Why IoT Matters to the Transportation and Logistics Industry

6 min readMar 20, 2023

Supply chains are intricate systems, and tracing products from the manufacturer to the end customer is a massive undertaking that relies on advanced technology. Innovators are constantly developing new solutions to improve supply chain operations and boost profits. One promising area that is still in its early stages is the integration of Internet of Things (IoT) devices in transportation and logistics.

While IoT devices and their corresponding application programming interfaces (APIs) are not new, the lack of a compelling business case and reliable wireless internet connections hindered early developments. However, recent advancements are paving the way for new business models, particularly in the logistics industry. Connected devices, much like barcodes, offer solutions to various logistics problems, including warehouse management, fleet management, and package tracking. The use of IoT in logistics could provide logistics companies with better analytics and monitoring capabilities to optimize their business models and remain profitable.

This article will explore some current applications of IoT in logistics and discuss the future of this technology.

Internet of Things

The realm of IoT devices is vast, encompassing everything from kitchen appliances with internet connectivity to smartwatches and RFID tags. In the logistics industry, these devices typically take the form of small transmitters affixed to parcels, shipping containers, or vehicles. Being connected to the internet enables them to transmit data in real-time, primarily location data, although other data points such as temperature or wearable IoT devices measuring employee vital signs are increasingly feasible.

The first use case of IoT was created by computer science majors at Carnegie Mellon in the 1980s, which involved a device connected to a vending machine that monitored and reported its contents to a department building via a primitive hardwired version of the internet. While it was merely a novelty at the time, it was a rudimentary precursor to today’s advanced IoT devices.

However, IoT devices require a stable internet connection to function correctly, which can be problematic in logistics where packages are frequently in motion. Until recently, a lack of reliable wireless connectivity has limited IoT’s use in logistics. Still, the advent of mobile networks, satellite communications, and long-range wireless networks has made transmission more affordable, making IoT use cases in logistics more compelling.

In logistics, small transmitters are the primary form of IoT devices, providing real-time analytics for warehouse management, fleet management, ocean fleets, and parcel tracking.

Warehouse Management

IoT has a broad range of applications in warehouse management, from tracking inventory and monitoring employee health to operating security systems. In logistics, IoT devices are not only high-tech barcodes but also real-time sensors that provide comprehensive insights into all operations.

Inventory Management

Inventory management is essential for any retail operation, and IoT devices can transmit real-time data to connected apps and APIs to keep track of inventory levels and identify when items need replenishing. As IoT devices advance, there are opportunities for automation that can streamline manual labor and improve tracking notifications for businesses and consumers alike.

Warehouse Security Systems

IoT-powered security applications offer numerous benefits, including better access controls, item tracking, and loss prevention. Connected surveillance cameras, locking systems, and tracking apps are just a few examples of how IoT is used in logistics.

Employee Security

Wearable IoT can also enhance occupational safety for warehouse employees, identifying potential health hazards and notifying managers of a worker’s physical condition. Integrated devices can monitor temperature, hazardous gas concentrations, or worker exhaustion, ensuring that logistics companies maintain safe working environments for their employees.

In addition to improving occupational safety, IoT devices can also enhance employee efficiency by tracking and predicting performance, reducing redundant trips in the warehouse, and optimizing route planning to allocate resources more effectively and reduce costs.

Fleet Management

Fleet management is another advantage for logistics companies through the use of IoT devices. These devices can monitor various types of delivery vehicles, including trucks, rail cars, ships, and airplanes. Tracking a fleet of vehicles can be challenging, particularly when customers require updates on their item’s whereabouts and delivery time.

It is crucial for logistics companies to track their vehicles to optimize their routes or re-route them in case of delays at ports or logistics centers. This became even more evident during the pandemic disruptions. As IoT devices continuously transmit data, logistics companies can effectively track route data. This increased visibility into how goods are moving through the supply chain enables quicker responses to delays and consolidation of shipments. Such measures can result in fuel savings by adopting more efficient routes and reducing personnel and administrative costs in the long run.

Improved tracking provides more accurate and dependable service to customers who demand timely delivery of their shipments. Therefore, logistics companies can use this as an opportunity to enhance their customer service.

Freight management

One area that holds potential for growth in the IoT industry is in the field of freight management. Sending full shipments can result in more efficient operations, and IoT devices can provide precise data that can automate many of the issues involved in shipping and unloading at ports and logistics terminals. With the use of connected devices that communicate with one another and with logistics firms, a complete ecosystem can be established for parcels traveling through the supply chain, resulting in faster forwarding, happier customers, and lower costs.

Long-distance shipping, particularly ocean freight, is an excellent example of when IoT can be particularly beneficial. If you know where items are, it becomes possible to organize offloading items first at every port of call along the way. The future of IoT promises to reduce bottlenecks in shipping.

Services such as Spot Ship are already exploring solutions in this field. Spot Ship is currently a SQL database that assists ship brokers in managing full shipments. However, by integrating with IoT, the app can maintain an updated log of shipments and automate more of its operations. Better analytics about the contents of a shipping container and its destination can reduce waste, promote sustainable shipping, and increase profits for logistics firms.

Parcel Tracking

IoT devices can be used to track individual parcels just as they can track vehicles. This allows for better transparency about the location of an item in the supply chain, and more accurate predictions of when it will arrive, ultimately leading to improved customer satisfaction and increased value for end users.

As the supply chain becomes more complex, it can be difficult to pinpoint the exact location of a parcel, particularly when it is between points in its journey. However, customers now expect to have visibility into the status of their items throughout the delivery process.

According to a report by logistics solutions company Loqate, missed deliveries cost companies an average of over $250,000 per year, with the majority of these losses occurring during the last-mile delivery from the warehouse to the final destination.

Better reporting can lead to more accurate delivery predictions and, instead of providing an 8-hour window for delivery, shipping companies could give customers one or two-hour notices for when to be home to receive their package. Real-time data transmitted by IoT devices can greatly assist companies in achieving this goal, ultimately leading to increased customer satisfaction, fewer missed deliveries and improved operational efficiency.

IoT in Logistics — Wrapping Up

The logistics industry stands to benefit significantly from the advancements in IoT solutions. With better reporting and data collection, it is possible to identify areas that need improvement in terms of efficiency. By leveraging technologies such as predictive analytics, optimized routes, and real-time tracking of inventory, logistics companies can cater to the increasing demand for e-commerce while reducing waste in the delivery process.

As IoT devices and their supporting networks and applications continue to evolve, the logistics industry will have more opportunities to streamline operations and explore innovative solutions. The prospect of automating systems and deploying driverless fleets guided by internet-connected devices presents an exciting vision for the future of logistics.

By embracing technological advancements and investing in smart solutions, companies can stay ahead of the curve and enjoy the benefits of improved data and operational efficiencies. As IoT devices and data-driven applications continue to emerge, logistics providers, retailers, and consumers will all benefit from the insights gained from better data collection and analysis.




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