Coronavirus Pandemic Spurs Greater Digitization of the Economy

Wed, Jun 3, 2020 - 3:24pm

Woody Preucil of 13D Global Strategy and Research recently joined the FS Insider podcast to discuss the new wave of technological innovation we’ve seen as a result of the COVID-19 pandemic. He explains how airports and cities are implementing health surveillance technology and what role AI is playing as well. See below for excerpts from his interview with FS Insider.

For audio, see The Birth of Global Health Surveillance.

You've had some really good insights between what we see today with COVID-19 and what we saw during 9/11. Can you share some of those insights?

Shortly after 9/11, we wrote a report that made the case that a new global security industry was being created. We wrote that first, screening of weapons and explosives would become standard at airports, and, then ultimately, all public venues. We've tracked land and border security, seaports, biosecurity, cyber security and overall home security very closely since then and it's become a major industry.

We think the same thing is going to happen with this pandemic. The world is losing the battle against infectious diseases. The number of infectious outbreaks has been rising exponentially since 1980 and there have been over 100 new viruses identified. As you know, most countries still have some sort of border closure or lockdown in effect, though they're starting to reopen now. But you know, most of the world has been locked down. And so we don't know exactly how it's going to look. But Hong Kong may provide some insight.

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In Hong Kong, as soon as you get off the plane, they put a GPS tracker wristband on your wrist, and then they shuttle you over to a large conference area where you're tested for COVID-19. You’re social distancing in this conference area and it’s very large, almost like a stadium. Then from there, they shuttle passengers to a holding area, which is basically a converted hotel. The whole process takes at least 18 hours before you’re able to leave the airport. Then you have a wristband tracker on, and you’ve got to stay self-quarantined for two weeks until you can go outside.

Yeah, I don't think we're going to be able to implement something like that here.

Well, so we don't know exactly what it's going to look like. But I think in general, we're going to have thermal cameras and scanners at security checkpoints. The recent guidelines from airlines are that you must wear a mask when you’re in the airport and on a plane. I've read that Emirates Airlines is testing people before they get on the plane depending on the destination and the rules in that country. It could be a scenario where you have initial thermal screening, or some type of screening, antibody test, rapid antibody test or rapid diagnostic tests. Then depending on that, you go to the next step.

Interestingly, DARPA (Defense Advanced Research Projects Agency) recently developed a diagnostic test for COVID-19 that's able to diagnose if someone has the disease within 24 hours of infection. So that’s before you would be feeling any symptoms and it’s before you would be able to infect anybody else.

There are rapid advances being made technology-wise. That DARPA test will be available later this month, I understand. You know, you could play out a scenario in your mind where you have a test every day to see if you have this disease, and then you take appropriate action from there. But I think it's a huge industry that’s just starting to emerge now. And we'll have to track it very closely.

We discussed the intersection of health surveillance technology and COVID-19; what role has AI been playing?

I think AI is playing a role in virtually every aspect, not only for surveillance, but tracking the spread of the disease is one of the first areas. There is a startup called BlueDot. It's a Canadian AI startup and they warned about the coronavirus outbreak on December 31. And that was nearly a week before the World Health Organization or the CDC and it’s because they were using an AI program to analyze data for global airline ticket sales.

They correctly predicted the outbreak and, beyond that, they were able to predict the spread of the coronavirus to Tokyo, Bangkok, Seoul and Taipei based on the sales of airline tickets. They did that by analyzing unstructured text data in 65 languages every 15 minutes using natural language processing and machine learning. There are other startups that are doing that kind of thing, too.

AI is also being used in developing a cure for coronavirus. The Coalition for Epidemic Preparedness Innovations announced early on three technology-driven programs to develop a vaccine within 16 weeks versus processes normally taking years. It’s a combination of DNA sequencing and machine learning to narrow down good candidates and I think there's been a lot of promise there.

I think the pandemic is forcing greater digitization of the economy and I think AI will play an important role in this. Not only in terms of overall digitization, but it's boosting the internet infrastructure because now you have a lot of workers at home. It's going to help drive 5G deployments and promote greater automation, particularly if we go into a kind of a rolling lockdown scenario where we have a second wave. Whether it's either in the fall or on a more rolling basis, it’s going to encourage more automation.

For instance, the trend of warehouse robots was taking off before the pandemic. That's just going to be accelerated now and that's a huge opportunity. Less than 10% of warehouses are automated, at the moment. Certainly, there are companies like Amazon, which have a higher level of automation, but overall, the vast majority of the supply chain still uses rack shelving, lots of floor space and human labor.

Automation has a huge potential. Even before the pandemic, there was a warehouse in China, in Shanghai and it's the world's first human-less warehouse, basically operated by robots only. It was launched by a Japanese startup for Chinese e-commerce giant JD.com. And basically, instead of having 500 human workers needed to manage a warehouse of similar size, this facility only has five employees who basically just service the machines. So that's the direction and companies will be incentivized to use that.

Another point that I would make is also in terms of greater digitization of the economy. This is going transform supply chains because you can move the actual production of the end product closer to the consumer. This allows businesses to eliminate risk in their supply chains, and we’ve certainty seen a lot of issues with global supply chains in relation to COVID-19.

To listen to our full-length interview with Woody Preucil click here. If you're not already a subscriber to our FS Insider podcast where we interview book authors, strategists and industry experts from across the globe on all things economics, finance and markets...

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