Deutsche Post DHL, one of the world's three largest courier companies, tells you how the logistics industry will look like tomorrow.
In an era where 3D printing and the Internet of things are going to completely rewrite the supply chain in future manufacturing, and where mobile commerce is replacing brick-and-mortar stores as the main sales channel, logistics services remain indispensable in both, the old and new worlds.
While logistics services cover the last mile in commerce, be it production or sales, industry insiders have always had a good nose for market trends, sniffing them out ahead of other sectors.
How does this new future look in the eyes of international logistics giant DHL?
Priority Regions: China, India, Brazil, Southeast Asia
The 21st century will be characterized by the rise of the emerging markets. In its Strategy 2020 report DHL, headquartered in Bonn, Germany, lists emerging economies such as Brazil, China, India and Southeast Asia as priority areas for a greater DHL presence.
The report predicts that around the globe the middle class will increase 2.6-fold by 2030, with 90 percent of the new middle class members coming from Asia. At the same time, the work forces of India and China will see a 50 percent jump in people with university education. Growing urbanization paired with rising purchasing power in Asia will create the greatest business opportunities for the logistics industry in the future.
Global E-Tailing 2025, another study commissioned by DHL, provides four alternative visions of the future. In Scenario 1, multichannel retailing has become the norm with online and stationary stores existing alongside each other. People order their goods via tablets, smartphones and interactive displays in the streets.
In Scenario 2, wearable devices such as data glasses have become the standard and stationary stores focus solely on experience shopping while most actual purchases take place on online retailing platforms. Due to the boom in online retailing, the volume of transported goods has increased dramatically. Some mega cities impose stricter regulations on logistics companies to alleviate traffic jams.
Scenario 3 foresees a highly developed digital culture where precise customer profiles as a result of data mining allow to predict customer needs and requirements. Intelligent avatars serve as virtual shopping advisors and purchase everyday necessities for their users on their own. In big cities, most goods are delivered the same day. In some cases, unmanned, automated vehicles such as drones are used to transport goods.
Scenario 4 paints a more protectionist picture of the future. Due to trade barriers as well as high energy and raw material prices, the global economy grinds to a halt, leading to regionalization. Since consumers value sustainability and energy efficiency, leasing, sharing and swapping become common practice, creating a circular economy. Products become modular in design for easier maintenance and repair.
In this circular economy, logistics companies expand their traditional delivery business into spare parts logistics and repair services. Taxis take over local delivery services.
Foreshadowing these new developments and getting prepared for the boon of thriving e-commerce, DHL renamed its postal services division "Post - e-Commerce - Parcel" in 2014.
DHL expects e-commerce to grow 8 percent annually between 2011 and 2020 worldwide but to post faster growth of 11 percent and 15 percent in the emerging markets and China, respectively.
Nevertheless, DHL does not rule out that e-commerce companies will also branch out into the logistics services sector.
Generally speaking, the future seems to looks bright for the logistics industry be it in terms of existing business opportunities or in terms of the envisioned changes in consumer behavior and the retailing environment. Still, Frank Appel, Deutsche Post DHL chief executive officer, does see some dark clouds on the horizon. "The greenhouse effect has become our most severe challenge. If we don't face it, (logistics) costs will quickly rise," Appel points out.
Appel believes that sustainable and green transportation solutions are the key for the industry's future success.
Two years ago, a survey commissioned by DHL in six major markets (Brazil, Britain, China, Germany, India and the United States), found that the sense of crisis resulting from climate change is strongest in Asia. More than half (51%) of private end customers said they would opt for "greener" rather than cheaper modes of transportation. Among corporate customers that ratio was even higher with 57 percent. As many as 64 percent of corporate customers predicted that "carbon labeling" would become a new standard in the logistics industry.
DHL has already embraced green logistics, aiming to cut CO2 emissions by 2020 by 30 percent over 2007. The company cooperates with high-tech companies to develop alternative drive vehicles, is optimizing routes and using trains where possible as well as improving the energy efficiency of buildings and facilities. As part of a DHL pilot project, the city of Bonn is currently the first city in Germany to introduce a carbon-free vehicle concept for mail and parcel delivery.