Sitting in a unique niche covering fleet management, technology, risk management, workplace safety and insurance, CMS has some distinct perspectives on the trends coming to the fore this year and beyond.
Specifically, home delivery, the move to Electric Vehicles (EVs), AI & autonomous vehicles’ impact on Fleet Management, the game changing nature of 5G, and the changes we see in the insurance field, which in many ways is reacting to all the other developments.
Over the next few posts we’ll explore those trends and our views on what they mean.
Home delivery – the last mile
The COVID-19 pandemic saw 2020 accelerate the oft cited move to a society of online ordering and home delivery.
What many thought would be the way we’d move to living by, perhaps, 2030, or beyond, happened almost overnight in March and April of 2020.
The enormous pressure this put-on retailers, logistics companies and the last mile delivery industry as they pivoted to adapt are still at play.
Delivery capacity planning, warehousing capacity, staff levels (to both grow and cover those made ill by the pandemic), are all being thrown into the mix while the overriding goal is to keep deliveries moving.
At a strategic level this has led to margin challenges as rapid investment has been needed into the supply chain elements both for capacity growth and also the safety of staff to work in Covid-secure environments.
As a related example, a major UK supplier in the food sector saw margins fall at the same time as demand ramped up at rates not seen before, from its supermarket customers, due to the increase in at home eating.
The margin investment it needed to make in creating Covid-secure environments across its operations, out stripped the boost from the demand spike. However, now the investment has been made, and demand is still strong, margin is returning.
By observation of our customers and the broader home delivery industry, CMS can see a bow wave of improvements and investments building up as companies look to the medium term of how they will work in this new reality. While also balancing the day to day need to keep service levels high.
This includes risk management, cost control, operational efficiency, and supply chain resilience testing & scenario planning.
The last being important as it turns out the World can change overnight.
Will the new norm continue?
However, behind this, the burning question is will this new retail model persist when mass vaccinations allow a return to “normal”?
Well, a survey by UK supermarket Waitrose found that 40% of the respondents planned to do more online shopping.
And a US logistics provider, LaserShip’s, survey of consumers found that the rapid uptake of online shopping at the start of the pandemic, by the Baby Boomer generation (those aged 55+), will continue, as nearly half (47%) plan to stay with their new ways of shopping, post pandemic.
All this indicates that the online-offline mix pre pandemic will be radically changed post pandemic. Meaning the uptick in home delivery and all that entails, is here to stay.
If that is the case then operators will be looking to optimise their fleet operations, be that with more vehicles, or smarter use of their existing fleet, or more realistically, a combination of the two.
New service models for home delivery
One area of bleed over in-home delivery that has happened in the United States and may come to the UK is that of crowdsourced delivery.
With capacity maxed out in traditional suppliers, Atlanta based company Roadie has seen an increased demand for its part-time delivery solution.
This takes the friends and family approach of “I can drop it off for you, as it’s on my way” and through app-based technology creates a service that taps drivers already on the road, in their personal vehicles, and diverts them to a nearby store for pick-up and delivery.
Typically, orders are delivered within a few hours.
Roadie’s use by retailers surged with the pandemic, with usage in April rising between 151% to 1,456%, depending on retailer, over what it had been in February.
So, what does CMS think?
Given all we see from our home delivery customers in the UK and abroad, and a review of the trends, home delivery is not going to go back to what it was before the pandemic
The convenience, be that time saving or otherwise, is now embedded in our purchasing culture.
What will be interesting to see is how the market expansion affects innovation and disruption.
For example, Amazon’s prime model of “free” delivery is impacting the cost base of the industry, and leading to an expectation that delivery is included.
If that’s the case then what innovation and what disruptions in the marketplace will be needed and will occur as that core market assumption takes hold?
Lower cost home delivery methods – better stem and petal planning for van deliveries, the gig economy/Roadie model, and of course the next science fiction idea of delivery by drone.
All of these are on the table, as commerce will find a way given the opportunity that is now established.