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What is the outlook for urban mobility?

Roland Berger explores how COVID-19 has acted as a catalyst for the urban transportation sector

As with other parts of the transportation ecosystem, COVID-19 has acted as a catalyst for the urban transportation sector. Technological trends that were visible and sure to become reality have been accelerated by several years and are reshaping the industry.

Special report: The future of urban logistics

One of the clearest and lasting impacts of the crisis is the increase in global e-commerce. E-commerce was already on a sustainable growth path before the pandemic. For example, the parcel and logistics segment in the global postal services revenue grew with a CAGR of 7.5% between 2013 and 2019. COVID accelerated the trend of B2C e-commerce even further. Despite a global retail market decline in 2020, retail e-commerce sales grew by 27.6% in 2020 and reached €3.8tr (US$4.04tr) or 18% of retail sales. This growth was driven by pandemic-related restrictions, digital retail development and growing global online access. While the expected rebound of traditional retail will lead to slower growth of e-commerce, it will continue to outperform and account for a growing share of the total market.

As a reaction to this growing demand, operators are looking for new solutions to increase distribution efficiency. Besides new, purpose-built vehicle concepts that are co-developed with start-ups or existing OEMs, operators are growing their networks through PUDO (Pick Up Drop Off) and parcel lockers as shown in Figure 1. Based on a 10-15% average expected e-commerce growth, deliveries are likely to double by 2025. This growth and the pandemic-related need/acceptance of contactless delivery fuels interest in Out Of Home (OOH) and autonomous delivery services. Parcel locker networks are expanding rapidly globally to address this need while reducing delivery points and increasing efficiency for operators.

Roland Berger Fig 1
Figure 1: Strong growth of unattended delivery options provides partial answer to rapid increases in parcel volume

Growing demand for e-commerce drives changes in customer preferences. As shown in Figure 2, visibility and speed are still very important criteria in terms of shaping the future of last mile delivery. However, increased delivery options and reducing the environmental impact of e-commerce lead the list of important short- to mid-term trends.

Fig 2
Figure 2: Future developments in last-mile delivery

For many logistics companies, on-the-road operations account for the largest GHG emissions with 10-30% resulting from warehousing, storage and office buildings. Other factors like resource usage (e.g., water), plastics and waste are clearly visible negatives of e-commerce. As customers and regulators alike are clearly focused on sustainable consumption, logistics operators must find ways to address these concerns convincingly. De facto, last mile de-carbonisation of postal and parcel players is a must to keep the “license to operate” in many cities across the globe. Take the EU as an example. Urban logistics in the EU causes 15% of EU traffic, 25% of all CO2 emissions and 50% of all PM and NOx emissions. As a consequence, many cities are now implementing schemes to limit access to city centres for goods and freight vehicles. Restrictions are related to time, purpose or weight and size as well as to emissions with low-emission vehicles only allowed into Low-Emission Zones (LEZs). This forces operators to reconfigure their fleets with low emission vehicles driving the need for electrified last mile delivery vans.

Efficiency and sustainability are key drivers to leverage new technologies in the Courier, Express and Parcel (CEP) value chain (see Figure 3).

Fig 3
Figure 3: Technology disruption along the CEP value chain (selection)

Traditional LCV OEMs have not shown interest in the development of micro-solutions and have left the field mostly to start-ups. Micro-solutions will not eliminate (electric) delivery vans but serve as a complementary piece of the puzzle of last mile deliveries in cities. They serve the growing customer demand for emission free deliveries that at the same time relieve the traffic burden of modern cities. Rather than delivering parcels and clogging up traffic due to the footprint of delivery vans, micro-solutions such as e-cargo bikes have been shown to be more efficient than LCVs in densely populated areas.

All major CEP players have conducted trials with providers of micro-solutions, often partnering with multiple companies to understand the relevance of various solutions in a variety of use cases. Integrated solutions that are tailored to specific industries and regions cover multiple steps of the value chain (e.g., van, hub, cargo unit, e-cargo bike). They have been shown, for example, to increase the number of parcels delivered per run and, in particular in a US context, reduce the number of parking tickets issued to CEP providers.

The overall environment in the CEP space remains dynamic. Current concerns about inflation, eroding purchasing power, and a hard landing of the global economy may dent growth curves in the short term. Yet there is no doubt that technology-driven efficiency gains and a growing consumer demand for sustainable urban delivery solutions will continue to provide positive fundamentals for the sector.

About the authors:

Wilfried Aulbur is Senior Partner, Chicago, at Roland Berger

Walter Rentzsch is Principal, Chicago, at Roland Berger

Frank Pietras is Partner, Berlin, at Roland Berger

Wenbo Yu is Partner, Shanghai, at Roland Berger

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