The sharing economy has disrupted many industries. Is logistics next?

Logistics providers are paving new roads for businesses and customers by embracing the sharing economy.
14 March 2019

It is almost nightfall in Florence, South Carolina. An organic farmer is just about to call it a day when he receives an urgent message from a customer.

The head chef of an upscale restaurant in New York has put in a last-minute request for a batch of fresh peaches that he hopes to work into the dessert menu.

Upon receiving the order, the farmer opens his mobile app to arrange for a drop-off delivery, listing the load size, delivery address and timing.

Within minutes, he is matched with a truck driver who is en route to New York with another consignment, but has some load space to spare.

The farmer is notified of the exact delivery cost, and a real-time GPS tracker shows him the driver’s location, along with the estimated pick-up and drop-off timings.

Just like this, the peaches went from farm to table overnight.

Uncovering new opportunities

Having revolutionized the hospitality and transportation industry, the sharing economy is gradually making its mark on the logistics sector.

As DHL outlined in its ‘Sharing Economy Logistics’ report: “The technologies and business models enabling the sharing economy can be applied to any industry, and logistics — with all its heavy assets and infrastructure — is no exception.”

The company noted that up to 41 percent of consumers in the United States have used shared or on-demand services offering same-day and expedited delivery.

The trend is encouraging, given that speed and efficiency are pivotal to the logistics sector. By leveraging the sharing economy, the industry can help small businesses unlock a wealth of new opportunities.

Indeed, maximizing efficiency is a key tenet that the logistics industry shares with the collaborative economy. And there is still plenty of room for improvement.

A 2016 study by business consulting firm Frost & Sullivan found that in the United States and European Union, nearly one in four trucks on the road is running empty. And those that do carry cargo are loaded to just over 50 percent capacity on average.

One way to bridge this gap in efficiency is using data analytics and artificial intelligence to match demand with supply, or what is known as digital freight.

Uber Freight’s service, for example, allows companies to schedule deliveries directly with its trusted network of drivers based on their available capacities. Throughout the process, customers can monitor the status of their shipments in real time via smart tracking.

Similarly, the Saloodo! app is another digital freight platform that harnesses mobile technology to offer real-time data and communication between shippers and carriers, matching loads with available capacity on the roads.

Its aim is to maximize truckload utilization, cut deadhead miles and speed up shipping times — a benefit for customers and businesses alike.

The last mile

In the competitive last-mile delivery scene, the sharing economy has already become a mainstay through the crowdsourcing model.

Companies like Postmates and Instacart help businesses connect with non-professional couriers who can make deliveries within minutes of being activated.

On-demand food delivery apps serving hungry city dwellers are among the most successful use cases in the last mile for the sharing economy.

This works particularly well in urban areas with high traffic density, as companies can tap on a large network of couriers to reach customers quickly and efficiently with just a few clicks.

For shoppers, this translates to an enhanced retail experience as they can expect faster and more timely deliveries.

Cutting costs and wastage

Smaller businesses can rely on the sharing economy to cut costs by pooling their orders and engaging one logistics company. Instead of paying various third-party providers separately, they split the shipping costs and reap savings.

After all, a paper by the US National Bureau of Economic Research reported that nearly 45 percent of all cargo ships sail empty — a sign that there is much room for collaboration and improvement.

Besides helping firms cope with the underutilization of their assets, collaborative shipping also reduces emissions by optimizing the use of cargo space available in shipping containers.

DHL has gone one step further in tapping on the sharing economy to reduce wastage. Its shared warehousing program, DHL Spaces, lets companies broker unused warehouse space.

Customers across Africa, Europe and the Middle East can search for warehouse space based on their location either via a web browser or the mobile app. They are then shown the exact location of the space, the available size and the booking details.

As same-day or even same-hour delivery fast becomes an industry standard, embracing the sharing economy is a win-win approach for logistics providers and customers. Not only does this support the growth of new businesses, it is also flexible enough to cater to the evolving demands of customers.