Overall Supply Chain and Logistics Tech Spending Will Rise to $87.8 Billion
New research from Logistics Trends & Insights and American Global Logistics (AGL) projects that U.S. companies will spend more than $2.5 billion in disruptive logistics and supply chain technologies by 2022. Overall supply chain and logistics technology spending will rise to $87.8 billion. The report, “Supply Chain Technology Investment Outlook” (download here) explores the rapid growth in supply chain IT investment and which technologies are likely to take the lead in the next five years.
“Since the last major supply chain investment cycle, technologies like artificial intelligence, connected devices, sensors, cloud computing, cybersecurity and distributed systems are transforming the technology landscape,” said Jon Slangerup, Chairman and Chief Executive Officer, AGL. “The next wave of supply chain innovation will focus on weaving these technologies together to make global supply chains more efficient, more resilient, more transparent, and less costly. While figuring that out will take time, we think this is the most promising investment opportunity of the next two to three decades.”
Slangerup recently spoke on this subject at the Logistics Technology Conference in Las Vegas on Oct. 29-30.
As supply chain startups continue to develop innovative tools to serve customers, that innovation is fueled by the venture capital that continues to pour into the sector. Between 2012 and 2017, supply chain and logistics technology firms received more than $8.4 billion in investments and the average total venture capital investment was about $17 million.
Many of these investments are in tools that didn’t exist during previous investment cycles. In particular, startups are focusing on applications that sit atop or alongside established enterprise software, whether it’s AI, blockchain or machine learning tools.
“U.S. logistics costs have increased at a five-year compound annual growth rate (CAGR) of 3.2 percent. Projecting this same five-year CAGR, the estimated $75 billion in total logistics IT spending in 2017 increases to $87.8 billion in 2022,” said Cathy Morrow Roberson, Founder and Head Analyst, Logistics Trends & Insights. “The estimated $2.23 billion in disruptive logistics technology spending in 2017 will rise to $2.63 billion in 2022. It’s important to note, however, that technologies considered disruptive today may no longer be disruptive in 2022, which means those investments will be part of total logistics IT spending instead.”