Flexibility is the clincher on the last mile

In 2030, 600 million more humans will live in the world’s metropolitan areas compared to today. DHL has identified the four main trends that are shaping future delivery services to these customers, in collaboration with Euromonitor.

2008 marked a watershed in human settlement history – for the first time, more human beings were living in cities than in rural areas. And that evolution is showing no signs of abating. Today, the UN expects that in 2050 roughly 70 percent of the world’s population will reside in urban areas. Already 20 years before that this share will exceed the 60 percent marker. To provide some clear figures: The urban population will have grown by 600 million people in 2030.

Relocations of this magnitude can impossibly have no implications for urban logistics, even more so considering the constantly rising revenues and volumes within the e-commerce-sector. DHL, the world’s leading logistics company, and market research company Euromonitor took up this issue and identified four main trends in their white paper “Shortening the Last Mile: Winning Logistics Strategies in the Race to the Urban Consumer“: localized delivery, flexi-delivery networks, seasonal logistics and evolving technologies are important for business success of e-commerce companies within the urban area. “The last mile is increasingly becoming the key battleground in the e-commerce supply chain, and companies will have to develop targeted strategies in this area to compete effectively”, says Katja Busch, Chief Commercial Officer, DHL. Further on: “It’s not just about transportation, but about companies’ overall approach to managing inventory – getting the right items to the right place at the right time.”

Four different aspects will define the foundation of tomorrow's eCommerce-logistcs in the urban environment. [Graph: DHL]
Four different aspects will define the foundation of tomorrow’s eCommerce-logistcs in the urban environment. [Graph: DHL]

Volume surges require decentralization

Black Friday, Singles Day, Cyber day – promotional sales days are increasingly popular with the e-commerce customer. For logistics companies on the last mile this is a real

The urban consumer lives in a fast-paced world with increasingly busy schedules and want flexible services. [Graph: DHL]
The urban consumer lives in a fast-paced world with increasingly busy schedules and want flexible services. [Graph: DHL]
challenge, because they need to build up capacities and hire resources without knowing if this effort is really worthwhile. As the anticipated run on the offerings does not always materialize. Cost and operational impact is huge, and that every time. The central inventory management currently in use might reach its limit due to these developments. New strategies with local fulfilment and distribution infrastructures will be in demand. Strong partners are of help, as Katja Busch well knows: “DHL is developing focused solutions to help e-commerce companies reach their end customers quickly and efficiently, from using machine learning to better route shipments within cities to adding more automation to our delivery networks.”

Technolgy and flexible networks

This automation can only be handled with the aid of modern digital technology and concepts of Industry 4.0-norm. This is creating many opportunities for new disruptive challengers to position themselves in a dynamic market environment. Incumbents are at the same time required to incorporate new skills for mastering these technologies into their workforce and align their investment decisions along the developments in this area. This is exactly what the F.A.D. (Flexible transport networks, Automation and Data) model is meant for, a joint concept by DHL and Euromonitor. By improving their performance in increasing automation, managing data and building flexibility into their networks, e-commerce companies in all markets will be able to better manage inventory and increase the efficiency of their last-mile delivery networks. This will help retailers and logistics service providers alike to retain their competitiveness on the last mile.

The FAD Triangle identifies three possible areas for adjustments to improve competitiveness. [Graph: DHL]
The FAD Triangle identifies three possible areas for adjustments to improve competitiveness. [Graph: DHL]

High dynamics

At the same time, the e-commerce-market will undergo a constant change in the rear future. Predictions are hard to come by, thus agility and efficiency will be even more important for companies, enabling them to operate as close as possible to their customer’s demands. “Those companies that can build effective partnerships to make their urban delivery networks more elastic, invest in the most effective technologies to boost productivity, take advantage of data to build better customer experiences and, most importantly, manage their inventory as efficiently as possible will emerge as winners in the dynamic e-commerce marketplace of tomorrow”, says Lee Spratt, CEO, DHL eCommerce Americas.

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