The sharing economy will be worth $335 billion by 2025
Logistics will play a major role...
Once worth $15 billion in 2014, the sharing economy is set to grow in value by $320 billion in the space of a decade.
Logistics will play a major role in shaping the sharing economy. DHL has released a new trend report highlighting how embracing digital platforms and business models built around sharing not owning assets presents a significant future opportunity for the logistics industry.
The report, entitled ‘Sharing Economy Logistics – Rethinking Logistics with access over ownership’, provides insights to help understand the sharing economy, learn best practices from other industries, and presents practical applications of the sharing economy within the logistics value chain.
How sharing works
The new trend report provides a guide to how sharing works and the underlying business models powering it, as well as best practice insights in several industries that logistics can learn from holistically. In the Sharing Economy, users – individuals or organizations – get temporary access to an asset, service or skill owned by someone else and which would otherwise be underused. Not only does this maximize return on investment through greater utilization, it produces a new revenue stream in the form of rental fees for the asset owner. Sharing is also good for the environment as it leads to fewer new assets being produced, and existing ones are being used more often. PwC has identified five key sharing sectors with high growth potential – travel, car-sharing, finance, staffing and music/video streaming – and estimates that these sectors alone will increase the sharing economy from the US$15 billion industry it was in 2014 to US$335 billion in 2025.
Matthias Heutger, Senior Vice President Strategy, Marketing & Innovation, DHL Customer Solutions & Innovation commented: “The concept of sharing is nothing new, but today people can share assets and use sharing services at the speed and scale of three billion smartphone users worldwide. Naturally this started with high-value assets like rooms and cars, but the underlying concept can be applied to almost anything now.
“Logistics providers can really benefit from sharing their own assets, as well as facilitate the sharing of goods that are a hassle to transport. Digital sharing platforms give instant access to what’s available from online networks of users, including but not limited to hotel rooms, taxis, construction equipment household items and even people’s personal time or skills. Logistics providers can leverage these developments via more cost-effective usage of warehouse space, more efficient transportation and delivery methods, or flexible staffing models.”
Sharing is not new to logistics. In its early days, DHL pioneered an early form of crowd sourcing, offering free plane tickets to private travellers in exchange for giving up their baggage allowance to transport critical shipping documents.
Rethinking logistics in the sharing economy
Today, the tremendous scale of digital sharing platforms and crowd-based access to already existing assets is redefining the concept of ‘sharing’ and reshaping the future of the logistics. Sharing of warehousing space, transport capacities, operational data, and staffing are just some of the examples where the sharing economy could be effectively employed in logistics.
It could be applied across all parts of the logistics value chain to improve or change logistics operations – as well as create new businesses. For example, according to research, one in four trucks on US and EU roads are driving empty or typically only half-loaded. Digital platforms provide an instant snapshot of availability and the ability to access spare capacity in almost any truck, including smaller delivery vehicles or even privately owned cars on a day to day basis. With its recently launched Saloodo! real-time freight brokerage platform, DHL is already tackling the inefficiencies of unused capacity. Saloodo! uses the global network of smartphone users and real-time communications to reach a greater audience of shippers to take advantage of excess capacity.
Multi-customer warehouses help third party logistics providers achieve greater economies of scale by consolidating fulfillment, demand and know-how between several customers within a single site. Taking the concept of space sharing from the hospitality sector as a role model, sharing excess warehouse capacity would bring great financial and productivity benefits.
This promising opportunity for new business creation does not come without challenges. Risk liability, transparency, insurance and workforce protection are all issues that need to be addressed. More challenging is the pace of technological innovation and social change often outpace regulatory frameworks. “Collaboration between companies and policy makers is necessary to ensure development happens in a positive and productive way,” Heutger points out. “With logistics perfectly placed to enable and benefit from this trend, it will play a key role in shaping the Sharing Economy and rewriting the rules of value creation.”
UPS Posts Record Second Quarter with Revenues of $23.4bn
Growth across each of its core segments resulted in record results for UPS in the second quarter, with group revenues climbing 14.5% year on year to $23.4bn.
The global logistics outfit achieved consolidated operating profit of $3.3bn, up 47.3% compared to the same period in 2020. It is the second consecutive quarter of record profit, and a significant rise on Q1’s $2.9bn.
UPS Q2 Revenues in Brief
- Consolidated revenues: $23.4bn (+14.5% yoy)
- Domestic: $14.4bn (+10.2%)
- International: $4.82bn (+30%)
- Supply Chain Solutions: $4.2bn (+14.3%)
The US company’s domestic segment performed steadily with 10.2% revenue growth to $14.4bn. But it was its international and supply chain solutions segments where UPS saw the biggest gains. Strong demand in Europe led an increase in international revenues of 30% to $4.82bn. UPS’ supply chain solutions division saw revenue growth of 14.3% to $4.2bn, driven, the company said, “by strong demand in nearly all businesses”.
UPS’ steady growth throughout the pandemic has been led by the overarching vision of its chief executive Carol Tomé to do “better not bigger”, focussing on efficiency and high margin deliveries through its network over pure scale and volume.
“I want to thank all UPSers for executing our strategy and delivering high service levels, which fuelled record financial results in the second quarter,” she said. “Through our better not bigger framework, we are moving our world forward by delivering what matters.”
UPS Completes Sales of UPS Freight
The second quarter also saw UPS complete the divestiture of UPS Freight in a deal worth $800m - with a surprise result for the division, now called TForce Freight, under new owner TFI International.
“The second quarter was historically significant for TFI International, with the closing of our UPS Freight acquisition and record performance across the board,” said Alain Bédard, chairman, President and Chief Executive Officer, TFI International. “Particularly gratifying is the performance of TForce Freight, which has exceeded our operating ratio targets far ahead of schedule, and we have only just begun our work.”
In it first two months of ownership TFI reported that adjusted operating ratio (OR) was 90.1% for TForce Freight, far outperforming its forecasted OR of 96-97%.
“I wish to thank our entire team for their hard work and remarkable efforts, and officially welcome aboard our new TForce Freight colleagues who have seamlessly come under the TFI umbrella and are already making stronger than expected contributions,” Bédard added.