September 25, 2017 | Industry Insights
Will High Tech Delivery Solutions Be Used Anytime Soon in A City Near You?
It’s estimated that e-commerce retail sales will increase to $4.058 trillion in 2020, according to research company e-marketers, making up 14.6% of total retail spending that year. This undoubtedly will add to the flood of packages being delivered to crowded cities throughout the world and to the race by forward-thinking logistics providers to adapt high-tech solutions to make these deliveries.
Global management consulting firm McKinsey & Company in a recent report on urban commercial transport looked at logistic solutions that could make a positive impact on the delivery system into cities. It analyzed more than 20 solutions and ranked the overall benefit of each based on costs, feasibility, the environment, and customer expectations. Of those analyzed, McKinsey found six solutions it believed made an impact on the environment (cutting emissions) and parcel costs (reducing costs by 25 to 50%). These included: having urban warehouses to consolidate packages from disparate sources, the use of electric vehicles, load sharing to match cargo with spare capacity in commercial vehicles, drop boxes for parcels in businesses and residential buildings, and small self-driving vehicles to deliver parcels to their final destination.
Some of these solutions have been in existence for some time. The problem, however, is replacing and modifying old systems and getting everyone on board. As a recent article in Quartz points out, “cities present a perfect barrier of fixed [physical] infrastructure, sunk costs, and misaligned incentives where private sector actors refuse to cooperate, and public officials shy away from investing money in novel solutions. That comes at a cost: Cities lose as much as 4% of their GDP through wasted time and fuel as well as inefficiencies.” Additionally, competing delivery firms represent obstacles for cities looking to overhaul delivery.
There are also legal challenges to overcome with high-tech advances. For example, aerial drones are illegal (and impractical) in most cities to deliver packages. Self-driving vehicles face a winding road ahead as legislators fine-tune regulations. “Whisking packages to their urban destinations with self-driving trucks and electric drones is probably a long way off, says Chris Caplice, executive director of the MIT Center for Transportation and Logistics, in the Quartz article. “A lot this stuff is more evolutionary than revolutionary.”
We are seeing some headway. Amazon’s Flex program hires on-demand drivers (think Uber or Lyft but for packages) to deliver packages during crunch periods to reduce expensive peak delivery costs. Self-driving vehicles are nearly ready to transform point-to-point shipping on highways, but outside metropolitan cities.
How do you see the future of transport in a city near you?
Roanoke Trade, specialists in insuring third-party logistics providers, keeps its pulse on technology trends and how they will impact the industry including any emerging risks that require specialized coverage. For information about our insurance products and services, please contact one of our Roanoke Trade professionals at 1-800-ROANOKE (800-762-6653).