Global logistics spending set to soar to $10.6trn by 2020

By James Henderson
Global logistics spending is expected to reach $10.6trn in 2020, with transportation accounting for the majority at 70%, according to a new report. Res...

Global logistics spending is expected to reach $10.6trn in 2020, with transportation accounting for the majority at 70%, according to a new report.

Research by Frost & Sullivan predicts that technologies such as cloud computing, big data, and crowdsourcing, coupled with an influx of tech-savvy start-ups, are unbundling the value chain and transforming delivery models.

About two fifth of the overall logistics costs are associated with the last mile that are forcing providers to come up with newer innovative solutions to deliver packages within cities.

Frost & Sullivan predicts the market will rapidly move toward mobile freight brokerage-type, on-demand deliveries and autonomous technology, such as the use of drones and delivery bots which are set to solve the last mile delivery challenge by being more cost effective to end users with lesser regulatory mandates. 

The study highlights the trends, drivers, new business models, technology scenarios, opportunities and innovations within e-commerce, omnichannel, retail, courier, and post that are set to disrupt the last-mile delivery market.

In addition, it reveals cleaner forms of deliveries and provides a regional perspective in terms of countries such as United Kingdom and Germany that are considering ultra-low economic zones to facilitate the objective of sustainable and green transportation by 2020.

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“Spiralling last-mile delivery costs and changing customer demands are causing retailers to rethink their strategies and look toward new business models such as click-and-collect, locker boxes, on-demand, and autonomous solutions,” said Vijay Narayanan Natarajan, Visionary Innovation Senior Research Analyst at Frost & Sullivan.

“Moreover, the influx of start-ups in logistics has enabled innovative solutions that not only provide value-creation customized solutions for the consumer, but also tackle the inefficiencies currently witnessed.”

Further trends and developments driving growth include:

  • Digital freight brokering platforms reducing empty miles by 8% to 10%;
  • Shift toward low-emission and zero-emission solutions, such as use of low-carbon vehicles or bicycles;
  • Fleet operators expanding their strategies by developing urban distribution centres for effective logistics management; and
  • Retailers focusing on compact stores to reduce capital expenditure and bring products closer to a growing urban customer base.

“Rapid proliferation of connected technologies and solutions, and further advancements in autonomous applications could well usher in new innovations in logistics with delivery bots and drone solutions all set to be the future of urban deliveries,” said Archana Devi Vidyasekar, Visionary Innovation Global Research Manager.

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