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3 Ways that the Sharing Economy is Changing the Logistics Industry

The sharing economy phenomenon has taken the world by storm in recent years, radically transforming an array of services and sectors that previously thrived on traditional business models. The remarkable rise of companies such as Airbnb and Uber has charted the way for a new normal, where sharing is the order of the day. Both companies have surpassed an estimated $1 billion in revenue in less than a decade of their founding, without owning a single room or vehicle.

A key factor driving the rise of the sharing economy is an increased preference for temporary access to goods and services, over actual ownership. This robust appetite is evident in all aspects of our lives today – changing the way we consume everything, from music to transportation and holidays.

The sharing economy’s growth momentum is not likely to abate, judging from estimates. According to PricewaterhouseCoopers, five key sharing sectors (travel, car-sharing, finance, staffing and music/video streaming) will likely increase global revenues of sharing economy companies from USD15 billion in 2014 to an estimated USD335 billion by 2025. The impact of the sharing economy has extended beyond everyday life, to rewrite the rules of business across industries – not just in hospitality and transport, but also others, such as human resources and even heavy industries.

We see the logistics industry as a key driver of this phenomenon as well. In this model of business, the focus has to be on the outcome for customers rather than the product or service. When logistics companies start to think like a facilitator of outcomes to customers who seek convenience and value, it is not hard to see how the sharing economy can work favourably for both parties. It is no longer about who owns the most assets but who can offer the most flexibility and choice.

DHL is no stranger to this asset-light concept, having been a pioneer in the sharing economy long before the term was coined. In its early days, the company offered free plane tickets to individual air passengers in exchange for giving up their baggage allowance to transport critical ocean freight customs clearance documents. With the advent of technology, almost everything and anything can be accessed more easily than before through digital sharing platforms and crowd-sourcing.

Here are a few possible scenarios of how logistics could harness sharing economy principles to create new value, both for customers and industry players.

 

Neighbors Opening Doors to a World of Convenience

A common gripe of online shopping is missed deliveries, as shoppers find themselves not at home when their parcels arrive at their doorsteps. To avoid missed deliveries, parcel pick-up solutions come into play, as consumers can easily collect their parcels at their ease and convenience. Building on this paradigm, businesses can then apply sharing economy principles to utilize an existing asset that is often overlooked: residential homes.

Just like how one might list his property on Airbnb – residents can register for their dwellings to be a parcel pick-up point on a common platform, allowing for their neighbors to collect their items from them at the latter’s convenience. This mode of service is currently in play here in Singapore, by local start-up Park N Parcel. Logistics providers can hence also partner such platforms to leverage the existing network of residential collection points to expand their network. In Singapore, DHL taps into the locker networks of bluPort, Parcel Santa and PopStation to offer more delivery options to its customers. It adopts a similar model for its retail business, offering its import and export services to consumers at nearly 140 ServicePoints through key partners such as Cheers.

 

Logistics Asset Sharing to Increase Top Line Revenue

The principle behind the sharing of logistics assets lies in asset optimization. Logistics fleet operators will find that when it comes to out-of-working hours and weekends, their small to medium-sized delivery trucks sit idle in the garage. By opening up access to these underutilized vehicles using a sharing platform and in exchange for rental fees, these providers are able to fulfil untapped demand from those in temporary need for these vehicles, e.g. residents performing weekend moves, household projects, etc.

There is also opportunity for logistics providers to lend their idle vehicles to warehouse retailers too, such as IKEA, to cope with surge of orders during peak seasons such as Lunar New Year. By granting access to their idle assets, fleet operators are also uncovering new streams of revenue in the form of rental fees.

 

Leveraging Big Data to Improve Urban Planning

Logistics providers have long operated extensive transport and delivery networks to deliver their parcels on time. Following the shared economy model, logistics providers can share their own daily movement data.

This data can be accessed via a central, real-time data sharing platform by various stakeholders. By analyzing the data, stakeholders including businesses can derive insights that would greatly help improve planning pick-up and delivery times, and as a result enhance customer experiences.

Governments may also use such data to design cities with better transport and mobility networks. This will enhance the measurement of the environmental impact of such networks, which will ultimately help improve urban planning and sustain a higher standard of living for all residents.

 

A Win-Win Proposition

The rapid pace of technology necessitates change – and embracing sharing across all parts of the logistics value chain opens many possibilities for the sector. Particularly for express logistics, sharing may well be the differentiating factor that enables providers to be more nimble in meeting customer expectations. Besides presenting new and creative ways to do business and realize internal efficiencies, the adoption of new methods can potentially bring an added convenience and affordability to consumers – a win-win for all involved.

 

ABOUT THE AUTHOR

Christopher Ong
Managing Director
DHL Express Singapore

Christopher Ong is the Managing Director for DHL Express Singapore.He will be responsible for charting the company’s overall business growth and success in Singapore.

Chris brings over two decades of professional experience across logistics and the business sectors. Most recently the managing director for Malaysia and Brunei at DHL Express, he spent four years driving business strategy for the organization, managing over 1,200 employees and 27 facilities, including seven international gateways, across East and West Malaysia, and Brunei.

Prior to DHL Express, Chris spent 10 years with Temasek Holdings, the global investment company headquartered in Singapore, where he played a key role in managing the company’s international investments.

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