The advance of automation has the potential to completely rid logistics of human personnel, with robots sorting parcels, drones delivering them, and apps tracking these electric couriers as they buzz around the map.
Ukraine, for better or worse, is not a trendsetter in logistics.
For those Ukrainian firms interested in automating, their best bet seems to be copying and adjusting foreign technologies to the Ukrainian market.
Oleksandr Pertsovskyi, first deputy CEO and Ukrposhta, sees an advantage in this tech gap.
“We can leapfrog into a more modern state, deploying things that have already proven their efficiency [somewhere else],” says Pertsovskyi.
Private Ukrainian logistics companies agree. “Many ideas simply need to be adopted to Ukrainian realities,” says Nova Poshta CEO Alexander Bulba.
So while Google and Amazon are patenting drones and driverless car parcel delivery methods, companies in Ukraine have started budgeting the implementation of parcel sorting robots, development of mobile apps, tests of drones delivery, and replenishment of their electric autopark.
E-commerce shapes delivery
One major trend that has already made a breakthrough is a change made thanks to internet customers. Logistic firms now have to be omni-channeled to match each individual customer’s needs.
This has already led to the development of new delivery solutions, like same-day and even same-hour service, computerized parcel lockers, and mobile apps.
Doorstep delivery and centralized lockers where customers can pick up packages are still not widespread in Ukraine, though. According to Ukrposhta estimates, 70 percent of customers still have to pick up packages at a local post office, where they often must fill out reams of paperwork.
Ukrposhta’s Pertsovskyi predicts rapid growth in courier services and solutions that can “get products to customers in the most convenient way.” Ukrposhta itself plans to “invest heavily” into last-mile capabilities and courier services, Pertsovskyi says.
E-commerce also means that customers coming from the internet want notifications of their shipment status in real time available online.
And while some foreign postal companies have introduced GPS-based map tracking of parcels, Ukrainian firms like Nova Poshta and Ukrposhta started sending their notifications about the state of delivery through messaging apps like Viber.
“It’s unusual that even the state company experiments with means of communication, but it’s becoming an industry norm,” Pertsovskyi of Ukrposhta says. “Consumers want to be informed, and we’re moving towards consumer-driven logistics.”
Bucharskyi from Meest Express agrees, but thinks that it’s still too early to talk about more revolutionary decisions in app development for logistics companies with the introduction of more sophisticated functions.
“What’s the point in talking about deliveries via smartphone in a country where QR-scanners do not work sometimes even in newly built airports,” Bucharskyi says.
Drones not coming yet
Amazon and DHL’s presentations of how drones can be used to deliver mail have already fascinated many people, giving hope that machines will be able to deliver anything anywhere.
But drones still require a bit more time before they enter mainstream business operations.
Ukrainian logistic companies today have the same constraints that exist around the globe: high prices for drones, their technical limits, and no laws to control their usage.
Sergey Grachev, the CEO of In-Time, a delivery firm that has been the first to test drone delivery in Ukraine, says that routes first need to be established. “Paths need to be formed on a map that will eliminate obstacles for drones like cables or skyscrapers.”
And people should also give a little time for drones to develop technologically, he says. Today’s batteries secure only up to 40 minutes of flight. There are drones that can fly for 3 hours, but they are pricey.
“Of course, they can’t be used widely for business purposes at the moment,” Grachev says. “But as soon as the next technological breakthrough in development of batteries takes place, I predict swift mass production and use of drones.”
Drone prices depend on their carrying capacity. Those that carry up to 1.5 kilograms cost $3,000-$5,000. Those that carry from 10 kilograms cost $10,000-$20,000. According to Valeriy Yakovenko, a co-founder of Ukrainian drone producer Drone.Ua, the price will drop within the next 3 years – the parts will be mass produced on a larger scale and will become cheaper.
Yakovenko, though, thinks the main problem does not concern technologies – only laws.
“The world lacks policy on this,” Yakovenko said, noting that production of drones for logistic purposes is an interesting topic worldwide.
Today an annual turnover of the Ukrainian drones market, according to Yakovenko, is 1.5 million euros.
How long does Ukraine have to wait? Nobody knows. But Nova Poshta CEO Bulba isn’t optimistic about the pace.
“Ukrainian consumers are, first of all, interested in affordable services,” Bulba says. “(For them), receiving a drone delivery at the window isn’t on the list of priorities.”
Robots ahead
DHL says that industrial robots are now efficient enough to fundamentally change logistics and manufacturing.
Automating any process that used to be 100-percent manual reduces delivery time and cost, though one indirect cost is increased unemployment from cutting out the human factor.
State operator Ukrposhta that hires 75,000 people, for example, plans to run network redesign in 2017 to define locations for sorting centers.
“In Ukraine, mail volumes will remain mostly manually sorted or semi-automated,” Ukrposhta’s Pertsovskyi says. “But we aim to setup automated parcel sorting at the largest centers.”
Viktor Shevchenko, the CEO of logistic company Zammler, likes the approach. He thinks there’s no way logistic firms can move on without automating warehouses.
“Plus, you need to keep in mind that Ukraine undergoes crisis,” Shevchenko said. “Not all the logistic operators are ready to spend such colossal money on technologies.”
Besides, Shevchenko thinks Ukrainians are not ready for such a huge mental shock. “We accept new things differently – we check everything 100 times and usually opt to wait until others try out something new, and then, we maybe take a risk.”
Logistics warming up
Introducing new technology is a very effective way to increase productivity, but Shevchenko from Zammler thinks Ukrainian companies should do it accordance with local mentality.
Private delivery company DelFast used modern technologies to launch a one-hour electric-bike delivery service in Kyiv back in 2015. More than 45 internet stores have corporate accounts with DelFast, and offer the service as their delivery option for merchandise weighing not more than seven kilograms. (VOLODYMYR PETROV)
“It’s important to implement technologies taking into account the specifics of Ukraine,” Shevchenko said. “Things used in Germany or in the U.S. are not always as successful in Ukraine as they are in those countries.”
Modern technological progress forces even Ukraine’s state-owned companies to adopt foreign innovations for their work.
Ukrposhta is “waking up” quite late in the competition for customers and is focused on “fixing fundamental issues” like renovating its 3,500 vehicle fleet, says Pertsovskyi.
Meest Express’ Bucharskyi is also optimistic.
“Everything that needs to be done regarding (technical) issues will be done. Certainly. In due time.”
“Flip through sci-fi books written 200 years ago and you’ll see our days,” he went on. “People are already tired of news about fantastic drone delivery – that’s not a wonder anymore. Only more innovative things will come.”
As for delivery of the future, Bucharskyi says, “soon people will get notifications of the kind: ‘Turn around – here’s your parcel.’”
