Global logistics spending to reach $10.6 trillion in 2020

• New business models are unbundling the urban logistics value chain


JEDDAH — Global logistics spending is expected to reach $10.6 trillion in 2020, with transportation accounting for the majority at 70%, Frost & Sullivan’s recent analysis titled “Urban Logistics Opportunities—Last-Mile Innovation” revealed.

Emerging technologies such as cloud computing, big data, and crowdsourcing, coupled with an influx of tech-savvy start-ups, are unbundling the value chain and transforming delivery models.

About two fifth of the overall logistics costs are associated with the last mile that are forcing providers to come up with newer innovative solutions to deliver packages within cities. Frost & Sullivan predicts the market will rapidly move toward mobile freight brokerage-type, on-demand deliveries and autonomous technology, such as the use of drones and delivery bots which are set to solve the last mile delivery challenge by being more cost effective to end users with lesser regulatory mandates.

The report highlights the various trends, drivers and the opportunities within eCommerce, omnichannel retail and the courier, express, and parcel market, and further identifies the new business models that are expected to disrupt last-mile delivery. Innovative new business models such as click and collect, locker boxes, on-demand deliveries, and micro distribution are providing flexible options to end consumers which will allow them to collect deliveries at their convenience. With technologies such as Big Data, cloud computing, connected devises and crowd-sourced platforms also set to play a major role in logistics, the report also looks at how technology use cases such as freight brokerage, and autonomous solutions are expected to further create efficiencies within the last mile of the logistics process. The future is all about drones and delivery bots and the report delves deep to understand the implications of these technology scenarios on Logistics. Lastly, the report also focuses on cleaner forms of deliveries and provides a regional perspective in terms of countries, such as the United Kingdom, Germany, which are considering ‘Ultra-Low Economic Zones’ to facilitate the objective of sustainable and green transportation by 2020.

“Spiraling last-mile delivery costs and changing customer demands are causing retailers to rethink their strategies and look toward new business models such as click-and-collect, locker boxes, on-demand, and autonomous solutions,” said Vijay Narayanan Natarajan, Visionary Innovation Senior Research Analyst at Frost & Sullivan. “Moreover, the influx of start-ups in logistics has enabled innovative solutions that not only provide value-creation customized solutions for the consumer, but also tackle the inefficiencies currently witnessed.”

Further trends, developments driving growth:

• Digital freight brokering platforms reducing empty miles by 8% to 10%;

• Shift toward low-emission and zero-emission solutions, such as use of low-carbon vehicles or bicycles;

• Fleet operators expanding their strategies by developing urban distribution centers for effective logistics management; and

• Retailers focusing on compact stores to reduce capital expenditure and bring products closer to a growing urban customer base

“Rapid proliferation of connected technologies and solutions, and further advancements in autonomous applications could well usher in new innovations in logistics with delivery bots and drone solutions all set to be the future of urban deliveries,” noted Archana Devi Vidyasekar, Visionary Innovation Global Research Manager.

The Logistics market is undergoing a major shift, with innovative solutions transforming the way goods and parcels are delivered. The industry is witnessing an influx of tech-savvy start-up firms that are introducing new, unique, value-added services, which are disrupting the overall supply chain ecosystem. The rise of start-up firms within the logistics industry for city deliveries parallels the growth of emerging technologies, such as Big Data, cloud computing, crowd sourcing platforms and connected devices which are transforming the way deliveries are expected to be transported in the immediate future. This change has forced service providers to deliver more customized solutions that address larger concerns within the industry. Recently, there has been greater emphasis on last-mile delivery. Research suggests that two-fifths of the overall logistics cost is being spent on the last mile. This has resulted in logistics and transportation firms looking at technology and new business models as means to address the growing issue of the last mile. With end consumers becoming more demanding, user experience and instant deliveries are taking greater precedence and are becoming critical factors. This means that same-day and last-mile deliveries will be key differentiators, as service providers will be obliged to provide more customized solutions to address such concerns. — SG