing so at a rapid pace, as Professor Michael Schüller from Osnabrück University of Applied Sciences described at Hellmann Innovation Day. ‘The logistics processes of tomorrow will be more sustainable, customised, connected and automated’, said the professor during his presentation. In this context, he highlighted four main megatrends that are already turning time-tested business models and processes upside down:

In the field of robotics, for example, a remarkable fact is that a good two thirds of today’s robotic applications originate from logistics applications. ‘Big data and artificial intelligence, on the other hand, will work together to enable better, forward-looking planning in digital logistics’, said Professor Schüller. At the same time, he addressed some alarming trends, such as when data is used and analysed without any restrictions within the clash of economic systems. ‘The largest big data project in the world is currently being carried out in China with the aim of identifying every individual in the shortest possible time using photos and surveillance cameras’, said Professor Schüller, describing a scenario that sounds extremely disturbing, at least to Europeans.

What conclusions can logistics companies draw from these current assessments from the worlds of politics and academia? To Reiner Heiken, CEO of Hellmann Worldwide Logistics, one thing is clear: ‘We have to be honest with ourselves: we won’t be able to keep doing the same things we have done successfully for decades. Massive changes are coming our way.’ It is important to face the questions of the future today and begin implementing them. The entire logistics industry will have to deal with a fundamental transformation in a short period of time. As a trained navigator, Heiken takes a pragmatic approach to these challenges: ‘It’s about determining our position on a daily basis – what is our goal and are we still on course? Only those who set, recognise and follow trends can hold their own in the market over the long term. This is more true today than ever before. Our job is to ensure that future issues such as digitisation, big data and AI are fully integrated into our corporate strategy.’