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E-Commerce Rise Calls for Building a Better Way to Move Goods

On the surface, it would seem the growth of e-commerce at the expense of brick-and-mortar retailing would ease the number of vehicles on the road, but recent studies show that not necessarily to be the case.

According to a report by the World Economic Forum (WEF) and Deloitte, the growing specialized need to transport goods to meet the jump in online shopping and the overall B2B and B2C call for on-demand delivery, has also driven an increase in the number of vehicles on the road.

A white paper from the WEF and Deloitte, “Designing a Seamless Integrated Mobility System (SIMSystem): A Manifesto for Transforming Passenger and Goods Mobility,” contends that “the way people and goods move is on the cusp of a radical transformation.”

The report said the number of goods being transported and the means by which they are moved is growing rapidly.

“Just as single occupancy cars impose negative externalities in crowded cities, more fractionalized online shopping with single packages being delivered for each order also results in greater congestion from delivery vehicles, both during the journey and at the curb,” the study said.

Between 2005 and 2015, as consumers increasingly bought single items online for home delivery, the global number of parcels grew by 128 percent, to 31 billion a year. An additional 20 percent growth is expected by 2018.

“In the U.S., for example, delivery trucks represent up to 7 percent of urban traffic and 17 percent of congestion costs due to wasted hours and petrol,” the paper said. “Solving congestion problems requires addressing not only the movement of people but also the movement of goods.”

A host of new technologies and innovative services, coupled with disruptive demographic and socio-economic trends, are fundamentally reshaping mobility, the paper said.

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“From ride-sharing, car-sharing and bicycle-sharing to smart infrastructure and soon the emergence of autonomous vehicles, these developments have profound implications for our existing transport system,” it noted. “They offer the promise of mobility that is faster, cheaper, cleaner and safer than today. Without appropriate mechanisms to integrate and coordinate across modes, and a platform for stakeholder collaboration, these powerful forces will likely exacerbate–rather than alleviate–many of the current transport system challenges.”

The answer, the paper surmises, lies in designing a seamless integrated mobility system (SIMSystem) that connects and integrates different modes of transport–city buses, ride-sharing vehicles, delivery trucks, autonomous pods and beyond–to improve overall efficiency and enable more optimized and accessible mobility for people and goods across geographies.

[Read more about e-commerce effects: E-Commerce Explosion Raises Profile of Distro Centers and Warehouses]

The paper reached three key conclusions–making better use of existing assets and infrastructure, better integration and interoperability across modes, geographies and functionalities to help move people and goods more seamlessly and efficiently through the transport system, and enabling seamless integration through new level of coordination and collaboration between the public and private sectors, across modes and geographies.

For commercial endeavors, “advancing public-private collaboration for a SIMSystem will accelerate the realization of other aims of the Fourth Industrial Revolution.”

Between 2005 and 2015, as consumers increasingly bought single items online for home delivery, the global number of parcels grew by 128%, to approximately 31 billion a year. An additional 20% growth is expected by 2018.11,12 In the US, for example, delivery trucks represent up to 7% of urban traffic and 17% of congestion costs due to wasted hours and petrol.13 Solving congestion problems requires addressing not only the movement of people but also the movement of goods.

The e-commerce juggernaut isn’t slowing down. Between 2017 and 2021, e-commerce sales and its share of global retail will continue to grow, projects market research company eMarketer. That growth will drive parcel volume increases between 17 and 28 percent each year, estimates global technology company Pitney Bowes.

Global logistics giant DHL is feeling the e-commerce pressure and is devising ways of dealing with it.

“E-commerce is fundamentally changing the way in which logistics companies operate,” Lee Spratt, chief executive officer of DHL E-Commerce, said late last year. “To help our retail customers in the U.S. meet the demands of online shoppers for greater transparency, convenience and speed, we have to balance increased capacity with improved efficiency and to offer flexible omni-channel solutions. DHL is expanding its services across all operating divisions, from fulfillment to the last-mile, in order to support this dynamic and fast-growing segment.”

He noted that with 1.7 billion people shopping online last year, e-commerce is expected to reach a 12.8% share of global retail spend by 2019.

“That’s why e-commerce is so important to DHL,” Spratt said. “The needs of today’s consumers are changing. Consumers now want it faster and easier, and they want routing convenience. While two to three days delivery is the norm, they have shown a desire to pay for the convenience of same-day shipping, although 75 percent still want free shipping. This is changing the landscape of e-commerce shipping.”

There’s been some testing of semi-autonomous care and trucks to advance the shipping sector with greater efficiency and safety protocols.

By 2067, McKinsey & Co. believes the container shipping industry will have autonomous 50,000-TEU ships plowing the seas—perhaps alongside modular, dronelike floating containers—in a world where the volume of container trade is anything from two to five times greater than it is today, it predicted in its study, “Container Shipping: The Next 50 Years.”

“A fully autonomous transport chain will extend from initial loading, stowage and sailing, all the way to unloading directly into autonomous trains and trucks and drone-enabled last- mile deliveries,” the study added.