Delivering to the Cities of TomorrowGlobal Mega Trends and the Future of Urban Logistics

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Agenda

Presentation of Top Mega Trends of the Future Influencing Urban LogisticsUrban Logistics Business Models of the FutureMacro to Micro : How To Apply Mega Trends Within Your Organisation to Develop Growth Strategies

Introduction and Definition of Urban Logistics

“Only those who will risk going too far can possibly find out how far one can go.” – T.S. Eliot

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What are Mega TrendsIt can happen without you noticing it !!!

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African Mega Trends

Source: Frost & Sullivan

Urbanisation

Social Trends Bricks and Clicks

Connecting the Unconnected

New Business Models Future Infrastructure

Smart is the new green

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What is Urban Logistics?

Transportation & Distribution ActivitiesWarehousing Activities Value-Added Activities

Urban Logistics offers unique tailor-made solutions for the transport of goods in cities by consolidating & rationalizing the existing logistics platforms & creating innovative solutions for the future through the use of information and communication technologies

In-Bound Transportation

Outbound Transportation

Storage

Inventory Management

Planning / Marketing

Other Optimisation Techniques

Examples of typical urban logistics activities

Global Mega Trends and Urban Logistics

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Mega Trends Driving Urban Logistics IndustryUrbanisation Connectivity and Convergence Bricks & Clicks Future Infrastructure Development

1 2 3 4

By 2025, 3 out of 5 people will live in cities globallyBy 2025, each person will have a minimum of five connected devices

By 2025, 20% of retail will happen through online channelsBy 2025, globally over $800 billion will be spent on high speed rail projects.What does this mean for Urban Logistics?

500 million deliveries per person per day to cities‘On-the-fly’ deliveries will have to made anywhere, anyhow, faster and quicker

Demand for urban parcel deliveries will increase – shipments to become smaller and frequent

An fuel and carbon efficient alternative to road and air transport and muti-modality.

Top Mega Trends in Africa

Source: Frost & Sullivan

3 Mega Cities by 2025

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8 Mega Corridors by 2025

70 Satellite Towns by 20254 Mega Regions by 2025

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Mega Trend 1 : UrbanisationMega Cities in Africa: Engines of Economic Growth

> 75% Urbanization rate by 2025

Johannesburg10 Million

(2025)

Luanda8.9 Million

(2025)

Kinshasa14.5 Million

(2025)

Lagos18.8 Million

(2025)

Cairo14.7 Million

(2025)

Cities >6 million population by 2025

Mega Cities

Nairobi7 Million

(2025)

Alexandria6.2 Million

(2025)

Khartoum7.1 Million

(2025) Abidjan 7 Million

(2025)

Dar es Salaam7.2 Million

(2025)164.1

35.2

101.0

253.2

47.9

124.6

79.5

12.1

57.724.5

47.3

103.0

21.6

87.6

5.819.5

30.548.4

GDP (Nominal) ($ Billion) in 2014

GDP (Nominal) ($ Billion) by 2025

Mega Cities, City –level GDP and Population, Africa, 2014-2025

Mega City is defined as a city with population of over 8 million

31.7

68.4

Source: Business Insider; UN population Database, 2014 Revision; African Development Bank; Frost & Sullivan

Mega Trend 1 : UrbanisationMega Corridors: Reconfiguring Africa’s Space and Economy

Source: UN-Habitat, 2014; Frost & Sullivan analysis.

Combined population >18.0 million

Combined GDP of $127,592,000.

North-South Corridor

The Greater Ibadan Lagos Accra

(GILA) Corridor

The North Delta Region

Combined Population: 533.0 Million

Combined GDP of $833.00 billion or 58% of Africa’s GDP

More than 50% of National GDP

Abidjan

Ouagadougou

Ibadan

Accra

Luanda

Kinshasa

Cape Town

Durban

Johannesburg

Dar es Salaam

Nairobi

Addis Ababa

A

Future Corridor Development

1,000 km Abidjan-Ouagadougou Corridor

Trans-Cunene Corridor between DRC with SA through Angola and Namibia.

Kampala-Nairobi-Mombasa urban corridor (900 km )

A

B

B

C

C

a

Mega Corridors, Africa, 2025

$

Combined population of 77.0 million

$

$

b

c

a

b

c

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Mega Trend 1 : UrbanisationUrbanisation Will Compel Logistics Companies To Have More Spokes in the Cities and Lesser HubsThe Hubs:

Central Distribution Centres in the outskirts

Heavy Commercial Vehicles (double trailer trucks) will carry goods to big warehouses at outskirts

Spokes: Drop off-points for deliveries

in city centres

Medium and Light CVs will deliver goods to warehouses within

city

Outer Ring Road25 miles from City

Centre

80% - 100% load factor

In-night services, Early-morning deliveries

Reduce the number of trips by almost half

100% on-time deliveries

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Mega Trend 2 : Connectivity and Convergence

Reactive ProactiveTelematics

Intelligent Transport Systems

Social Media Integration

2010

Sensors and Terrain MappingTraffic Predicting Software

Real-time is Too Late…

201520202025 Cloud Logistics

‘On-the-Fly’ DeliveriesIndividually optimized transport solutionQuality Control ‘On the Move’Urban Lead Logistics

Urban logistics opportunities

Logistics Technology to Become More Proactive than Reactive

Global Online Retail Sales To Reach $4.3 Trillion By 2025 Accounting for 19% of Total Retail“More the ‘Clicks’ More the Truck Mileage”

$11.8 Trillion

$23 Trillion

$18.7Trillion$11.25 Trillion

$4.3Trillion$0.55 Trillion United States China United Kingdom Japan Germany

24% 18% 25% 10% 15%

1 2 3 4 5

$1.32Trillion $1.30 Trillion $0.19Trillion $0.17 Trillion $0.95 Trillion

% share of online in total retailOnline Sales Non-Online Sales

5%

95%

19%

81%

Mega Trend 3 : Bricks and Clicks

The Retail Model Will Evolve From a Single/Multiple Channel Model to an Integrated Cross Channel Model Demanding For Multiple Delivery Options

Source: Frost & Sullivan Analysis

Department Stores

Supermarkets Hypermarkets Online Mobile Payments Mobile Apps

Bricks (pre-2000) +Advent of Clicks (post-2000)

Interactive StoresVirtual Stores Hyper Online Markets

The Future - Bricks and Clicks (2015 and Beyond)

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Same-Day Night Time Click ‘n’ Collect Locker Boxes

Frequent Deliveries Inventory VisibilityCold Supply Chain Services

Multiple Delivery Options

Refrigerated Locker Boxes

Smaller Shipments

Urban Logistics Solutions

Ecommerce pressures on the supply chainRetail Logistics Will Innovate Its Last Mile Offering Multiple Delivery Options From Home Delivery to Self-Collect

In Future, HS Rail will not only offer high speed personal mobility but will also transport cargo at a lesser fuel and carbon cost

What are the Opportunities?• Higher Speed Logistics• Intermodal Logistics• Next-day delivery between continents• More fuel-efficient than Air-Road Mix• Night-time multimodal logistics (e.g. no night time flight restrictions)

Project Examples:• Eurocarex – High Speed Freight Train Between Lyon and London• Bangalore-Chennai High Speed Freight Train• China’s Mixed Passenger-Freight High Speed Trains

Mega Trend 4 : Higher Speed Logistics

Urban Logistics Trends and Business Models

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$2.55 trillion $5.98 Trillion

50%32%18%

55%23%22%

Transportation & DistributionWarehousingValue-Added

2011 20202.5xUrban Logistics Spending

How will demand for urban logistics affect the spending on logistics in urban environments ?

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How will urban freight transportation change?Road to remain the dominant mode of urban freight transport. Logistics Related Transport Will Account For Over 35% Of Urban Freight Traffic B2C trips will Come to rival the current dominant segment, B2B by 2020 underpinned by growth in ecommerceAverage length of haul will decrease as warehouses and delivery spokes move further into cities100% Loading Factor of Trucks – Full OptimisationSmaller and more fuel-efficient vehicles will be used within cities which are seamlessly integrated with multi-modal functionalities (roll on-roll off)

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Future of Road Transport: Truck Concept 2020

Engine & Fuel

Design

Driver Support

Connectivity • Lighter weight vehicles (Plastic Shell)• Low loading floor constructions• Roll on-roll off systems

• Tire Pressure Monitoring System, Driver Distraction Warning, Adaptive cruise control

• Vehicle to grid Communication, Navigation, green routing, terrain mapping, On-Board Traffic analysing tools, Geo-fencing, and Smart sensors • Electric• Hybrids/Fuel cell Fleets• CNG• HCCI

The Concept of future delivery vans will revolve around technology, carbon footprint, fuel efficiency and Aerodynamics

Without Consolidation Centres

With Consolidation Centres

Distribution will become more Consolidated and Move Toward the City Centre

Consolidation centre

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Urban Transhipment AreasUrban Consolidation CentresUrban Intermodal Hubs

Locker BoxesMicrodistribution

Mobile Depots / Freight Buses

Future of Consolidation and Last Mile DeliveryMore Bundling, Intermodality and Microdistribution in Urban AreasTypes of Urban Distribution

Types of Urban Last-mile Deliveries

Mobile Collection Postal Service

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How are Cities managing Urban Logistics?Through vehicle access restriction, economic instruments, and special infrastructure, city governments and municipalities are planning for an urban future

Access Restriction Economic InstrumentsSpecial Infrastructure

Low Emission ZonesTime WindowsVehicle Weight Restrictions

Congestion ChargingIncentives & Subsidies

Freight LanesUrban Consolidation CentreLoading / Unloading Areas

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City of Paris Parking Bays London Congestion Zone

Barcelona Night Time Window Italy’s Urban Consolidation Centres

Examples of Cities experimenting with Urban Freight Measures

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How are Logistics Services Providers Scaling up to meet demand for Urban Logistics?

Transportation Technology2008

Distribution

2010

2012

2015

2020

Off-Peak Deliveries

Multimodal Deliveries

Hybrid / Electric Fleet / Shared Fleet

Autonomous Fleet (Self-Monitoring Vehicles)

Consolidation Centres

Locker Boxes

Pick-Up Vans / Self- Collection Points

Lifestyle Carriers

Proprietary EDI

Telematics / Real Time Solution

Vehicle Tech (Smart Trucks with Sensors)

Cloud Logistics

Future

Past

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Examples of Logistics Service Providers Experimenting with Urban Logistics Models

DHL Consolidation Centre TNT Express Tricycles

TNT Express Bento BoxFedex Smart Ecommerce Solutions

UPS-Kiala

Geodis Distropolis

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Top Industries Using Urban Logistics Services in the Future

Retail ApparelPharmaceutical Food & BeveragesSmaller Stores Generic Medicines Chilled and Frozen Food Bricks and ClicksIndustry Trend

Urban Logistics ImplicationSmaller shelf size – need for constant replenishment

No more homogenous single supply chain modelChilled and Frozen Food Free Shipping –Low cost services

Urban Logistics ServicesRetail Consolidation Centres Pack-to-order Cold Supply Chain Services Self-pickups

So what will the future of Urban Logistics look like in 20251. A minimum of 500 million deliveries per day will be made within cities by 2025. 2. People will volunteer to deliver goods on their way home becoming lifestyle couriers3. Access to cities in the future will be guided by Smart Cards and e-Tags4. Information Driven Logistics will become the norm with providers planning delivery trips even before orders are placed through predictive analysis and social media integration5. Logistics companies will innovate to overcome the future urban challenge introducing hybrid fleets, consolidated deliveries and locker boxes among others innovations for cities6. City planners will reinforce and introduce new policy measures to control vehicle access, provide economic incentive for sustainable freight deliveries, and invest in infrastructure such as freight villages

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Macro Micro

From Macro to Micro: Taking Mega Trends from Information to Strategy Implementation

Mega TrendSelected trends that impact your business and markets

Sub TrendA sub-layer of trends that has a wide ranging impact Impact to Your IndustryVisualising the roadmap of these critical forces through scenario-building and macro economic forecasts

Impact on Future Product/ Technology

Analysis of Opportunities and Unmet Needs

To

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Learn More About “New Mega Trends”Upcoming Book:New Mega Trends Implications for our Future Lives By Sarwant Singh     Publisher: Palgrave Macmillanhttp://www.palgrave.com/products/title.aspx?pid=577423

Join Our Mega Trend Group OnMega Trends: Strategic Planning and Innovation Based on Frost & Sullivan Research

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Frost & Sullivan’s Visionary Innovation SubscriptionProvides Global Mega Trends Analysis, Regional Implications and a Deep Dive into Specific Topics by Industry Verticals

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A Global Mega Trends Analysis• Featuring global study updates annually and analysis of key topics like Urbanisation, Smart is the New Green, Health, Wellness and Well Being

BRegional Mega Trends and Implications

• Analysis of global Mega Trends in key geographies such as1. Africa2. India3. China 4. Latin America• Identification of specific regional trends (e.g., beneficiation in Africa)

CFocus on Specific Mega Trends and Their Impact by Industry• Focus on specific Topics e.g. the Impact of Connectivity and Convergence on Healthcare Devices, Urban Logistics . • There will be over 30 such topics completed in next 12 months

360 Degree Perspective of Global Mega Trends and Analysis of their Impact on Industries

Contact Information

Mani JamesCommercial Director, Africa

+27 21 680 3208

mani.james@frost.com

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