Mega Trends Impact on Urban Logistics presented at eyefortransport's 3PL Summit- North America


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Mega Trends Impact on Urban Logistics presented at eyefortransport's 3PL Summit- North America

  1. 1. 1 NA99-13 Global Mega Trends and Implications to Urban Logistics Sandeep Kar Global Director- Commercial Vehicle Research
  2. 2. 2 NA99-13 1. Urbanization 2. Connectivity and Convergence 4. Future Infrastructure Development There Will be 35 Mega Cities Globally By 2025 Demanding For Unique City Logistics Solutions By 2025, each person will have a minimum of five connected devices By 2025, 20% of retail will happen through online channels By 2025, globally over $800 billion will be spent on high speed rail projects. What does this mean for Urban Logistics? 500 million deliveries per person per day to cities ‘On-the-fly’ deliveries will have to made anywhere, anyhow, faster and quicker Demand for urban parcel deliveries will increase – shipments to become smaller and frequent Multi-modal, low carbon footprint, mission critical utilization of road, rail, marine, and air infrastructure 3. Bricks & Clicks Source: United Nations, Department of Economic and Social Affairs, Population Division (2012). World Urbanization Prospects: The 2011 Revision , Frost & Sullivan, 2012 Mega Trends Driving Urban Logistics Industry
  3. 3. 3 NA99-13 Urbanization Trends Influencing Urban Logistics Development of Mega Cities, Mega Regions, Mega Corridors, and Mega Slums to Drive Demand for Logistics Services in Urban Areas MEGA REGIONS Cities combining with suburbs to form regions (Population of over 15 million) (21 Mega Regions in 2025) EXAMPLE: National capital region of Delhi (includes New Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad) MEGA CORRIDORS The corridors connecting two major cities or Mega Regions (60 km or more apart, and with a combined population of 25 million or more) (37 Mega Corridors in 2025 EXAMPLE: Guangzhou- Shenzhen-Hong Kong Corridor MEGA CITY City with a minimum population of 8 million and a GDP of $250 billion in 2025 (12 Mega Cities in 2011 and 35 Mega Cities in 2025) EXAMPLE: Greater Tokyo (Population of over 27 million by 2025) MEGA SLUMS 1 billion urban poor live in an area measuring just 1.5 square miles Source: Frost & Sullivan Analysis.Image Source: Dreamstime Urbanization Trends, Global, 2011–2025
  4. 4. 4 NA99-13 The Future of Urban Distribution The Hub-and-Spoke Logistics Model In Urban Environment Will Feature Mega Size Warehouses on Outskirts of Cities, with Smaller Decentralized Warehouses Inside the City Perimeter The Spokes: Drop off delivery points for double-trailer trucks Heavy commercial vehicles (double- trailer trucks) will carry goods to big warehouses at outskirts Macro to Micro Implications The Hub: Central Distribution Centers • All trucks to operate at 80%– 100% capacity (load factor) • New technologies in tracking deliveries, such as track and trace, RFID in warehouses to evolve • New business models, such as in-night services, special delivery, and self-collection points, to grow in popularity • ~50% reduction in trucks going in and out of cities • Ensures “on-time delivery” for retailers Medium and light CVs will deliver goods to warehouses within city Outer Ring Road ~ 25 miles from City Center Source: Frost & Sullivan Analysis. Illustration of Global Urban Distribution in 2025
  5. 5. 5 NA99-13 Multimodal Trends Influencing Urban Logistics Road and Rail Accounted for Nearly 60% of Total Domestic Freight Traffic in Large Trading Regions, Such as EU and US in 2010 Modal Split of Domestic Freight, % (Million tonne per km), Global, 2010 Source: Eurostat, US Bureau of Transportation Statistics 29% 31% 12% 8% Road Rail Water Air 49% 10% 38% 0% Road Rail Water Air Modal Split of Domestic Freight, United States, % (Million tonne per km), 2010 Modal Split of Domestic Freight, EU-27, % (Million tonne per km), 2010
  6. 6. 6 NA99-13 Multimodal Trends Influencing Urban Logistics — High Speed Rail High-speed Rail To Improve Logistics By Freeing Up Space For Freight and Offering Exclusive High-speed Logistics Solutions Source: Frost & Sullivan Analysis Freeing up space for freight on road and standard rail tracks as more people move to high-speed mobility High-speed freight trains that transport cargo exclusively at the same service cost as air, but at lesser carbon cost High-speed Mobility High-speed Logistics • Congestion zones, low emission zones • Multimodal access point • Reliable and convenient • Reduction in delay and commutation time • Transport up to 300 km/h in some countries • Night time transportation: no non-peak hours restrictions • Short transport time and lesser truck trips • Green in comparison to planes Impact of High-speed Rail on Logistics, Global Image Source: Dreamstime
  7. 7. 7 NA99-13 Connectivity Trends Influencing Urban Logistics — Location-based Services (LBS) Over 40% of the connected devices globally will be LBS enabled by 2020 2011 Non-LBS Devices 5.58 Billion Non- Internet Users Total: 6.00 Billion Connected Devices LBS Devices 0.42 Billion (7% of total) LBS Devices 35.20 Billion (44% of total) 2020 Total: 80.00 Billion Connected Devices Source: Frost & Sullivan Subscriber Forecast of LBS Devices, Global, 2011 and 2020 Non-LBS Devices 44.80 Billion • Navigation services will continue to drive growth in this market • Core navigation features include voice-guided turn-by- turn directions with updated maps, 3D moving maps, and automatic rerouting for missed turns • Enhanced features include integration with contacts; multiple route capability; real- time traffic; gas prices and weather information; voice recognition for address input; traffic-optimized routing; intelligent navigation rerouting and updated estimated time of arrival based on current traffic flow, among others
  8. 8. 8 NA99-13 Bricks and Clicks: Growth in Online Retail to 2025 Global Online Retail Sales To Reach $4.3 Trillion By 2025 Accounting for 19% of Total Retail Source: Frost & Sullivan analysis. 1.320 1.300 0.210 0.170 0.090 0 0.2 0.4 0.6 0.8 1 1.2 1.4 United States China United Kingdom Japan Germany $11.8 Trillion $23.0Trillion Retail Market Size Retail Market Size $0.550 Trillion $11.250 Trillion $4.300 Trillion $18.700 Trillion 24% 18% 26% 10% 15% 5% 19% 2011 2025Online Retail Top Markets, 2025 Online Sales Non-Online Sales % share of online in total retail 1 2 3 4 5
  9. 9. 9 NA99-13 Bricks and Clicks: Impact of Bricks and Clicks on Store Formats Retail Formats Are Becoming Smaller and Unique With More Emphasis Being Placed on the Concept and Urban Location of the Store 0 20000 40000 60000 80000 100000 120000 140000 Pre-1970s 1970s 1980s 1990s 2000 2010 2011 2012 AverageStoreSize(Sqft) Grocery Stores Convenience Stores Supermarkets Club Warehouses Hypermarkets Concept Stores Express Stores Store Format Average Size Grocery Store: Small market for basic groceries 8,000 Convenience Store: A small store selling basic items and over-the-counter medicines 10,000 Supermarket: Large-size grocery and basic items 80,000 Club Warehouse: Large store selling only bulk quantities (e.g. Sam’s Club) 100,000 Hypermarket: Large stores combining a supermarket and a department store (e.g., Carrefour in UK; Wal-Mart Supercenter in United States) 120,000 Concept Stores: Small- to medium-sized manufacturer stores (e.g., Apple) 50,000 Express Store: Small convenience stores (e.g., Wal- Mart Express) 12,000 Era of Expansion Era of Contraction Source: RetailNet and Frost & Sullivan Analysis. Evolution of Retail Formats, Global, 1970–2012
  10. 10. 10 NA99-13 Bricks and Clicks: From Big-Box to Small Box Retailer Store Size to be 15%–20% Less than the Current Average Store Size by 2020 Size: 200,000 Sqft Size: 10,000 Sqft Location: Semi-urban areas—less dense areas with small populations. Accessibility: Car drives–5 to 6 miles from city centers and urban hubs. Building Format: Leased/owned, large scale standalone properties. Shelf Capacity: 120,000 items Shelf Capacity: 12,000 items 15%–20% smaller Location: Urban shopping centers—a minimum of 1,000 urban population per sqkm Accessibility: Walkable distance–2 to 3 miles from city centers and urban hubs Building Format: Leased small stores fit into existing city buildings. Big-Box Small Box Source: Frost & Sullivan Analysis.Image Source: Dreamstime
  11. 11. 11 NA99-13 Bricks and Clicks: New Retailing Business Models Case Study: Tesco Virtual Store Sparks New Generation of Grocery Shopping 1 2 3 4 Choose grocery item from “virtual shelves” Smartphone app registers product of choice The product lands in customer’s “virtual cart” The product is delivered to the customer at a time and date of his choice Number 1 shopping app in Korea, with over 900,000 downloads Online sales increased by 130% since launch in 2011 Home plus online membership increased by 76% since launch in 2011. Virtual Store—The Fourth- generation Retail Store Virtual Store: Tesco Virtual Store Sparks New Generation of Grocery Shopping Single virtual store opened in a subway Source: RetailNet and Frost & Sullivan Analysis.Image Source: Tesco
  12. 12. 12 NA99-13 Regional Distribution Center to Shop (In-House) Bricks (pre-2000) +Advent of Clicks (post-2000) Source: Frost & Sullivan Analysis. Impact of Bricks and Clicks on Logistics Evolution of Bricks and Clicks Model in Logistics Central Distribution Center to Customer (Packing and Last Mile Delivery Outsourced) Bricks and Clicks (2012 and Beyond) Hub and Spoke For Faster Deliveries (Special Delivery Options Such as Same-Day Outsourced) E.g. Wal-Mart US E.g. Amazon US Same-Day Night Time Robotic Warehouses Stores as DCs Locker Boxes Each distribution center supports 90 to 100 stores in a 200-mile radius. Closest Central Distribution center identifies and sorts product which then packed and delivered by UPS Image Source: Dreamstime, Wal-Mart, Amazon and Tesco
  13. 13. 13 NA99-13 Urban Logistics
  14. 14. 14 NA99-13 5.950 (70%) 1.660 (65%) 0.890 (35%) 2.550 (30%) Urban Logistics Spending: Urban Vs. Non Urban Urban Logistics Spending to Reach $5.98 Trillion by 2020, Accounting for 46% Total Logistics Spending 7.020 (54%) 2.990 (50%) 2.990 (50%) 5.980 (46%) 2011 2020 In-House Outsourced In-House Outsourced Urban Non-urban Logistics Spending, Global, 2011 and 2020 Source: Frost & Sullivan Analysis. Note: Numbers provided here are in Trillions
  15. 15. 15 NA99-13 Retail Pharmaceutical Food & Beverages Smaller Stores Generic Medicines More regulations Chilled and Frozen Food Industry Trend Urban Logistics Implication Smaller shelf size – need for constant replenishment No more homogenous single supply chain model Need for Cold Supply Chain Services Urban Logistics Services Retail Consolidation Centres Pack-to-order Refrigerated Locker Boxes Top Industries Leveraging Urban Logistics Services in Future Source: Frost & Sullivan Analysis.
  16. 16. 16 NA99-13 $2.55 trillion $5.98 Trillion 50% 55%Transportation & Distribution Warehousing Value-Added 2011 2020 2.5x Urban Logistics Spending 32% 18% 23% 22% Urban Logistics Spending by Segments Transportation Costs will Rise and Account for Majority of Urban Logistics Costs while Warehousing Costs Decline
  17. 17. 17 NA99-13 Examples of Key Cities That Have Trialed City Logistics Policies: Time Windows, Vehicle Weight Restrictions, and Multimodal Initiatives Emerge As Most Popular Measures Implemented For City Logistics Management City Low Emission Zones Time Windows Vehicle Weight Restrictions Pricing / Subsidies Loading and unloading zones Special Lanes Urban Consolidation centers Multimodal Initiatives London Barcelona Berlin New York Paris Tokyo Utrecht Beijing Mexico City Mumbai Seoul Source: Turblog, World Bank, International Transportation Forum, MDS Transmodal Limited, Frost & Sullivan Measures by City Authorities to Manage Urban Logistics, Global, 2005–2012 Highly Active / Implemented
  18. 18. 18 NA99-13 Examples of Urban Logistics Business Models From LSPs* Targeted Deliveries, Hybrid Fleets, and Bundling of Consignments Emerge As Most Popular Measures Implemented For City Logistics Management Off-peak Deliveries (Night Deliveries/ Early-morning Deliveries) Green Vehicles (Electric, Hybrid, Natural Gas) Non- conventional modes of Delivery (Trams, Foot, Bicycles) Urban Consolidation centers Locker Boxes (Automated Locker Boxes) Pick-up Vans/ Outlets (Parked Vans; Store-pick- ups) Smart routing and Scheduling (sensors, GPS, telematics, real-time monitoring) DHL UPS FedEx TNT Kuehne- Nagel DB Schenker *The above examples are tactics and strategies trialed/piloted by LSPs in certain cities only (mainly in Europe). These are currently not offered in all cities as full-time services. These examples have been collated here for illustration purposes only. Source: Frost & Sullivan Analysis. Business Models by LSPs Targeting Urban Logistics, Global, 2005–2012 Highly Active / Implemented
  19. 19. 19 NA99-13 Urban Logistics Trends : Trends in Urban Freight Distribution Distribution will be Shared and become more Consolidated Deliveries to cities travel from warehouses directly to distribution points, making multiple trips and resulting in high congestion and rising C02 emissions in urban areas Consolidation centers in cities will sort and dispatch goods intelligently, avoiding the need for multiple trips and thereby reducing congestion and C02 levels Without Consolidation Centers With Consolidation Centers Source: Frost & Sullivan Analysis.
  20. 20. 20 NA99-13 Future of Connectivity in Urban Logistics: Smart Urban Fleet Design of Future Delivery Vans Will Revolve Around Technology Improvement, Carbon Footprint Reduction, Weight Reduction, Fuel Efficiency, Eco Driving and Aerodynamics Improvement Before Delivery During Delivery After Delivery • On-board real-time telematics (vehicle to grid communication, routing) • Smart sensors and access cards for security and quality control • Noise reduction technology, such as engine isolation • Lightweight vehicles • Low loading floor constructions • Safety and ADAS technologies (driver distraction warning) • On-board Traffic Analyzing tools • Geo-fencing • Chilled compartments • New powertrains and low CO2 emissions New Vehicle Technologies, 2012 Next Generation of Driving Support, 2012 On-board systems informs driver about the following conditions: • Vehicle condition such s tire pressure, Oil condition • Traffic updates • Route guidance • Delivery scheduling/deadlines Through LBS and telematics, vehicle technology informs driver about the following conditions: • Inputs to make driving more energy efficient • Real-time updates on “on-the-fly deliveries” Transport analytics systems inform drivers about the following conditions: • Eco driving • Vehicle and driver analytics Source: Volvo, OECD and Frost & Sullivan Analysis.
  21. 21. 21 NA99-13 A minimum of 500 Million deliveries per day will be made within cities by 2025. Urban logistics spending will more than double to $5.98 Trillion over the next decade, with transport and distribution activities accounting for the majority of the cost. So What ? Over 60% of the world’s population will live in cities by 2025 The world will be connected through a network of 80 billion connected devices by 2020 Online retail is accelerating at an tremendous rate and will grow to account for nearly 20% of total retail in 2025 The parcel and express market will innovate and realign supply chains to deliver smaller and more frequent shipments in shorter time windows. City municipalities are encouraging the development of intermodal freight deliveries for medium- to long-distance flows Logistics service providers will offer unique urban logistics solutions, including targeted deliveries, hybrid fleets and the bundling of consignments, smart trucks, and advanced warehouse management systems. Governments will use ICT, including smart cards and e-tags, to enforce access restrictions to cities and to allow the use of dedicated parking/loading zones. City governments are also encouraging the development and take-up of low emission vehicles for “last-mile” deliveries So What? Conclusions and Future Outlook Mega Trends, Such As Urbanization, Bricks and Clicks, and Access to Multimodality, Will Drive Demand for Time- sensitive Deliveries Resulting in Stricter Demands Being Placed on Shippers and LSPs Urban Logistics, Key Findings and Future Outlook, Global, 2020 Source: Frost & Sullivan Analysis.
  22. 22. 22 NA99-13 Thank You Sandeep Kar Global Director- Commercial Vehicle Research Direct: +1. 416.490.7796 Fax: +1.416.490.1533 Email: