Unmanned drones, asset-light crowd-sourcing models and analytics-based ‘network brokers’ couldpotentially create ‘big bang disruption’ of traditional parcel delivery methods, according to
industry experts and entrepreneurs.Investors are putting “significant investments” into new last-mile delivery models which aretechnology-enabled, flexible, source spare capacity and can be scaled up and down, Brody Buhler,Accenture’s global managing director for the postal and parcel industry, told last week’s EuropeanPost and Parcel Services conference in Vienna.
These new entrants “have an entirely different cost structure. It is no longer aboutdensity,” he told delegates. A firm such as Uber could theoretically provide last-mile delivery foran estimated $2 compared to more than $5 for traditional postal and parcel operators such asDeutsche Post, Royal Mail or UPS, he claimed. “As they figure out these models, the threat ofdisruption is there,” he warned industry executives.
Another new business model was that of ‘analytics-driven network brokers’ who acted asmulti-carrier domestic fulfilment providers for retailers by using the capacity of diverse deliverypartners, Buhler said.
One example is Cainiao, the Alibaba-owned Chinese logistics company that uses five differentdomestic carriers to create a nationwide virtual delivery network, targeting next-day delivery, hepointed out. “This new model may become the default shipping option for most content moving throughChina’s domestic networks,” he predicted.
The third potential ‘big bang disruptor’ is drone delivery, according to Buhler. Commercialdrones are getting “cheaper, faster and smaller”, and people “will get used to the concept offlying robots”, he said. Various companies have started testing deliveries by drone.
However, advances in technology and regulations are still necessary before drone deliverybecomes a reality, he cautioned. “At present there’s no sustainable profitable model of dronedelivery.”
In contrast, Matt Sweeny, founder of start-up firm drone delivery Flirtey, told delegatesthat “drones will revolutionise logistics.” Unmanned drones could operate more cheaply and moreflexibly, he claimed.
The Australian firm has gained investment from three different logistics firms as well asother sectors, and had made successful delivery tests in Sydney, he said. “The first commercialdelivery will be launched in New Zealand very shortly,” he disclosed.
In Europe, new regulations would be agreed by the end of this year, enabling an operationallaunch in 2016, Sweeny said. “We are looking for partners to undertake tests together,” he said.
The potential of crowd-sourcing as an alternative model for last-mile delivery washighlighted by Peter Hesslin, CEO DHL Freight Nordics & UK, who presented the company’s‘MyWays’ scheme which was tested last year in Stockholm. “We will have to operate with a lot moretrust in future,” he underlined.
Under the app-based scheme, customers enter details of a parcel delivery, one of thevolunteer ‘MyWayers’ reserves the order, picks up the parcel at a DHL ServicePoint, and delivers itto the recipient. The ‘MyWayer’ earns a small delivery fee as well as incentives.
In response to questions, Hesslin clarified that the volunteers are mostly young people andare rated by the recipients. “We have not had any issues with a MyWayer so far. If they do a badjob, they will be excluded,” he said. DHL is currently reviewing the results of the trial, whichonly involved relatively small volumes.
Alibaba’s business model in China and international ambitions were presented by Ken Ardali,the group’s international business development director for EMEA. He highlighted the rapid growthof e-commerce in China, driven by increasing internet penetration, mobile technology, rising demandfor Western goods and other factors.
Following the establishment of the Cainiao network for domestic delivery within China,Alibaba Group is now looking for international partners “to help the flow of goods to and fromChina”, and Europe is a “top priority”, he said.
Asked by CEP-Research how Cainiao allocates volumes to delivery partners, Ardali explainedthat retailers decide themselves which carrier to use for certain routes but are stronglyinfluenced by the feedback of their customers.
“The buyers effectively decide who gets the business, not Alibaba. If a company is the beston the route, they get the business. I would expect the same principle to apply in other markets,”he commented.
