The logistics industry is undergoing radical reinvention. The latest ideas sound like something from a sci-fi novel.
With roughly 2.9 employees, 235 billion euros in revenues and some 60,000 service providers in Germany, mostly SMEs, logistics is one of the largest industries in Germany. A real heavyweight, one might say. And yet also an industry that just a few years ago would hardly have been called highly innovative, forward looking or even futuristic.
The increasing volume of packages through eCommerce, a growing rural exodus and increased traffic volumes have forced the industry to get quite inventive.
Bold idea with major hurdles
Nearly all logistics firms are currently bandying about some version of "air delivery via drone." This past August, internet giant Google presented its "Project Wing," developed by its in-house innovation lab Google X. Unlike most other drone models, the Google flying vehicles do not actually land, but rather lower the package on a rope. The drones will fly automatically to their destination at altitudes of roughly 40 to 60 meters, Google is reporting.
Drone-based delivery services are also in consideration in Germany. DHL for example has already launched a pilot project using package-bearing drones to carry medicine to the North Sea island of Juist and back. Their test flights succeeded even in darkness, rain and fog – conditions that would scuttle a normal air transit. Other European postal services such as the Swiss Post – also exhibiting at CeBIT 2016 – have also run experiments to use drones to bring medicines to remote mountain villages. France's La Poste and Finland's Posti Group are similarly considering the use of drones to bring packages to hard-to-reach areas.
While it is nowhere near close to clearing all regulatory hurdles and commercial applications for the devices remain cloudy even in the medium term, Amazon's drone deployment plans are nevertheless far more developed than many market watchers had expected. The online behemoth intends to do more than just deliver packages on the backs of flying quadcopters.
It wants to establish a complex delivery network capable of bringing packages to the recipient, wherever he or she might be. The establishment of re-supply and charging bases for the drones are all part of Bezos's vision.
Robots and underground pipelines for package delivery
But there are other ideas beyond package drones. Skype's founders, Ahti Heinla and Janus Friis, have been kicking around a different idea: going forward they want robots to deliver packages. Their company Starship Technologies intends to launch its pilot program in Great Britain and the US in 2016, with robots covering the last mile in bringing parcels and packets to their recipients. The robots are small (roughly 50 centimeters tall), roll on six wheels and move only at a walking pace, yet are designed to cut costs significantly for the last mile, while also serving more quickly and environmentally friendly than traditional delivery methods.
The latest logistics concepts from Cambridge, England are even more futuristic: working together with DHL and drawing on support from the British Environment Ministry, a company called Mole Solutions is working on an underground tunnel system to shoot packages filled with packages along a magnetic field. The first set of package pipelines will be built in Northampton. If the pilot project proves effective, underground pipeline systems could be zigzagging across entire nations in just a few years – as both China and India have already expressed interest in the system, Mole Solutions is claiming.
The anticipatory shipping model, for which Amazon acquired a patent a year ago, is also very trendy right now. The idea combines big data analysis with real-life delivery processes: it can trigger the creation of a 'rolling warehouse' by sending a truck filled with merchandise out into a given region – without any concrete order in hand — based on data analysis suggesting that those goods will be ordered there soon. Unlike drones, many experts believe that the model is fundamentally sound. Amazon has another logistics-related patent that goes even further: before the customer has even clicked the Buy button, the merchandise is already on its way to him or her. The system relies on an analysis of the customer's click history and purchasing patterns. So customers who always buy the latest release by a specific author automatically receive a new book from that author when one is published.
There are also far less spectacular package delivery models for the future that are intended to get a handle on the oft-cited eCommerce congestion of the future. Parcellock for example has a highly pragmatic idea currently ready to go . To boost the successful delivery rate for packages and parcels, and thus also the efficiency of the individual truck routes, courier services DPD, GLS and Hermes have founded a joint venture named Parcellock to establish a provider-neutral network of package lockers The first package lockers and a parcel pouch are expected on the market in summer 2016.
Packages are then coded by the courier and placed in the locker, to be retrieved by the recipient at any time. The system is intended to be available for all other courier services to use as well.
To ensure that multiple deliveries are not attempted while the recipient is away from home, DHL and Hermes are also currently exploring the option of delivering directly to customer's car trunk. Two separate collaborations, one between Amazon and Audi and another between Hermes and BWM, are testing out precisely that model.
The concept of delivering directly to the trunk of a vehicle is not new. A firm called Usus has been offering this service for 15 years now, letting technical field staff arrange for spare parts to be delivered directly from the factory via TNT to the trunk of their service vehicle.
In summer of this year, Hermes started setting up package shops in Hamburg's subway and bus stations. This represented yet another measure to ease the delivery of packages. Consumers can then pick up their packages on the way to or from work, or, thanks to the extended opening hours, even just in passing.
It's clear that the logistics industry is exploring all kinds of completely new ideas for delivering packages, but the more immediate priority is to send fewer trucks out in the streets. To do so, the existing system first needs to be streamlined. Not least because it's clear that there's significant room for improvement there. After all, roughly a third of all trucks are out on the road with no load whatsoever in back. Average truck utilization loads total around 50 to 70 percent. Even today, logistics companies could use already-existing software sensors and data to achieve utilization rates of 80 percent or more.
That would get a great number of those trucks off the roads. As such, it makes sense that the German logistics industry is currently focused above all else on the topics of digitization and improvements to their logistics software – as determined in a representative sample of German logistics firms back in January 2015.
The fact is: the feared eCommerce congestion hasn't actually arrived. That could change quickly in the future. Package volumes are expected to grow by at least four percent annually through 2018. At the same time, the United Nations is predicting that 84 percent of Germans will live in cities by 2050.
For the urban infrastructure planners, this means dealing with significantly more traffic. Looking for alternatives for tomorrow today is the smart move.