What's in store for delivery services?

Retail has come a long way since the local ‘mom and pop’ shops of the 1800's. Technological advances and changing consumer preferences have seen the industry go from cash-only, family-owned brick and mortar shops, to a multi-store mall experience and more recently the advent of big-box stores and then e-commerce. Technology such as the cash register, point of sale and credit cards have all contributed to retail as we now know it, however this progress would not have been possible without the furtherance of the delivery services that have enabled it.


How have delivery services evolved over the years?


Many ancient civilizations have laid claim to being the first to offer food delivery with some stating its origins can be traced back to Roman times. That was possibly the earliest form of home delivery service in existence, gaining in popularity as households got TVs en-masse in the 50's and the cost of transport became less prohibitive to businesses. After TV shopping in the 70's, the next big breakthrough came in the 90's when a pioneering UK based company called Supermarket Direct, started offering a delivery service for a large supermarket chain within a localized area. Around the same time came the powerhouse of e-commerce that is Amazon and the rest as they say, is history.


The stats around e-commerce growth speak for themselves, it’s popularity growing exponentially in tandem with better internet connectivity and cell services so that online shopping will represent 22% of global retail sales in 2023; although this could be a more than conservative estimate post-COVID. Delivery services have evolved with the rise in e-commerce, also spurred by technological advances, not so much in the way of vehicles as yet, but in software and information technology systems that have allowed tracking of vehicles and packages and allowed for greater volume and quicker deliveries to consumers who have demanded more and more flexibility.



Mckinsey estimates the mail to parcel ratio will be 1:1 by 2025 and with only a few behemoth retailers capable of delivering on both volume and speed using their own means, how is the wider industry going to keep pace with customer expectations?


The future of parcel delivery


Airborne


We’ve all heard that drones are penned to be the next big thing in delivery and realistically it will only be a matter of time before drone delivery services from Amazon Prime Air, Walmart and others are commonplace in urban areas.


The benefits of airborne delivery are indisputable with regards to their positive effect on reducing congestion, ability to fly at high speed and reach rural areas that were previously very costly for delivery providers. There are some limitations and concerns that have to be addressed before usage extends from mainly recreational to commercial delivery. As with recreational drones, privacy and safety is the major concern for this delivery mode and usage will need to be closely governed to ensure public safety. Currently, there are limitations as to the weight of packages that can be carried by drone and therefore the types of products that it can transport are restricted, plus they can only travel a set distance under optimum weather conditions. For these reasons they may work in union with an autonomous ground vehicle.


Autonomous Ground Vehicles


Autonomous ground vehicles (AGVs) is a generic term for any vehicle that doesn’t require a driver and they can be operated either automatically or remotely. An AGV features a number of parcel-containing lockers which can only be accessed by the customer using a unique code once the destination is reached. This type of service could easily replace today’s mainstream delivery services and affords businesses big labor cost savings and increased efficiency.


Using drones which take off from the AGV itself to fulfil inner-city last-mile delivery, presents an opportunity for both the problem of restricted drone flight time to be negated and further efficiencies to be realized through smart-routing of the AGV during peak congestion times, allowing the drone to take over delivery to the customer.


In Canada, the first ever fleet of autonomous delivery trucks was deployed a few months ago as Loblaws partnered with tech-startup Gatik to address inefficiencies in their ‘middle-mile’ operations and shift products from distribution to city retailers. Dominos pizza has also recently started trialling delivery of pizza from unmanned vehicles in Houston, made possible by robotics startup Nuro.



Underground


In areas with unavoidable levels of traffic congestion, groundbreaking concepts are being piloted to move goods around underground in a pipeline system that carries capsules on a track from distribution centers straight into businesses and residential homes without the need for drivers and all propelled by simple magnets. One such scheme has been aptly named ‘the mole’ by its creators.


Improvements at whose cost?


These are certainly innovative solutions to moving goods around more quickly and efficiently, still none of them hold the answer to transporting every kind of product to every area; they can only currently fulfil very specific needs and require a level of human intervention. Given that customers want speed but not at their expense, the deciding factor for business adoption will be cost and profitability. It could be that smaller enterprises need to scale up their offering gradually whilst building on the more personalized approach that has seen a revival amid COVID-19. Emerging crowd-sourcing services are one way that retailers can access shared delivery providers with minimal capital investment.


We may be getting ahead of ourselves here though when we think about the deficit in infrastructure spending and the level of funding required just to bring infrastructure up-to-date. Autonomous vehicles (AVs) require near-perfect quality roads for precision turning and the tiniest alterations or blemish by way of potholes or faded paint stripes can be a major impediment to the functioning of an autonomous vehicle. The question remains as to whether public-private partnerships can be formed to include preparation for AVs in infrastructure spending now.


Industrial investment opportunity


Investors of the future have the ability to shape sustainable delivery services through specialty warehouses with suitable entrances and docking and layouts conducive to operating automated trucks. Drones will also need enough space for take-off and landing in an e-commerce or other warehouse setting.


As the cost of autonomous transportation for businesses decreases, it would be prudent to also be aware of investment opportunities further afield as companies look to relocate to less urbanized areas. Opportunities will also present themselves for the redevelopment of existing parking garages, whether that be for accommodation or for spaces for the maintenance and overnight storage of autonomous vehicles and somewhere for packages to be collected by recipients out of hours.


We may still be 10 years or so away from full adoption of the technologies cropping up in the delivery services industry, but opportunities exist now for those interested in being part of an exciting and sustainable future.





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