Urbanisation and Online Retailing to Provide Opportunities for Future Urban Logistics, Says Frost & Sullivan

Urbanisation, connectivity & convergence, bricks & clicks as well as high speed rail to shape the future of the logistics industry

Apr 09, 2013, 06:53 ET from Frost & Sullivan

LONDON, April 9, 2013 /PRNewswire/ -- According to research by Frost & Sullivan's Visionary Innovation Group (www.frost.com), urban logistics spending will more than double to $5.980 Trillion over the next decade, influenced by the following four mega trends: urbanisation, connectivity & convergence, bricks & clicks as well as multimodality (high speed rail). Transport and distribution activities are expected to account for the majority of the cost.

Urban Logistics is one of the key topics at Frost & Sullivan's forthcoming annual industry workshop 'Urban Mobility 3.0: New Urban Mobility Business Models', taking place at the House of Lords and the Siemens Crystal Building in London on 19 – 20 June 2013. A panel discussion, focusing on "Urban Logistics: How Urbanisation and Online Retailing Provides Opportunities for City Logistics" is scheduled for the afternoon of Day 2 of the event.

"The future will shift towards smarter models of urban logistics," explains Frost & Sullivan Senior Research Analyst, Archana Vidyasekar. "However, there is no homogenous strategy as each city represents a different picture in spatial pattern, infrastructure and urban setting. Each city looks at unique and customised options with private logistics providers to mitigate risks associated with urban freight distribution."

By 2025, there will be 35 mega cities globally demanding unique logistics solutions, with 3 out of 5 people expected to live in cities globally. Currently, an average city dweller from a developed city generates about 0.1 deliveries per day. For 2025, deliveries are expected to grow to a minimum of 500 million daily deliveries to cities.

"To meet that kind of volume, logistics companies must consolidate their delivery and polarise their fleet," Ms. Vidyasekar continues. "Companies will adopt a hub and spoke model in logistics for deliveries to be consolidated and dispatched."

By 2025, every person will have more than 5 connected devices providing people with an omni channel touch point to suppliers and the possibility to order goods from anywhere at any time. Logistics must become agile and scale up to offer spontaneous 'on-the-move' deliveries with technology becoming more proactive than reactive and connectivity seeping into every stage of the supply chain process.

"During the delivery, route planning and scheduling will become imperative," says Ms. Vidyasekar. "Using traffic predicting tools, RFID tags, GPS devices, road sensors, and bar codes, companies can optimise their trips. Through geofencing and location based tracking they ensure the trip is going as planned and in cases of unexpected disruptions they can use on-board vehicle telematics to have the delivery moved around."

The transition to online retailing will at the same time transform the traditional retailing model with most retailers adopting a hybrid bricks and clicks model in the future. By 2025, nearly 20 per cent of retail will happen through online channels, and in leading markets like the US and UK, with high per capita online spending, nearly 25 per cent of retail will be online. Global online retail sales are expected to reach $4.300 trillion by 2025, accounting for 19 per cent of total retail sales. Demand for access to products both in store and offline has compelled retailers to introduce innovative multiple delivery options. Multimodality and faster delivery modes have become very important in this respect.

For same day or next day deliveries, a possible future faster and cost-effective option will be high speed rail. By 2025 over $800 billion will be spent globally on high speed rail projects, some of which will connect continents. While freeing up space on roads and standard rail tracks for freight, it also offers potentially exclusive high speed freight services in the parcel market, such as the Eurocarex.

"Delivering to cities of tomorrow will require customised solutions and unique propositions for each metropolis," concludes Frost & Sullivan Program Manager of Visionary Innovation Group, Archana Amarnath. "We are already seeing innovative models such as the locker boxes being used aggressively in the UK logistics market. Consolidation, bundling, routing and scheduling have already become increasingly important in this context. Consequently, in the future we will see more distribution points than distribution centres."

If you are interested in more information on Frost & Sullivan's two day workshop Urban Mobility 3.0: New Urban Mobility Business Models, please send an email to Katja Feick, Corporate Communications, at katja.feick@frost.com, with your full contact details. The event brochure can also be found on Slideshare: http://www.slideshare.net/FrostandSullivan/frost-sullivan-urban-mobility-30

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Katja Feick
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SOURCE Frost & Sullivan