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The Impact of Megatrends on Logistics and Transportation Sector

Firstly identify a market or sector, and then investigate the impact of the mega trends studied and the emerging trends on that market or sector.  Your task is then to identify entrepreneurial business opportunities arising as a result of the impact of the trends.

Making prediction concerning the future development directions is gaining concern. Nonetheless, making a forecast of the forthcoming events as well as the development directions is becoming elusive since the prediction’s certainty is minimal. Regardless, there are several studies that focus on the analysis of the future trends using different techniques. Future research concerns itself with making forecasts of the future states of a long spanning and essential events as well as the phenomena and its consequence. Future trends have a huge effect on the global as well as the national economies. These trends will result to technological as well as structural changes among business sectors with the service industry included.

This report is based on the logistics and transportation sector, focusing at designing of a last-mile fulfillment strategy and hub services to assist capture opportunities that are presented at the intersection between urbanization and e-commerce in the long-run (de Sousa and Mendes-Moreira, 2015, pp.90). According to Jens, Hady and Dorota (2016), there is the possibility of the transportation and logistics industry being significantly altered by many megatrends in the years to come. These megatrends are reshaping this business environment. As the megatrends continue to reshape the transportation and logistics industry, most of the leading players will be in a position to capture the business opportunities presented by decisively reacting faster compared to their rivals (Dekker, Bloemhof, and Mallidis, 2012, pp.678). The most successful organizations will begin to prepare for these likely changes as early as now.

Some of the megatrends that are related to the transportation and logistics sector include urbanization, e-commerce, sustainability, as well as infrastructure congestion and scarcity (Kersten, von See and Skirde, 2014, pp.17). This report thus will focus on creating an understanding of the changing business environment.

Urbanization

Due to the continuing migration of individuals from the rural areas to the urban centers, several megacities are observed to be continuously evolving and creating new demand patterns among the consumers who directly have on influence on the logistic players (Kunze, 2016, pp.288). Cities have been observed to be the manifestation of the cultural, the economic, as well as social acceleration experienced by individuals in the modern industry. According to Markku (2012) in the year 1950, almost 2/3 of the global population resided in rural settlements while the remaining settled in the urban areas. However, he notes that by the year 2050, a reverse of the population will be observed globally, with more than 6 billion individuals residing in the messy as well as the burgeoning urban areas (Pfohl, Ehrenhöfer and Zuber, 2013, pp.87). A study conducted by the Sustainable Urbanization Policy Brief reveals that currently, the urban centers are occupied with not more than 5% of the global landmass. The urban centers have undergone massive global infrastructural and technological innovations. Urbanization has made it necessary for urban planning decisions as well as strategic design to facilitate equity, world competitiveness, energy-efficiency, as well as mobility patterns. It is observed that with a decline in the density, the city areas are observed to grow faster compared to the city population. This has an effect on the environmental sustainability (Prentkovskis, Junevi?ius and Ska?kauskas, 2017, pp.431). The manner in which industries manage these uncertain urban growths in the years to come will determine the likelihood of their sustainable endeavors. This shows the reason as to why there is need for transport and logistics sector to address the enhanced city complexity resulting from urbanization.

Addressing the Challenges: Last-Mile Strategy and Hub Services

E-commerce

E-commerce entails the buying and selling of goods and services by firms as well as customers via the internet. In this era of World Wide Web, the rise of e-commerce has resulted in some multi-story shopping centers closing. The online retail boom has been facilitated by technology which has had benefits on some retailers (Sabadka, 2015, pp.17). Adoption of smartphones and tablets has facilitated the e-commerce’s shift from an untested frontier that has developed to become a retail industry’s retail industry. According to Ozan (2015), Europe is for example expected to have a 12% growth rate in e-commerce by end of 2018. Due to these developments and continuous growth in e-commerce, it has as well become a changing factor that is reshaping the global transportation and logistics sector. Transportation is viewed as a primary piece to the success of any retail business. The role of this sector is expected to become even greater as e-commerce continues to take shape in the retail industry. The reason is that having an efficient supply chain facilitates high service level to be availed across all the channels. As a result of e-commerce, there is an inevitable market shakeout that awaits the transportation and logistics sector (Savelsbergh and Van Woensel, 2016, pp.581). The e-commerce products that require being transported keep on increasing on a daily basis. This has resulted in spurring new concepts and ideas within transportation and logistics sector such as the development of a last-mile fulfillment strategy.

Infrastructure Congestion and Scarcity

Freight movement takes its toll on transportation and logistics. With an increased size of freight that requires being moved, the costs necessary to maintain and develop infrastructure increases. On the same note, poor and inadequate infrastructure also results in traffic delays as well as accidents. Nonetheless, trucks that move freight aggravate crowded roadways in the cities and beyond (Simon, 2015, pp.210). With an increased number of privately owned vehicles, freight delays, as well as costs, are expected to increase. According to Jean-Paul (2017), cities are locations that possess increased economic activities’ congestion and concentration levels and are complex spatial structures that are facilitated through the transport systems. The bigger the city, the greater the complex as well as the likelihood of disruptions. The greatest issue with the cities is the transportation and logistics sector which fails to meet the needs for urban mobility (Speranza, 2018, pp.833). This is a result of congestion which calls for the need of identifying business opportunity within the transport and logistics department such as the last-mile fulfillment strategy.

The Importance of Sustainability in Last Mile Strategy

Sustainability

Sustainability is applied to ensure that activities do not have a negative impact on the environment. Because the transportation and logistics sector is involved in good’s shipment from one destination to another, the primary responsibility that takes place is reducing carbon emissions. Most of the vehicles use fossil fuels which lead to carbon emissions. Adopting “green” solution to the transportation and logistics sector would determine the sector’s success since it will benefit in not having to pay extra fines and penalties due to environmental regulation’s violations. With the increased need for fright movement, the transportation and logistics sector is focusing on reducing the consumed energy. This is through the adoption of efficient opportunities such as the last mile strategy to make transportation less energy consuming.

Data Analysis

From the four mega-trends that have been identified and deeply explored, it is evident that they have that ability to affect the transportation and logistics sector. This would thus be essential in assisting the sector to identify other business opportunities that can be adopted with the aim of enhancing innovation to meet future customers’ demands.

Last mile logistics facilitate the shippers to deliver more products to the customers quickly and cost-effectively. The last mile has been considered critical in e-commerce as well as Omni-channel supply chain. According to John (2010), the buyers are willing to give premiums to have enhanced last mile delivery services. Nonetheless, the sector may be robotized to facilitate unmanned deliveries within cities where robots and drones take charge of monitoring. Last mile delivery is to be more effective since there is no pollution in the atmosphere as well it does not create noise pollution.

Sustainability

Sustainability is the driving force behind last mile strategy. Increased number of stringent regulations as well as greater resource constraints make it hard for the transportation and logistics department to develop means of reducing energy consumption. Also, the enhanced sustainability issues’ awareness among the consumers indicates that “green” transport will be of great value (Stank, Autry, Daugherty and Closs, 2015, 31). Sustainability will determine the winners and losers within the transportation and logistics sector. Adoption of the last mile strategy by the sector will be beneficial since it is environmentally friendly. The regulations compliance’s burdens associated with the transportation and logistics sector such as the continuous upgrade of fleets in achieving new emission standards will not be experienced with the last mile strategy thus making it more sustainable. 

E-commerce

Trade volumes are observed to shift from the physical retail outlets to the online and mobile platforms, a factor that necessitates for quick product delivery. With the increased purchase of products via the internet through ubiquitous offerings, complexity has resulted in the transport network. This has increased the delivery time of products due to congestion resulting from the number of trucks and vehicles used (Tavasszy, Ruijgrok and Davydenko, 2012, pp.211). Direct deliveries to the consumers have as a result replaced delivery to the warehouses. It is observed that the online retail sales are vigorously growing thus creating a challenge to the logistics sector in meeting this demand. It has proven difficult to handle small personal orders and ship them to the clients’ homes within a timely period and using the most cost-efficient manner. Customers are observed to demand quick delivery of the ordered products which calls for the logistics players to broaden their services and adopt the last mile delivery strategy. Due to the increased number of individual orders, the last mile delivery strategy would be considered more cost-efficient and fast as it covers many stops within the urban centers.

Infrastructure Congestion and Scarcity

Infrastructure congestion and scarcity justify the reason why transportation and logistics sector requires to adopt the opportunity of developing hub services as well as last mile delivery services. Infrastructure has increasingly become a bottleneck among many businesses (Van Riessen, Negenborn and Dekker, 2015, pp.387). Congestion, as well as the associated costs which include increased landing fees, will end up imposing extra problems to the transportation and logistics sector, thus resulting in disruption in delivering services such as just-in-time delivery. Particularly, congestion and infrastructure scarcity will be crucial problems in areas that have high population density. This calls for the need for the logistics sector to identify opportunities to come up with solutions to their customers. The transportation and logistics sector as the key players in the highly congested urban centers where the clients have limited alternatives (Verdonck, Caris, Ramaekers and Janssens, 2013, pp.710). The segment within the transportation and logistics sector such as freight-forwarding and contract-logistics are to benefit as organizations earn increased margins through selling capacity on congested routes. By use of the hub services, the sector can identify the routes that possess the most significant capacity limitations, secure capacity on the identified routes, and avail it to the clients at premium prices.

Urbanization

As urbanization raises resulting from increased migration from rural areas to urban centers, new demand patterns are arising among clients which have an effect on the logistics players. This requires for the transportation and logistics sector to develop new strategies and identify opportunities of coping with the increased logistics’ complexity within the cities as well as the clients’ enhanced expectation to improve convenience. The high congestions experienced due to urbanization has resulted in inefficiency in delivering products to the customers (Taniguchi, Thompson and Yamada, 2016, pp.11). The customers are offering increased point-to-point connections between cities thus the transportation and logistics sector will benefit greatly if they take the advantage of the opportunities presented. Such opportunities include developing a last time delivery strategy and use of hub service to help bundle less-than-truckload delivery as well as efficient delivery networks.

Conclusion

The report has established that the future trends have a great influence on the transportation and logistics sector. The primary megatrends that affect this sector thus necessitating new opportunities include urbanization, e-commerce, sustainability, and infrastructure congestion and scarcity. These megatrends have been observed to be influenced by technology and customer needs. The report has gone further in identifying opportunities that can be adopted by the transportation and the logistics sector to become competitive. Such strategies include adopting a last mile delivery service as well as the hub services

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