E-commerce is a massive industry that reaches every corner of the globe, and its growth is driven by a combination of many factors, including technology, consumer behaviour, and more. However, you may be surprised to learn that there is one industry directly impacting the growth and success of e-commerce businesses which also has a global market value of 4x that of the global e-commerce market, and that industry is logistics.
It’s a simple fact that in order for e-commerce to succeed, there needs to be an effective and efficient logistics and supply chain in place to make it work from start to finish. As global e-commerce grows, so too does the world of global logistics and supply chain management to match it. Given these conditions, it should then come as no surprise that two giants from the worlds of online retail and transportation services are bringing their history of industry disruption to bear on logistics and are changing the game for everyone. Amazon and Uber, two companies known around the world for their history of shattering notions of ‘how things should be done’, are shaking up the logistics industry with alternative approaches to managing supply chains, from the local level to the global level.
Recently, TradeMachines.com published an in-depth infographic that looks at the impact that these two behemoths, Amazon and Uber, are having on logistics, and how their differing approaches to solving supply chain challenges are blending in the middle to create a new standard that will change how companies around the world manage their logistics operations.
In this article, we will share our three main takeaways from the infographic, and what they could potentially mean for Canadian businesses.
For the complete infographic, as well as links to all the various data sources used to compile the insights, visit TradeMachines.com.
Flexible and Efficient Solutions for Last-Mile Delivery
One of the biggest challenges that exist in the world of logistics is that of last mile delivery. The last mile is a high-cost, high-complexity problem that requires a great deal of strategic planning and resource investment in order to solve. Amazon and Uber have developed similar approaches to solving this challenge, by utilizing a vast network of freelance delivery drivers to provide short-distance delivery services. These freelancers are able to provide quick turnaround times, cost savings, greater flexibility, and scalability to the supply chain, especially in large urban centers.
Bringing Greater Efficiency to Freight Movement
The current state of trucking in North America has led to many different inefficiencies that Amazon and Uber are seeking to solve with different strategies. Rather than work through the traditional methods of the fragmented and decentralized trucking industry, both Amazon and Uber are adopting a freelance-based approach, similar to what they are leveraging for shorter, last-mile delivery services. Individual shipments will be connected with available drivers in an attempt to improve turnaround times and reduce the movement of empty trailers. An additional effect of these changes is that now there are customs brokerage companies emerging to meet the needs of independent truckers and aid in the brokerage of international freight.
Amazon has started extending its reach to ocean freight and air freight, while some of their global competitors are beginning to develop ocean and air transportation service models that mirror what Uber has done in ground transportation.
Autonomous and Drone Technology is Developing at a Faster Rate
Self-driving vehicles were the stuff of science fiction in years gone by, but now they are on the precipice of becoming a commonplace reality. Both Amazon and Uber have been investing heavily in autonomous vehicle technology, and once the technology is proven enough to be widely deployed, the advantages are clear to see. Deliveries will become faster and more efficient with the ability to run around the clock, 365 days a year. Risks inherent with human drivers will be reduced, and the impact of costs savings will be substantial for many businesses that move large volumes of freight.
Drone delivery for small packages over short distances has been tested in a handful of locations with success, and as technology advances this will undoubtedly become a key component of e-commerce logistics. Of course, while self-driving vehicles and drone delivery aren’t going to be the ‘new standards’ for logistics in the next few months, the reality is the shift has already started. These technologies are coming, there’s no doubt about it, and those companies that plan appropriately for the future will be better prepared to integrate them into their logistics operations when they do gradually become more and more ubiquitous.
The authors of the infographic offer two examples of what the future may hold, while also cautioning all of us that these are just two possible outcomes out of many. While it’s certainly possible that Amazon will take the lead or that the two companies may find an equilibrium or balance, it’s equally likely that other companies or new players may emerge to further disrupt the world of logistics and take hold as a new force to be reckoned with. Whatever the future may bring for logistics, one thing to be sure of is that technology will continue to drive innovation and reshape the way we move goods from place to place and get them in the hands of the final customer.
It’s important for all businesses to stay on top of technological advancements in transportation, global e-commerce trends, and market conditions in order to avoid being caught off guard as the world of logistics evolves all around us.
Partnering with the right logistics providers is one of the best ways to equip your company with the resources and expertise you need to capitalize on trends as they emerge, reduce costs, improve efficiency, and deliver improved service at each step of your supply chain.
The team at SCI is eager to help your business attain greater competitive advantage and plan your logistics strategies to achieve growth and success in the future. Contact us today to speak with our team of experts and have your questions answered.