This presentation made by Sandeep Kar, Global Director, Frost & Sullivan shows the impact of urbanization and urban logistics on commercial vehicle design philosophies

1. Global Mega Trends and Implications to Urban Logistics
Sandeep Kar
Global Director- Commercial Vehicle Research
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2. Mega Trends Driving Urban Logistics Industry
1. Urbanization
There Will be 35 Mega
Cities Globally By 2025
Demanding For Unique
City Logistics Solutions
2. Connectivity and
Convergence
By 2025, each person will
have a minimum of five
connected devices
3. Bricks & Clicks
By 2025, 20% of retail will
happen through online
channels
4. Future Infrastructure
Development
By 2025, globally over
$800 billion will be spent on
high speed rail projects.
What does this mean for Urban Logistics?
500 million deliveries per
person per day to cities
‘On-the-fly’ deliveries will
have to made anywhere,
anyhow, faster and
quicker
Demand for urban parcel
deliveries will increase –
shipments to become
smaller and frequent
Multi-modal, low carbon
footprint, mission critical
utilization of road, rail,
marine, and air
infrastructure
Source: United Nations, Department of Economic and Social Affairs, Population Division
(2012). World Urbanization Prospects: The 2011 Revision , Frost & Sullivan, 2012
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3. Urbanization Trends Influencing Urban Logistics
Development of Mega Cities, Mega Regions, Mega Corridors, and Mega Slums to Drive Demand for
Logistics Services in Urban Areas
Urbanization Trends, Global, 2011–2025
MEGA CITY
MEGA REGIONS
City with a minimum
population of 8 million and
a GDP of $250 billion in
2025 (12 Mega Cities in
2011 and 35 Mega Cities in
2025)
Cities combining with
suburbs to form regions
(Population of over 15
million) (21 Mega Regions
in 2025)
EXAMPLE: Greater Tokyo
(Population of over 27
million by 2025)
EXAMPLE: National capital
region of Delhi (includes
New Delhi, Noida, Greater
Noida, Ghaziabad,
Gurgaon, Faridabad)
MEGA
CORRIDORS
The corridors connecting
two major cities or Mega
Regions (60 km or more
apart, and with a
combined population of 25
million or more) (37 Mega
Corridors in 2025
MEGA SLUMS
1 billion urban poor live in
an area measuring just 1.5
square miles
EXAMPLE: GuangzhouShenzhen-Hong Kong
Corridor
Image Source: Dreamstime
Source: Frost & Sullivan Analysis.
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4. The Future of Urban Distribution
The Hub-and-Spoke Logistics Model In Urban Environment Will Feature Mega Size Warehouses on Outskirts of
Cities, with Smaller Decentralized Warehouses Inside the City Perimeter
Illustration of Global Urban Distribution in 2025
Macro to Micro Implications
The Spokes:
Drop off delivery points for
double-trailer trucks
•
•
New technologies in tracking
deliveries, such as track and
trace, RFID in warehouses to
evolve
•
New business models, such as
in-night services, special
delivery, and self-collection
points, to grow in popularity
•
~50% reduction in trucks going
in and out of cities
•
The Hub:
All trucks to operate at 80%–
100% capacity (load factor)
Ensures “on-time delivery” for
retailers
Central Distribution Centers
Medium and
light CVs will
deliver goods to
warehouses within
city
Heavy commercial
vehicles (doubletrailer trucks) will carry
goods to big warehouses
at outskirts
Outer Ring Road
~ 25 miles from
City Center
Source: Frost & Sullivan Analysis.
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5. Multimodal Trends Influencing Urban Logistics
Road and Rail Accounted for Nearly 60% of Total Domestic Freight Traffic in Large Trading Regions, Such as
EU and US in 2010
Modal Split of Domestic Freight, % (Million tonne per km), Global, 2010
Modal Split of Domestic Freight, United States, %
(Million tonne per km), 2010
Modal Split of Domestic Freight, EU-27, % (Million
tonne per km), 2010
0%
8%
29%
12%
38%
49%
10%
31%
Road
Rail
Water
Air
Road
Rail
Water
Air
Source: Eurostat, US Bureau of Transportation Statistics
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6. Multimodal Trends Influencing Urban Logistics — High Speed Rail
High-speed Rail To Improve Logistics By Freeing Up Space For Freight and Offering Exclusive High-speed
Logistics Solutions
Impact of High-speed Rail on Logistics, Global
High-speed Mobility
Freeing up space for freight on road
and standard rail tracks as more
people move to high-speed mobility
High-speed Logistics
High-speed freight trains that
transport cargo exclusively at the
same service cost as air, but at lesser
carbon cost
•
Multimodal access point
•
Transport up to 300 km/h
in some countries
•
Night time transportation:
no non-peak hours
restrictions
Short transport time and
lesser truck trips
•
Congestion zones, low
emission zones
•
•
•
Green in comparison to
planes
Reliable and convenient
•
Reduction in delay and
commutation time
Image Source: Dreamstime Source: Frost & Sullivan Analysis
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7. Connectivity Trends Influencing Urban Logistics — Location-based
Services (LBS)
Over 40% of the connected devices globally will be LBS enabled by 2020
Subscriber Forecast of LBS Devices, Global, 2011 and 2020
2011
Total: 6.00 Billion
Connected Devices
Non-LBS Devices
5.58 Billion
LBS Devices
0.42 Billion
(7% of total)
2020
Total: 80.00 Billion
Connected Devices
NonNon-LBS Devices
Internet
44.80
Users Billion
LBS Devices
35.20 Billion
(44% of total)
• Navigation services will
continue to drive growth in this
market
• Core navigation features
include voice-guided turn-byturn directions with updated
maps, 3D moving maps, and
automatic rerouting for missed
turns
• Enhanced features include
integration with contacts;
multiple route capability; realtime traffic; gas prices and
weather information; voice
recognition for address input;
traffic-optimized routing;
intelligent navigation rerouting
and updated estimated time of
arrival based on current traffic
flow, among others
Source: Frost & Sullivan
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8. Bricks and Clicks: Growth in Online Retail to 2025
Global Online Retail Sales To Reach $4.3 Trillion By 2025 Accounting for 19% of Total Retail
Online Retail Top Markets, 2025
2011
% share of online in
total retail
Non-Online Sales
Online Sales
2025
19%
$23.0Trillion
1.4
24%
18%
1.2
5%
1
$18.700
Trillion
$11.8 Trillion
0.8
1.320
0.6
$11.250
Trillion
1.300
0.4
26%
10%
0.2
$0.550
Trillion
Retail Market
Size
15%
0.210
0
1 United States 2
China
3
United
Kingdom
0.170
4
Japan
$4.300
Trillion
0.090
5
Germany
Retail Market
Size
Source: Frost & Sullivan analysis.
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9. Bricks and Clicks: Impact of Bricks and Clicks on Store Formats
Retail Formats Are Becoming Smaller and Unique With More Emphasis Being Placed on the Concept and
Urban Location of the Store
Store Format
Convenience Store: A small
store selling basic items and
over-the-counter medicines
100,000
120,000
Concept Stores: Small- to
medium-sized manufacturer
stores (e.g., Apple)
Hypermarkets
80,000
Hypermarket: Large stores
combining a supermarket and a
department store (e.g., Carrefour
in UK; Wal-Mart Supercenter in
United States)
140000
10,000
Club Warehouse: Large store
selling only bulk quantities (e.g.
Sam’s Club)
Era of Contraction
8,000
Supermarket: Large-size grocery
and basic items
Era of Expansion
Average
Size
Grocery Store: Small market for
basic groceries
Evolution of Retail Formats, Global, 1970–2012
50,000
Express Store: Small
convenience stores (e.g., WalMart Express)
12,000
Average Store Size (Sqft)
120000
Club
Warehouses
100000
Supermarkets
80000
60000
Convenience
Stores
Concept Stores
40000
20000
Grocery
Stores
Express Stores
0
Pre-1970s
1970s
1980s
1990s
2000
2010
2011
2012
Source: RetailNet and Frost & Sullivan Analysis.
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10. Bricks and Clicks: From Big-Box to Small Box
Retailer Store Size to be 15%–20% Less than the Current Average Store Size by 2020
Small Box
Big-Box
Size: 200,000 Sqft
Size: 10,000 Sqft
Shelf Capacity: 120,000 items
Shelf Capacity: 12,000 items
15%–20%
smaller
Accessibility: Car drives–5 to 6 miles from city centers and urban
hubs.
Accessibility: Walkable distance–2 to 3 miles from city
centers and urban hubs
Building Format: Leased/owned, large scale standalone
properties.
Building Format: Leased small stores fit into existing city
buildings.
Location: Semi-urban areas—less dense areas with small
populations.
Location: Urban shopping centers—a minimum of 1,000
urban population per sqkm
Image Source: Dreamstime Source: Frost & Sullivan Analysis.
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11. Bricks and Clicks: New Retailing Business Models
Case Study: Tesco Virtual Store Sparks New Generation of Grocery Shopping
Virtual Store: Tesco Virtual Store Sparks New Generation of Grocery Shopping
2
Choose
grocery item
from “virtual
shelves”
Smartphone app registers
product of choice
The product lands in
customer’s “virtual cart”
3
Number 1 shopping app in Korea,
with over 900,000 downloads
Online sales increased by 130%
since launch in 2011
The product is
delivered to the
customer at a time
and date of his
choice
4
1
Virtual Store—The Fourthgeneration Retail Store
Single virtual store opened in a subway
Home plus online membership increased
by 76% since launch in 2011.
Image Source: Tesco Source: RetailNet and Frost & Sullivan Analysis.
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12. Impact of Bricks and Clicks on Logistics
Evolution of Bricks and Clicks Model in Logistics
Bricks (pre-2000)
Regional Distribution Center to Shop
(In-House)
+Advent of Clicks (post-2000)
Central Distribution Center to Customer
(Packing and Last Mile Delivery Outsourced)
Closest Central
Distribution center
identifies and sorts
product which then
packed and
delivered by UPS
Each distribution
center supports 90
to 100 stores in a
200-mile radius.
E.g. Wal-Mart US
E.g. Amazon US
Bricks and Clicks (2012 and Beyond)
Hub and Spoke For Faster Deliveries
(Special Delivery Options Such as Same-Day Outsourced)
Same-Day
Night Time
Robotic Warehouses
Stores as DCs
Locker Boxes
Image Source: Dreamstime, Wal-Mart, Amazon and Tesco Source: Frost & Sullivan Analysis.
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13. Urban Logistics
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14. Urban Logistics Spending: Urban Vs. Non Urban
Urban Logistics Spending to Reach $5.98 Trillion by 2020, Accounting for 46% Total Logistics Spending
Logistics Spending, Global, 2011 and 2020
2011
2020
In-House
0.890
(35%)
5.950
(70%)
2.550
(30%)
1.660
(65%)
2.990
(50%)
In-House
Outsourced
7.020
(54%)
5.980
(46%)
2.990
(50%)
Outsourced
Note: Numbers provided here are in Trillions
Urban
Non-urban
Source: Frost & Sullivan Analysis.
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15. Top Industries Leveraging Urban Logistics Services in Future
Food & Beverages
Retail
Industry Trend
Urban Logistics
Implication
Urban Logistics
Services
Pharmaceutical
Smaller Stores
Generic Medicines
More regulations
Chilled and Frozen
Food
No more
homogenous single
supply chain model
Need for Cold Supply
Chain Services
Pack-to-order
Refrigerated Locker
Boxes
Smaller shelf size –
need for constant
replenishment
Retail Consolidation
Centres
Source: Frost & Sullivan Analysis.
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16. Urban Logistics Spending by Segments
Transportation Costs will Rise and Account for Majority of Urban Logistics Costs while Warehousing Costs
Decline
2011
2020
2.5x
$5.98
Trillion
Urban Logistics Spending
$2.55
trillion
Transportation & Distribution
50%
55%
Warehousing
32%
23%
Value-Added
18%
22%
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17. Examples of Key Cities That Have Trialed City Logistics Policies:
Time Windows, Vehicle Weight Restrictions, and Multimodal Initiatives Emerge As Most Popular Measures
Implemented For City Logistics Management
Measures by City Authorities to Manage Urban Logistics, Global, 2005–2012
Low
Emission
Zones
City
Time
Windows
Vehicle
Weight
Restrictions
Pricing /
Subsidies
Loading
and
unloading
zones
Special
Lanes
Urban
Consolidation
centers
Multimodal
Initiatives
London
Barcelona
Berlin
New York
Paris
Tokyo
Utrecht
Beijing
Mexico City
Mumbai
Seoul
Highly Active / Implemented
Source: Turblog, World Bank, International Transportation Forum, MDS Transmodal Limited, Frost & Sullivan
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18. Examples of Urban Logistics Business Models From LSPs*
Targeted Deliveries, Hybrid Fleets, and Bundling of Consignments Emerge As Most Popular Measures
Implemented For City Logistics Management
Business Models by LSPs Targeting Urban Logistics, Global, 2005–2012
Off-peak
Deliveries
(Night
Deliveries/
Early-morning
Deliveries)
Green
Vehicles
(Electric,
Hybrid,
Natural Gas)
Nonconventional
modes of
Delivery
(Trams, Foot,
Bicycles)
Urban
Consolidation
centers
Locker Boxes
(Automated
Locker Boxes)
Pick-up Vans/
Outlets
(Parked Vans;
Store-pickups)
Smart routing
and
Scheduling
(sensors, GPS,
telematics,
real-time
monitoring)
DHL
UPS
FedEx
TNT
KuehneNagel
DB
Schenker
*The above examples are tactics and strategies trialed/piloted by LSPs in certain cities only (mainly in Europe). These are currently not offered
in all cities as full-time services. These examples have been collated here for illustration purposes only.
Source: Frost & Sullivan Analysis.
Highly Active / Implemented
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19. Urban Logistics Trends : Trends in Urban Freight Distribution
Distribution will be Shared and become more Consolidated
Without Consolidation Centers
Deliveries to cities travel
from warehouses directly
to distribution points,
making multiple trips and
resulting
in
high
congestion and rising
C02 emissions in urban
areas
With Consolidation Centers
Consolidation centers in
cities will sort and
dispatch
goods
intelligently, avoiding the
need for multiple trips
and thereby reducing
congestion and C02
levels
Source: Frost & Sullivan Analysis.
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20. Future of Connectivity in Urban Logistics: Smart Urban Fleet
Design of Future Delivery Vans Will Revolve Around Technology Improvement, Carbon Footprint Reduction,
Weight Reduction, Fuel Efficiency, Eco Driving and Aerodynamics Improvement
New Vehicle Technologies, 2012
•
•
•
•
•
•
•
•
•
•
On-board real-time telematics (vehicle
to grid communication, routing)
Smart sensors and access cards for
security and quality control
Noise reduction technology, such as
engine isolation
Lightweight vehicles
Low loading floor constructions
Safety and ADAS technologies (driver
distraction warning)
On-board Traffic Analyzing tools
Geo-fencing
Chilled compartments
New powertrains and low CO2 emissions
Next Generation of Driving Support, 2012
Before
Delivery
On-board systems informs driver about the
following conditions:
• Vehicle condition such s tire pressure,
Oil condition
• Traffic updates
• Route guidance
• Delivery scheduling/deadlines
During
Delivery
Through LBS and telematics, vehicle
technology informs driver about the
following conditions:
• Inputs to make driving more energy
efficient
• Real-time updates on “on-the-fly
deliveries”
After
Delivery
Transport analytics systems inform
drivers about the following conditions:
• Eco driving
• Vehicle and driver analytics
Source: Volvo, OECD and Frost & Sullivan Analysis.
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21. Conclusions and Future Outlook
Mega Trends, Such As Urbanization, Bricks and Clicks, and Access to Multimodality, Will Drive Demand for
Time- sensitive Deliveries Resulting in Stricter Demands Being Placed on Shippers and LSPs
Urban Logistics, Key Findings and Future Outlook, Global, 2020
SoSo What?
What ?
Over 60% of the world’s
population will live in cities
by 2025
The world will be
connected through a
network of 80 billion
connected devices by
2020
Urban logistics spending will more than double to
$5.98 Trillion over the next decade, with
transport and distribution activities accounting for
the majority of the cost.
Online retail is accelerating
at an tremendous rate and
will grow to account for
nearly 20% of total retail in
2025
City municipalities are
encouraging the
development of intermodal
freight deliveries for
medium- to long-distance
flows
A minimum of 500 Million deliveries per day will
be made within cities by 2025.
The parcel and express market will innovate and
realign supply chains to deliver smaller and more
frequent shipments in shorter time windows.
City governments are also
encouraging the development
and take-up of low emission
vehicles for “last-mile”
deliveries
Logistics service providers will offer unique urban
logistics solutions, including targeted deliveries,
hybrid fleets and the bundling of consignments,
smart trucks, and advanced warehouse
management systems.
Governments will use ICT, including smart cards
and e-tags, to enforce access restrictions to cities
and to allow the use of dedicated parking/loading
zones.
Source: Frost & Sullivan Analysis.
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22. Thank You
Sandeep Kar
Global Director- Commercial Vehicle Research
Direct: +1. 416.490.7796
Fax: +1.416.490.1533
Email: sandeep.kar@frost.com
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