Making dynamic adjustments to logistics networks
In October 2024, two authors —Christian Kille, Professor of Retail Logistics and Operations Management at the Technical University of Applied Sciences Würzburg-Schweinfurt (THWS), and Andreas Backhaus, a freelance lecturer—published a study entitled “Chemical logistics on the move” (in German), which was supported by DACHSER Chem Logistics. Their study analyzed the current and future challenges and opportunities for chemical logistics in Germany and concluded with six recommendations for action. Now follows the double interview with author Christian Kille and Michael Kriegel, Department Head DACHSER Chem Logistics, to intensify the recommendations and to learn about the opportunities that arise from their practical implementation.
Mr. Kille, your recommendations for how companies can shape chemical logistics don’t provide any concrete actions. How should these corporate recommendations be understood?
Christian Kille: There’s so much variety within the chemical industry that it makes no sense to give highly specific options for action to such a broad target group. There are just too many aspects to consider: the company’s size, its stage in the value chain, type of goods or products, logistics setup, international networks, and so on. That’s why we see our recommendations for action more as a basic structure around which each company can develop its own specific approaches.
So, companies need to adapt how they implement the recommendations in practice to their own situation. I’d still like to find out a bit more about a few of your recommendations. For instance, how might chemical companies and logistics companies work together to overcome the challenges of the lack of qualified personnel?
C. Kille: Let’s go into a little more detail. Here’s an example: capacity coordination is an area with—to put it mildly—room for improvement right along the entire logistics chain. As we found out in another study, one way to hugely increase the capacity of qualified personnel is by better coordinating the sender’s production and sales departments with the logistics provider and with the customer’s procurement and production departments. Doing this means fewer drivers would be needed.
How can automation and digitalization in logistics increase the resilience and performance of the chemical industry?
C. Kille: The possibilities are manifold. The logistics networks need to be adjusted dynamically whenever the chemical industry’s requirements change. And that’s precisely what we set out to do with our study: identify a range of developments with which to adapt logistics structures as necessary. In my view, the biggest lever is the flow of information. For one thing, numerous administrative processes can be automated, thereby increasing efficiency. In many areas—whether in customer communication, transport scheduling, or invoice processing—paper is redundant, and some processes don’t need to involve people at all. For another, transparency in the supply chain helps make better use of capacity and makes it easier to react to unplanned changes, which in turn makes the company more resilient. Professional risk management calls for complete transparency together with a strategy that will take effect at the right time in the event of an emergency.
Mr. Kriegel, from a practical perspective, what benefits can you derive from these recommendations?
Michael Kriegel: DACHSER has set itself a target picture for the year 2030, and all employees are working together to achieve it. We’re pursuing our goal with seven strategies dedicated to our Road Logistics and Air & Sea Logistics business fields and to their close integration. In addition, there are overarching development topics such as digitalization, climate action, and our HR strategy, which puts people at the heart of the logistics business. Finally, our global system for ideas and innovation management also plays an important role. I’m pleased to see that these strategies are reflected in the study’s recommendations for action. This shows us that DACHSER is on the right track and can position itself successfully despite the challenges of international competition.
Can you give us any specific examples of how DACHSER has successfully implemented the strategies recommended in the study?
M. Kriegel: One example of how we’ve successfully implemented the digitalization strategy has to be our @ILO digital twin, for which DACHSER, together with Fraunhofer IML, received the German Logistics Award from the German Logistics Association (BVL) in autumn 2023. @ILO is a pioneering digital map of all packages, assets, and procedures in the transit terminal—a paradigm shift in the organization of groupage logistics that we’re now rolling out across Europe. DACHSER is also a driving force in the logistics industry when it comes to sustainability. We started out on this marathon back in 2018. Our aim is to gather experience with zero-emission technologies, especially with battery-electric trucks, and put them into real-life operation. As part of the DACHSER Emission-Free Delivery concept, we now deliver to defined downtown areas in 16 major European cities using fully electric trucks and pedelecs. By the end of 2025, that number will rise to 25. We’ve also set up three e-mobility locations in Germany to gain experience with using zero-emission trucks for long-distance transport, and we’re developing the necessary charging infrastructure. DACHSER recently put its 100th all-electric truck into operation.
In your experience, which of the scenarios mentioned pose the greatest challenges for logistics companies?
M. Kriegel: AI is a great opportunity, especially in logistics, but it’s also a challenge that needs to be managed. DACHSER has taken the first step along this path, and will take subsequent ones in due course. Let me give you a practical example: a crucial factor for achieving efficiency and quality in logistics is planability. Here, too, AI can really make a difference, as demonstrated by our first machine learning project, “Predictive Analytics DACHSER”—or PAnDA One for short. This model was specially designed to forecast inbound volumes at overland transport branches, providing tactical decision-making support for capacity planning. That makes it possible to obtain suitable load capacity on the market at an early stage, or to plan inbound volumes in the transit terminal up to 25 weeks ahead. The technology helps people make sound decisions, but it needs to be implemented wisely and carefully. This is because AI always works with probabilities, and within a certain corridor, those probabilities can turn out to be incorrect. That’s why technology should support people, but it mustn’t replace independent, creative thinking. We always keep this in mind in all our digitalization projects.
Six recommendations:
1. Logistics can (still) only be successful through people: Investing in the recruitment and retention of employees ensures existing business and promises long-term competitive advantages.
2. Innovations mean local advantages: In addition to participating in research on logistics innovations, modernization measures are needed for a good positioning in international competition.
3. Germany as a base for the chemical industry can only be successful with high quality and diversified portfolios: Investments in automation and digitalization are crucial in logistics in order to increase the resilience and thus the performance of the chemical industry.
5. A transformation will take place in the chemical industry: The changes in the chemical market require a reassessment and adaptation of logistics networks and offerings.
6. The impact of climate change and the energy transition is leading to strategic changes of direction in the chemical industry: logistics has to prepare for restrictive measures in the course of the energy transition and implement processes which are resistant to weather influences.
