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Logistics is a functional system; it combines and coordinates the operations of different modes of transport as a fundamental pre-requisite for ensuring efficient service. Since the last decade, the growth of global logistics market has been significantly driven by rise of e-commerce. This increase in e-commerce operations requires logistics companies to work quicker and more effectively to process small individual orders quickly.
Estimates of the size of the global logistics industry range from $8 trillion to $12 trillion annually. The rule of thumb many forecasters use is a percentage of GDP. In the U.S., some estimate that up to 10% of GDP is attributed to the logistics industry in any given year. Globally, research found that the logistics market represents approximately 12% of the entire world’s GDP. The U.S. has the largest 3PL market of any one country. However, the Asia-Pacific region has a 3PL market that is roughly 50% larger than that of North America.
All industries are experiencing competitive upheavals as technological innovations become increasingly exponential as well as the logistics industry. The sector is of enormous economic importance. Logistics reaps the benefits and potential of the innovative power of fintech companies.
Fintech offers logistics service providers opportunities to expand their shared service portfolio by strategically working with start-ups to provide their customers with a better proposition. Fintech can bring about a real transformation of the supply chain, solving the problems of lack of transparency, inefficient capacity utilization and reluctance by supply chain partners to cooperate. In particular, this applies to the transformation of international trade and logistics and the redesign of business with blockchain technology.
The key players of logistic market are United Parcel Service Inc, FedEx, Nippon Express, C.H. Robinson Worldwide, Inc., DB Schenker, Deutsche Post AG (DHL Group), DSV, FedEx, Geodis, Kuehne + Nagel. The key players of logistics tech market are Lalamove, Balckbuck, Convoy, Locus Robotics.
FinTechs are evolving continuously. By the year, this evolution has become more rapid. The apps will continue to expand along with them. There is no sector more in need of this than transport and logistics, some analysts argue. Customers continue to evolve and also grow digitally by the day. Those in the logistics industry are responsible for taking advantage of every opportunity to better serve their customers.
One out of four companies are currently using some form of FinTech in their supply chains, according to a report from CGN Global.
Ecommerce relies heavily on the logistics sector and these both interest with fintech at multiple locations for every sale. Fintech systems that help to automate the processing of payments during handoffs will safeguard anyone. With the adoption of more DLT supply chain offerings, this opportunity is growing. Ecommerce businesses are part of this as when blockchains are joined by their partners, providers, and manufacturers.
Specific to supply chains, FinTech is used as a way to better handle financial processes for manufacturing and distribution firms and their partners, enabling customers to complete purchases faster and providers to collect funds faster.
After every journey, Uber Money enables drivers and couriers to have access to immediate funds instead of waiting for a weekly paycheck. A number of services such as debit cards, a digital wallet and an Uber credit card relaunch are also provided by the platform.
A subsidiary of PayPal, Braintree helps online companies handle financial security. And, Carta, Palo Alto, Calif., is a network that enables businesses to manage and monitor equity, manage portfolios and processes for back offices and track regulations.
China Merchants Port, the largest port operator in the country, also teamed up with e-commerce giant, Alibaba Group, and its Fintech-focused subsidiary, Ant Financial. The DLT-based platform will allow buyers, sellers, logistic firms, banking institutions, customs, and tax authorities to carry out contactless digital or online import / export transactions.
Fintech solutions have a significant potential to provide some important opportunities.
The Logistics and Fintech programmers make available the overview of the fintech solutions. Thus, it becomes easier for the logistic service provider. The challenges that the logistic service providers face and the fintech provides solutions for that are,
Firstly, to reduce the need for working capital, many logistics companies take a step forward by using a large variety of financial options. But there are still many companies remained which are struggling in invoice processing, payment modes, etc. These companies can gain much just by improving insights in the financial processes, speeding up payments, and reducing the administrative hassles. Secondly, the need for the equipment to fulfil the logistic processes is highly specialized in the world.
The warehouse and fulfilment also require fintech solutions. Fintech solution is able to provide a more optimized solution with more available data on logistic assets and processes. Lastly, due to an increase in the number of persons in international supply chains, international business becomes more complex than usual.
The fintech solutions helps international businesses by offering digitalized documents, and by connecting physical, financial, and operational information. To get more advanced fintech solutions, the logistic industries can register their transactions in the logistics transactional webs. Further, for higher quality of information, dual filing in customs supervision may result great with less uncertainty of processing at the border, and better performances in cost and time for the global logistics chain.
The logistic service providers are facing various challenges in providing their services. The serious challenges are as follows.
Fintech service providers help the logistic service providers in many ways to improve their services of processing the orders, payments, and invoices.