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New Mobility World @IAA Commercial Vehicles 2018Hanover, September 20-27, 2018
New Mobility World

Franck Leveque of Frost & Sullivan: The Future of Urban Logistics – Implications and Opportunities

By Editorial Team on September 23, 2018

Read up on the perspective of Franck Leveque, Partner and Business Unit Head of Mobility, Frost & Sullivan, on the future of mobility and hear more in person as he traces these critical shifts impacting the industry in his presentation ”The Future of Urban Logistics – Implications and Opportunities” at New Mobility World Forum on Monday, 24 September, at 11.15 am.

In recent years, delivering goods to cities has become an intimidating challenge with cities getting overly congested and traffic jams resulting in expensive logistics bottlenecks. In fact, studies show that the cost of congestion now in terms of time wasted in traffic and fuel consumption is off the roof, almost 200% more than what it was in the 1980s. And congestion is only a part of the urban delivery problem. Pollution, lack of parking bays, and warehousing costs are all restraints that are contributing to the economic cost of urban logistics.

The Mega Trend of urbanization is growing and expanding city peripheries and the areas to which trucks will be delivering to in the future. In fact, by 2025, there will be 35 Mega Cities (defined as cities with more than 8 million population and GDP of over $250 billion) globally demanding for unique urban logistics solutions. The number of city dwellers is growing by the day and by 2025 we expect 3 out of 5 people to live in cities globally. Currently, an average city dweller from a developed city generates about 0.1 deliveries per day, and if we were to assume the same ratio for 2025 (which we know will increase in the future), we are looking at a minimum of 500 million deliveries per day to cities.

In the context of this growing problem, the trucking and freight transportation industry is at the cusp of a revolutionary transformation as it innovates to meet the needs of urban logistics. For instance, the industry is making a conscious shift from asset centric models to more digital asset-light approaches enabling new types of services such as on-demand, real time and agile last mile delivery solutions suited for the uncertain nature of the urban supply chain. As a result, in the trucking industry, we expect to see a polarization phenomenon with vehicles – on the one hand the focus on heavy duty vehicles will continue while on the other, light commercial vehicles will be increasingly used for last mile; mainly to avoid access restrictions in urban centers which will account for over 60% of freight transport in ten years’ time. As an opportunity, urban logistic represents close to $5.98 trillion by 2020 in terms of overall industry spending, of which transportation will account for nearly 55%.

Connectivity & digitization will also drive innovation that will provide aggregated capacity and visibility across the supply chain (eg. e-brokerage). In parallel, remote diagnostics capability will also help continuously reduce TCO and maximise up-time. E-brokerage and such models are expected to generate nearly $26.5 Billion in revenue in 2025 in North America alone.

Tighter regulations and restricted access to diesel vehicles will drive investment in alternative drive systems.  Frost & Sullivan research indicates that by 2025, over 11 % of all MD-HD trucks sold globally will feature electric powertrain (2.5 million vehicles).

Looking ahead to the future, autonomous technologies such as drones and autonomous trucks are also expected to plough the road as they drive efficiency through cost savings from less fuel consumption. Approximately 200,000 trucks are expected to be making autonomous deliveries by 2030.

Discover how these trends are disrupting the market and the traditional industry’s business model with Frost & Sullivan research and insights.

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