Connecting to the Future of Urban Mobility

As more and more people move to cities, major shifts are happening in transportation and logistics.

Smarter transportation in urban areas, overcoming the last-mile barrier and achieving full connectivity. These were some of the major topics at the recent IAA Commercial Vehicles Exhibition in Hannover, the world's leading trade show for transport, logistics and mobility.

Global industry leaders at the event, including Daimler, VW and Volvo, came together to discuss the implications of increased global urbanization and the challenges it presents to the mobility industry.

Facing gridlock
It is estimated that by 2050, two thirds of the world’s population will be living in cities. This puts immense pressure on existing infrastructure, especially within transportation

“Cities are in danger of being suffocated by their own success. They are at the risk of gridlock,” said the CEO of German engineering company MAN, Joachim Drees.

Requirements for safer and more efficient transportation means that producers of vehicles will have to rethink all inner-city transportation, according to Drees: “We have to move away from being a manufacturer to become a provider of smarter and more effective transportation vehicles.” (This includes meeting the need for emission- free urban delivery will increase along with the increasing city population and changing consumer behavior.)

The last-mile stride

Last mile delivery has long been a one of the main challenges in the transport and logistics industry. As ecommerce becomes the standard for the modern consumer, this challenge will only get bigger, according to Jan Bartels, VP at one of Europe’s largest ecommerce platforms, Zalando.

The volume of goods from online shopping will require an increased number of delivery vehicles in cities – not only causing congestion, but also underlining the continuous lack of drivers, driving up the price of last mile delivery.

At the same time, 4 out of 10 key customer satisfaction drivers are related to transportation, including delivery options and on-time delivery. Bartels describes the shift as moving from “capacity to proximity,” where the companies that can provide the seamless customer experience with efficient and timely deliveries will be the winners.

As more and more consumers are moving online, they are also returning more products.   According to Shopify, the number of ecommerce returns increased by a staggering 95% in the last five-year period and return deliveries are estimated to cost companies app. USD 550 billion by 2020, putting additional pressure on the transportation.

As global trade increases we need smart and secure ways of collaborating across the supply chain. Maersk is looking to partially solve this challenge with Tradelens, a platform that promotes a more efficient, predictable and secure exchange of information to foster greater collaboration and trust across the global supply chain.

Meet the prosumer

A repeated theme in the discussions at IAA was connectivity. Whether connecting vehicles, e-commerce and their delivery solutions to customers, drivers and their suppliers, customers and fleets, it is clear that connectivity will be a key driver to finding the way to the next generations city logistics.

Björn Sack, Head of Connectivity & Digital Services at Daimler, pointed to the concept of a “prosumer” as a guiding principle for Daimler’s future intelligent and connected fleets. As a “prosumer,” the consumer becomes directly involved with designing or customizing products for their own needs. In-van delivery will be a key use case to reduce complexity and boost efficiency, and route planning will no longer only be for picking up parcels, but also include where the electrical vehicles will stop to recharge.

As we move towards this new era of electrification and automated vehicles, the traditional truck industry is facing major challenges. According to consulting firm Frost & Sullivan, the truck manufacturing industry is looking to lose 60% of its earnings. According to Frank Leveque, leader of the firm’s mobility team, a transition to electrical vehicles alone will not save the industry. Rather, we will see automotive companies shifting focus to providing more logistics and transportation services. And while factors such as load matching and brokerage platforms will increase efficiency by up to 10%, he emphasized that the major change will come from automated last-mile delivery solutions.