For centuries, the network of routes called the Silk Road allowed traders from ancient civilizations to exchange goods. Today, the Silk Road still whispers to us, as we can trace its connections across the land, sea, and air. In some ways, little has changed; our desire for things from other countries remains unstoppable. But our transport methods would astonish our ancestors – from drones dropping life-saving equipment to deliveries to the moon.
The Covid-19 pandemic dramatically changed consumers' shopping habits, compelling us to shift from brick-and-mortar retail stores to the virtual, online world. A UN-backed survey showed that the shift is permanent. And many have more money to spend. In 2021, Europeans enjoyed an average disposable income, of €15,055, a growth of 1.9%.
Both these factors have contributed to the explosion in eCommerce, and the anticipated upward trajectory in the next decade represents significant opportunities for the CAP industry.
Scalability will become increasingly important, and the sector must continue to explore new and innovative ways to meet demand.
The very nature of supply chains makes them highly interdependent; should one element falter, the whole lot can tumble like a pack of cards. One area is undergoing colossal transformation; the last mile, which means transporting goods from a distribution hub to the final destination - the customer's door.
And while a package may have travelled across countries or even continents, that final ostensibly short journey is akin to a marathon, consuming a whopping 53% share of the cost. Last-mile modernization can expand delivery capacity, increase efficiency, and reduce costs.
These are just some of the trends we believe will be prevalent in the decade ahead:
And the gig economy – characterized by short-term contracts and freelancers, will be a significant part of the last-mile labour market through the sharing economy.
The sharing economy is a peer-to-peer business model for providing and accessing goods and services, typically via online, community-based platforms. For prominent examples, think of Airbnb and Uber, the latter of which spawned the term “uberization."
Uberization is now, metaphorically speaking, knocking loudly on the door of the logistics world, especially in the areas of:
"Logistics providers can take advantage of sharing their resources and leveraging these opportunities through a more convenient use of their warehouse space, transport means, more efficient delivery methods, or flexible-work models," says Mario Zini, Country Manager (Italy) for DHL Global Forwarding.
Zini adds: “It is, however, crucial to ensure accountability and transparency. Indeed, technology developments often move faster than previous norms, and companies and authorities must therefore work together to protect relevant rights and safeguards.”
COP26 – the UN’s 26th Climate Change Conference – left the world in no doubt that everyone, from private citizens to industry leaders, has a vital role in securing the future of our planet.
Of course, sustainability is hardly uncharted territory for the courier, express, and parcel market. For example, in 2008 DHL launched GoGreen - a global environmental protection program.
But how are COP26's goals and the European Union's Green Deal ambitions translating into action? Can the CEP industry achieve net carbon zero by 2050? Let's again look to DHL for inspiration, which conveys parcels by riverboat in London before transferring them to power-assisted bikes for emission-free last-mile delivery.
DHL also recently announced its investment in 12 fully electric eCargo planes and is building sustainable facilities to meet the highest BREEAM standards.
Package delivery statistics in the U.S, which we can reasonably view as a barometer for Europe, reveal that consumers are ever more demanding, with:
Jeff Bezos, Amazon's founder, set the bar for home deliveries, making speed, real-time tracking information, and painless reverse logistics (returns) the expected norm. And this last point is crucial; the National Retail Federation reported a staggering 30% return rate for online purchases in 2020.
Given the continued growth of online shopping, efficient reverse logistics will be a core trend for the CAP sector in the coming years and a vital component of the customer experience.
Tech is now accessible to the masses. Even if you're a smaller player in the CEP market with a limited budget, it can help accelerate your ambitions and deliver a rapid ROI.
The Internet of Things makes the courier express and parcel industry an exciting place to be. Let's take RFID tags embedded in products and parcels. The parcels actively and passively communicate with their surroundings, making delivery networks more agile by anticipating bottlenecks. They also bring value-added services, like giving customers real-time tracking information.
My personal favorite is smart warehouses - highly data-driven environments that deploy numerous technologies, including IoT, where goods are received, managed, and prepared for shipment automatically. From smart supply chains to blockchain - your digital options are limited only by your imagination.
We predict that emerging technologies will play a central role in the CEP space in the years ahead. The boldest companies – regardless of size – may well win the race.
The trending topics outlined here: scalability, last-mile deliveries, the sharing economy, sustainability, and customer experience all have one thing in common. They are increasingly enabled by technology.
But there will be casualties. The shift to online channels and digital communication will impact direct mail volume growth for postal services. But in an age of mass consumerization and over-consumption in developed countries, this brings some small wins for the environment. CEP leaders have a vital role to play in protecting our Earth.
The opportunities for diversification and new business models are plentiful. The demand for green CEP services will grow, and the future is bright.