How the process of delivering packages to the customer could develop by 2040
Marcel Peppel / Jürgen Ringbeck / Stefan Spinler - February 22, 2022
In the delivery of goods, the “last mile” has always presented a challenge. For traders, this final leg of the shipment’s journey is, above all else, quite expensive. In fact, this is where around half of all shipment costs are incurred. It is also important that traders not simply opt for the cheapest delivery service, as customers may be swayed from making a purchase if they have no faith in the chosen logistics provider. For local governments, the CO2 emissions caused by delivery trucks also present a problem, as they pollute the environment and endanger people’s health. Package delivery, particularly in city centers, causes traffic congestions and safety issues (e.g., when delivery vehicles are parked on pedestrian walkways or in bicycle lanes). We must also remember that cities are constantly growing, and this will likely exacerbate these problems in the coming years.
Logistics service providers are under pressure
Logistics service providers need to be innovative if they want to confront these difficulties. With profit margins low and personnel costs high, they are under severe pressure caused by their pricing constraints. This, in turn, severely limits the freedom they have to take action. For this reason, cost efficiency is paramount. For example, an increase in “drop factor” (i.e., if they manage to delivery as many packages at as few stopping points possible) would lead to a reduction in fueling costs. The adoption of new technology (e.g., drones or the use of artificial intelligence to optimize both route planning and currently installed processes at the sorting centers) could also prove beneficial.
When it comes to logistics service providers, customers place high importance on quality and safety. Nobody is pleased to receive a dented or damaged package, and a lost package would spark even more consternation. Given that customers provide sensitive information (e.g., delivery addresses and preferred delivery methods), data protection is also an area of concern. Additionally, customers are now placing more importance on deliveries being completed in the most environmentally-friendly way possible—a further motivation for logistics service providers to reduce CO2 emissions. It is clear that conducting “business as usual” simply isn’t enough.
Sustainability and flexibility are highly valued by customers
Online shopping has become the norm for more and more people, and this has noticeably exacerbated the situation. Through the Delphi study, 36 experts from various fields explained the potential developments in this sector we are most likely to see in Europe. Sustainability will play a particularly important role in the future. By 2040, it is predicted that exclusively e-vehicles will be used for van delivery—that is, as long as the necessary electricity is generated in a sustainable manner. In larger cities, the use of cargo bikes is foreseeable, as these vehicles are environmentally friendly and do not increase road traffic in an appreciable way.
In the future, customers will likely be more willing to disclose their personal data. Today’s customers are looking for personalized delivery services that suit their everyday lives (e.g., through various types of package exchange points). That being said, stationary parcel lockers are not expected to go out of fashion. Rather, it is predicted that they will gain importance as a fundamental component of the delivery network.
The inner city won’t resemble the world of a science-fiction novel
Anyone expecting to have their packages delivered by a robot anytime soon will be disappointed. A large-scale implementation of delivery robots would be hindered by the robots’ limited radius and their inability to climb stairs. Additionally, they would clog the sidewalks. Use of such robots could only be realized in closed areas (e.g., on hospital grounds or a university campus). Similarly, the notion that drones alone could take over delivery services is little more than fantasy. Their implementation, which could only be significantly expanded in rural areas, will remain limited. Mobile, self-driving packing stations, conversely, could represent a more flexible pick-up option, thereby becoming another component of the delivery network.
With each scenario, one consistent trend has come to light: The number of delivery vans (today synonymous with the term “last-mile delivery”) will not infinitely increase. In fact, this sector will become increasingly segmented as years go by, and various types of delivery services will emerge according to the type of goods being transported, consumer preferences, and the service area.
Tips for practitioners
- As a logistics service provider, strive for a swift reduction of CO2 emissions and develop a broad range of services for your customers! You should also consider what hardware and software will be necessary to meet your customers’ individual needs.
- Stationary parcel lockers will continue to play an important role in the future, and logistics service providers should set up more of them. Cargo bikes and drones, though less relevant, will also be used.
- Online vendors benefit from close cooperation with their logistics service provider. Break new ground together and offer your customers a service tailored to them!
- Local governments should focus on the infrastructure that may be necessary. Consider whether certain bureaucratic obstacles could not be eliminated to allow, e.g., the use of drones in certain areas or the installation of parcel lockers at tram stops or other public places.
Literature reference and methodology
For the Delphi-based scenario study, a team of researchers produced 17 distinct projections concerning package delivery, which they then submitted to a panel of experts for evaluation. The 36 members of this expert team are active in a variety of professional fields, including logistics services, e-commerce, science, information technology, and politics. Participation in the study was exclusively limited to those who possess the relevant professional experience or who have published relevant studies. After an interim analysis performed by the authors, a second evaluation was carried out by the experts. For this, they had the feedback of the group at their disposal and the opportunity to adjust their original assumptions. In the end, three future scenarios were developed based on the responses of the expert team. Additionally, recommendations for affected stakeholders active in business and politics were derived from this research.
- Peppel, M./Ringbeck, J./ Spinler, S. (2022), How will last-mile delivery be shaped in 2040? A Delphi-based scenario study, in: Technological Forecasting & Social Change (Volume 177, April 2022).
Authors of the study
Marcel Peppel
Marcel Peppel is a doctoral student at WHU’s Institute for Logistics Management. The core of his research focuses on the future of last-mile delivery, including relevant, new network models that consider the effects on costs and the environment. Before starting his doctoral studies, he spent three years working as a strategy consultant for Porsche Consulting.
Professor Jürgen Ringbeck
After completing his doctorate at the University of Osnabrück, Jürgen Ringbeck was a partner at McKinsey & Company in Düsseldorf, later assuming global leadership responsibility for the travel and logistics sector at Booz Allen Hamilton (since 2008, Booz&Company). Additionally, he was active for many years as a Strategic Advisor to the World Economic Forum and the World Tourism Organization of the United Nations. As founder and managing director of Ricon GmbH since 2014, Jürgen Ringbeck has been an active investor and member of the advisory board of innovative young companies. He has been an honorary professor at WHU since 2014 and teaches various topics of business management and transport management for the master’s program.
Professor Stefan Spinler
Stefan Spinler holds the Chair of Logistics Management at WHU – Otto Beisheim School of Management. His research focuses predominantly on the areas of supply chain sustainability and the corresponding risk management. All of his research activities are conducted in conjunction with leading logistics service providers and industrial companies. Professor Spinler has also served as an adjunct professor at the Massachusetts Institute of Technology (MIT) and The Wharton School of the University of Pennsylvania.