One of the 21st century’s greatest phenomenons, the sharing economy was worth an estimated $15 billion in 2014 and is predicted to grow to $335 billion by 2025. Today, however, the sharing economy’s relevance for non-technology-based businesses is being called into question. The fact is that the sharing economy has revolutionized the hospitality and urban transport industries and it is headed for supply chains next.
By definition, the sharing economy is a transactional online ecosystem where users interact to buy and provide services. The systems involved allow users to save money, provide faster services, and bring in new revenue. Business operations require strong management and regulation – the weakest areas of the shared economy today – to adjust effectively and productively to the new popularity of the “sharing not owning” concept.
Companies like Lyft, Convoy, and Uber have already extended their service portfolios to freight forwarding. According to the American Trucking Association, Uber Freight, for instance, aims to keep trucks operating at full capacity by offering drivers seven-day payment terms and a convenient app to ensure full loads every time. The companies face difficulties, however, as cargo transportation is subject to different rules and regulations than those for the transportation of passengers. Cargo transportation companies, including Swiss multinational transport and logistics group AsstrA-Associated Traffic AG, seek to expand last-mile delivery services, whose potential is steadily growing. Walter Kemmsies, foremost expert on ports, rail and infrastructure in the U.S., predicts that e-commerce will account for twice as many retail sales within the next decade, with omni-channel leading the trend.
“In freight forwarding it would be impossible to share assets as easily as with privately owned flats and cars, as you see Uber and AirBnB users doing. Anyway, cargo transportation fleets are often being shared – on a rental basis – among logistics providers. We believe that in the future transport vehicles will be shared by different transporters more easily. Also, one of the coolest sharing economy ideas that freight forwarders can use is the more flexible exchange of human resources. That is because driver shortages are a significant problem in the transportation industry. Even competing enterprises are willing to collaborate and potentially exchange drivers in order to get their cargoes shipped. Technology and general trends in co-working and outsourcing are leading the industry in this direction,” says Denis Gural, Chief Operating Officer at AsstrA.
AsstrA transportation experts have noticed that retailers are no longer willing to store large quantities of goods on site and order fewer goods more frequently. These goods go directly to the shelves to be sold. Better fulfillment capabilities and closer relationships with logistics providers have led to increasing demand for partial loads shipping services. In theory this demand creates opportunities for sharing economy participants to boost their market share. Traditional logistics providers can use sharing economy principles as well to ease vehicle and driver sourcing, for example, by sharing resources with legitimate industry partners.
“Last-mile and express delivery services are now in the greatest demand. Unlike the urban transportation business, the freight forwarding industry adopted sharing economy ideas long ago in order to save costs. Cargoes belonging to different owners are consolidated in line with the concept of partial loads delivery. In order to reduce expenses for rapid last-mile logistics, cargo consolidation and tight collaboration with suppliers and different cargo owners are musts,” says Karol Baranczuk, Deputy Partial Loads COO at AsstrA-Associated Traffic AG.
Another sharing economy opportunity set to have a strong impact on supply chains is the introduction of autonomous, driverless trucks into the market. That may inspire shared efforts between logistics providers, IT solution suppliers, and retailers.
“The safety of delivered cargo is one of the key factors affecting success in the logistics business. And until driverless truck technology can guarantee the safety of cargo and vehicles themselves, we won’t see those autonomous vehicles operating outside warehouses or unloading docks. As players from various industries come together for the same purpose of fully automating the supply chain business, driverless truck testing will continue. But the vehicles are not likely to be a part of our daily routine for the next 10 years,” says Vitaly Eremenco, Road Freight Transportation Department Deputy COO at AsstrA.
Horizontal supply chain collaboration is a new phenomenon wherein companies establish partnerships with each other to handle bigger projects. Logistics providers collaborate with their counterparts to bundle volumes in one vehicle to reduce costs and achieve eco-friendly atmospheric emission reduction goals. And whereas electronic data interchange (EDI) solved vertical collaboration communication problems between partners, such struggles are yet being solved for horizontal collaborators.
Horizontal supply chain collaboration, with the help of modern user-friendly technology, increasingly relies on the power of the crowd. Carrier outsourcing systems are being created to support point-to-point delivery schemes. As last-mile deliveries account for 40-50% of a company’s logistics costs, crowdsourcing technology may support same-day shipping for a lower price. It may also ease transportation problems for companies which do not own transport vehicles or have drivers. The future of the sharing economy in supply chains is still not clear but its potential and recent popularity speak for themselves.