Innovation in Logistics During Times of Disruption

Vice President of Global Innovation at DB Schenker, Erik Wirsing, joined us in our Innovation Rockstars Podcast and shared insights about the hottest topics in logistics.

DB Schenker is one of the largest logistics providers in the world. Owned by German rail operator Deutsche Bahn, DB Schenker comprises divisions for air, land, sea freight, and contract logistics to support industry and trade in the global exchange of goods.

In one of our latest Innovation Rockstar podcast episodes, we welcomed Erik Wirsing, Vice President of Global Innovation at DB Schenker. Having been engaged in logistics for more than 22 years, Erik believes that logistics is not just transporting and storing things, but a great field to nurture new ways of thinking and working. Therefore, at DB Schenker, Erik keeps a keen eye on recent trends and technologies that can alter the future of innovation in logistics. He is also responsible for establishing new business models faster, better, and more efficient than their competitors.

Erik joined us in our Innovation Rockstar podcast to shed light on how DB Schenker handled the recent pandemic crisis and the disruptions that followed. He also provides insights into DB Schenker’s approach to innovation and how - according to Erik - new trends and technologies will impact the logistics industry

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Innovation in Logistics

A fundamental change, Erik perceived in the logistic industry is, that this area of business is considerably more open to innovation than a few years ago, alluding to the last five to seven years when the world witnessed substantial technological transformations. Since logistics companies have to collaborate with various partners, suppliers, and startups, the field of logistics cannot stay immune to the emerging ideas and trends in the market. Erik further states that even though DB Schenker is one of the largest logistics providers in the world, they have to compete with a slew of other companies of a similar kind. This adds additional pressure to stay ahead of the game, to be relevant today and even tomorrow, making logistics a fantastic field for innovation. According to Erik, the biggest challenge in today’s logistics industry scenario is that there are many competitors, all vying for equal attention.

Being asked about the technological shifts the world is witnessing, Erik answers quite enthusiastically and even emphasizes how “cool" it is, that all these crazy new technologies are also impacting innovation in logistics. According to him, these technologies provide excellent baselines for the logistics industry to innovate. Clarifying the claim further, Erik gives examples of Elon Musk’s "The Boring Company", autonomous driving, and various other projects promoting smart cities that can drive the logistics sector to reduce its carbon footprint. According to Erik, these technologies will appear in the logistics industry sooner or later. And the only way to ride these waves of dynamics is by testing them for viability to determine if they resonate with DB Schenker’s purpose.

And that’s exactly, what Erik and his team are doing at DB Schenker: In order to identify relevant business opportunities, Erik and his team are continuously assessing emerging trends and technologies. This future-oriented way of which led the company - among others - to very successful cooperation with Volocopter, a German aircraft manufacturer specializing in the design of multirotor helicopters in the form of personal air vehicles. DB Schenker is working with the startup on the development of a cargo drone. Erik says the technology could be an excellent alternative to conventional methods of shipping commodities for several reasons. One reason is the rising average age of the logistics workforce, e.g. with 58 average age many German truck drivers are getting closer to retirement, as well as bans on diesel-driven trucks, are on the rise in many countries. And finally, cargo drones will be highly relevant in urban areas on a fast mile delivery schedule.

Erik states that businesses often tend to apply a tunnel vision and only look at the immediate benefits and behave reactively when faced with such transformative events. But this is not the correct approach. Instead, the ideal thing to do would be to approach innovation proactively and constantly be on the lookout for the next big thing.

Pandemic, De-Globalization, and Supply Chain Innovation

When being asked how DB Schenker managed the unprecedented Covid-19 situation, Erik acknowledges that the pandemic has not been an easy ride for the logistics industry at all. Especially the automotive and electronics industries asked to store things for longer periods of manufacturing, as there was a fear of abrupt lockdowns. The situation was unprecedented and presented an enormous challenge of providing undisrupted and consistent logistical solutions. As a consequence of keeping things local, there was a severe warehouse shortage. To tackle this, clients started to use shipping containers as makeshift warehouses. DB Schenker realized the need for an urgent alternative plan to deliver a ‘business-as-usual’ approach. As a part of the solution, the company started to employ more charters in the shape of passenger planes. They took the seats out and loaded the freight onto the upper deck of the airplanes. Freighters became “preighters”. This has initiated new business models and collaborations with airplane companies for DB Schenker.

While the pandemic slowed down the entire global market, the logistic industry perceived rather the opposite. For instance, the rise in the trend of home-office has fueled the demand for the global transportation of electronic devices. Likewise, there was a high demand for different healthcare products like masks, sanitizers, Covid-19 test kits, and vaccines. During that time but also in the retrospective, Erik perceives this specific challenge as an opportunity to demonstrate to customers that DB Schenker supports them even in the crazy pandemic times.

Further down the conversation, Erik outlines another major disruption caused by the pandemic; de-globalization. Because of the pandemic, many of DB Schenker’s customers were rethinking their supply chain, also to become more sustainable. Companies have started looking for alternative options to bring everything closer and eliminate the geographical space in-between, which logistics would traditionally fill. But again, Erik chose to look at the fruitful side of the development. This disruption allowed them to align with their client’s sustainability goals in reducing their carbon footprint. Thus, DB Schenker is pushing their suppliers and carriers nowadays to be as compliant about CO2 reduction as possible when transporting things.

Approaching Innovation at DB Schenker

One thing we also wanted to know from Erik was, how DB Schenker is keeping up with these unprecedented changes in the external environment. In his reply, Erik outlines that there are always times of disruption, in which the company has to deal with whatever is thrown at them with little or no warning. But that's why DB Schenker has a system in place to respond to these changes. Internally, this plan is called the “innovation thesis.” This innovation thesis revolves around focal areas the company is interested in exploring and provides clear guidance regarding its short-term goals. DB Schenker also conducts trend analysis with a specially designed trend radar. The radar platform pools inputs from startups, trends, and other projects to leverage possibilities and opportunities. The company’s database is so up-to-date that it practically features all the startups related to the logistics industry, Erik proudly highlights. The trend spotting is followed by an analysis regarding their relevance to DB Schenker, possible business opportunities, or new supplier models. At the same time, the process helps DB Schenker with its 'try and fail fast' mindset to stop resource-draining.

When it comes to innovation, the most important headline is constantly finding new streams of knowledge to bring into an organization most straightforwardly and directly to the right people within your organization. DB Schenker thus encourages its employees to drive and educate colleagues regarding the topics they are well acquainted with. In that context, Erik accentuates the importance of involving employees, customers, and stakeholders in the process of innovation. Motivating the employees by giving them the resources, responsibility, and freedom to work on the topic of their interest could sometimes lead to breakthroughs and greatness. Finally, Erik says that the most critical attitude everyone at DB Schenker applies in their daily jobs is to be #hungryforinnovation.

We thank Erik for this insightful interview!