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4 business models that are disrupting the parcel delivery industry

Knut Fredrik Ramstad | 10. Apr 2019
5 minutes read

The rapid growth in parcel shipping is attracting new industry-disruptive players to the traditional delivery market. This has led to an ‘Uberfication’ of deliveries, potentially increasing traffic and emissions. The question then arises: Are all of these new business models really environmentally sustainable?

 

Rapid growth 

According to Pitney Bowes, Access Intelligence and Accenture, the growth in parcel deliveries worldwide is estimated to be 9 percent per year.

 

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The Pitney Bowes Parcel Shipping Index reports that parcel volume globally grew 17 percent last year to 74.4 billion parcels, up from 63.6 billion in 2016. Global shipping volume is expected to surpass 100 billion parcels in 2020. Nothing can stop the shift to online shopping, so no wonder new players are entering the scene, challenging established brands like DHL, DB Schenker, UPS, FedEx and TNT.

Amazon, Alibaba and Uber are making the biggest headway in penetrating the logistics and transportation industry.

 

Amazon and Alibaba: One big logistics network vs. many small logistics companies

Amazon has announced plans to expand its own logistics services (we examine this development here). In addition, Amazon has launched Amazon Flex – often described as Uber for package delivery – where individuals and small companies can register to be a part of their delivery network. With an estimated 1 billion deliveries per day in China alone 4 to 6 years from now, e-commerce giant Alibaba has also set their eyes on logistics. They are taking a different approach than Amazon and are investing in a large number of small logistics companies.

According to Business Insider, Alibaba has announced plans to invest $720 million in Huitongda Network, a subsidiary of Jiangsu Five Star Appliances, to build new logistics and supply chain networks in rural China. This model may also work internationally and across continents, as it develops.

 

The freight-share model – hurting or helping the environment?

Uber (and many other companies) have launched freight-sharing apps that operate by matching carriers with shippers who have freight that needs to move. The shipper with the best offer gets to move it. Though tempting in terms of convenience and flexibility, this ‘uberesque’ freight-share model may easily lead to ‘one car – one package’, which does not seem to be good utilisation of resources.

In fact, the “jury is still out” on whether initiatives like these are environmentally sustainable in the grand scheme of things. Currently, a team at the University of California, Berkeley, is looking into the climate impacts of Uber and Lyft.

Studies analysing the effects of these transportation network companies on urban environments so far seem to show negative impacts on the environment. For instance, reports from San Francisco show that after introduction of the Uber, Lyft and similar services, the number of cars in the city increased significantly (drivers waiting for passengers) and the number of people using public transportation went down. On-demand ride-hailing services are replacing trips that might have been made by transit, walking, or biking.

The result? More traffic, more congestion, and more emissions

Services linking carriers with shippers, though rich in potential, is bound to have a similar environmental impact. New, groundbreaking logistics services are required to meet this environmental challenge.

 

The MIXMOVE model: Linking carriers and shippers the eco-friendly way

So how does MIXMOVE approach the transportation and logistics industry any differently?

We, too, link carriers and shippers. But the way we do it allows for the best possible use of all transportation resources throughout the supply chain. The innovative MIXMOVE Match solution enable loading-unit optimisation, where the movement of goods is consolidated (on parcel level) to make sure that freight vehicles are utilised as much as possible.

This sustainable approach has helped 3M Europe reduce emission by 50% and cost by 35%. Plus, it has been used in urban distribution to produce similar figures for city traffic.

 

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