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• HAMBURG| 26 SEPTEMBER 2013
Professor Alan McKinnon
Kühne Logistics University
Hamburg
TREFF 2014 Conference
Gothenburg
27th August 2014
European Logistics
Forecasts and Speculations for 2030
KÜHNE LOGISTICS UNIVERSITY HAMBURG
A private, independent, state- recognized university – founded in 2010
A university with expertise in logistics and management
2 MSc, a Bachelors, an executive MBA and a PhD program – 180 students
17 resident faculty plus contributions from a group of external professors
mega-trend
game-changer
Megatrends
5
80
130
180
230
280
Road tonne-kms
forecast
actual
Based on linear relationship with GDP and 3% / ann growth rate
year
Past attempts at long term forecasting of the growth of road freight movement
Source: Adams 1981
‘The new Department of Transport forecasts when
projected far enough into the future present the
country with a stark choice between an absurd
number of vehicles and vehicles of absurd size’
John Adams 1981
Forecast Change in CO2 Emissions from Different Types of Road Vehicle: 2010-2040
Source: UK Dept for Transport, 2013
7
0
20
40
60
80
100
120
140
160
180
200
Bulgaria
Poland
Germany
EU27
UK
Belgium
Relationship between GDP and Freight Tonne-kms in EU Countries
Ratio of freight tonne-kms to GDP (index values 2000 = 100)
Source: Eurostat 2014
Technology
Infrastructure
Market
Behaviour
Energy
Regulation
Modal split
Utilisation
Fuel efficiency
Energy mix
categories of external factor decarbonisation lever
TIMBER framework
for assessing the effect of external factors on the decarbonisation of logistics
Projected CO2 impacts of road freight vehicles technologies (UK)
Source: Ricardo study for UK Dept for Transport
Teardrop Cheetah
DolphinBoat-tails Trailer under-tray
Over cab spoiler
Improving the Aerodynamic Profiling of Trucks: 360o perspective
Mercedes Concept Truck Walmart
concept truck
Market Mega-trend: Growth of Online Retailing
0
10
20
30
40
50
60
70
80
90
100
2004 2005 2006 2007 2008 2009 2010 2011 2012
Percentage of individuals purchasing online
UK EU
Source: Eurostat, 2012
Forecast of Online Retail Sales in EU 17 2009-2014
omni-channel logistics
Average Household Consumption of Products and Packaging (UK)
Source: Incpen
Impact of Demographics on the Quantity of Freight to be Moved
Decline in average household size
Reshoring of Manufacturing to the EU
EU manufacturing wages still on average 15 times higher than those in China
Wage inflation in China
0% 10% 20% 30% 40%
product quality
delivery speed and reliability
supply chain disruption risk
erosion of labour cost saving
Reasons for reshoring
300 UK manufacturers survey by UK Engineering
Employers’ Federation 2013
Reshoring of European Manufacturing?
Retail distribution centre assembly plant supplier warehouse
Pre off-shoring Post off-shoring
Extent of any net reshoring ?
Effect on the configuration of global supply chains?
Likely to increase the freight transport intensity of the European economy?
Restructuring of Logistics Systems within the EU?
Potential for future centralisation of production and warehousing?
At an advanced stage within countries, but at an EU level?
Source: Prologis, 2013
centralisation deecentralisation % of DCs serving areas of
differing geographical extent
16
De-materialisation of the EU Economy?
18
Higher proportion of income spent on services: many services less logistics-intensive
Major improvements in ‘material efficiency’:
• Increase modularisation and remanufacturing: more ‘closed loop’ supply chains?
• Digitisation of physical products: entertainment, news and educational content
• Designing products with less material: miniaturisation, product downsizing
3D printing: just how transformational will it be?
3-D Printing / Additive Manufacturing / ‘Fabbing’
19
Technologies on the Gartner Hype Cycle 2010
3D Printing
Gartner Hype Cycle 2013
Rapid prototyping Component manufacture Dental / body parts
Over-hyping of consumer applications?
Constraints on the Mass Use of 3D Printing
Home-made toys – entry point for the domestic market?
• Very expensive relative to scale economies of batch production
• Need to attach high value to customised products
• Technical difficulty in producing all but simple parts
• Limited range of materials used – constrains functionality
• Layering and bonding process causes intrinsic weakness
Role for LSPs in the 3D printing market
Printing of spare parts may transform service logistics Inventory management algorithms for spare parts rendered obsolete?
Thoeretically, one day Amazon might just sell the design file for a product, and the
consumer would print the design file at home with a 3D printer in the comfort of his or
her living room. Presumably, these consumers would also be purchasing their 3D
printers and 3D printer filament from Amazon’s 3D Printer Store.’
Washington Post 13th March 2014
Jeff Bezos owns both Amazon and the Washington Post
Future Development of Last Mile Logistics
development of unattended
delivery infrastructure
entry of FMCG manufacturers
into the online market manufacturer HomeDistribution
Centre
E-fulfilment centre
Superstore
retailer
switch from vans to self-
employed couriers
trip chaining reduces marginal costs
redefines interface between personal and freight movement
same day delivery: Shutl Amazon Prime – delivery by drone
Home Delivery by Drone ?
Surveillance of transport terminals Intra-logistics
11 reasons why distribution by drone is unlikely to work
Very limited range – in the absence of a battery miracle Impossible inventory trade-off between product range and decentralised distribution Very high energy-intensity - energy cost per order exorbitant Lacks the scale economies of hub-spoke distribution and last-mile groupage Requires very high-precision GPS to pinpoint domestic delivery points Household reception system very difficult and costly to standardise and operate No backloading of an extremely expensive transport mode Accident / liability risk: to people, aircraft etc Security risk: ideal target-practice for guns and air rifles Virtually no-one will value same-day delivery that highly – except super-rich niche Authorities very unlikely to approve use of urban air-space by delivery drones
Breakthroughs in the Electrification of Freight Transport?
Source: International Energy Agency, 2009
decarbonisation of electricity grids Siemens E-Highway test-track nr Berlin
Dual Carbon Battery
Very high energy-density
20x faster recharge than lithium iron
Only uses carbon
3000 recharges per life cycle
Much safer than conventional batteries
partnerships
alliances
consortia
1980s
1990s
2000s
2010s
2020s
CPFR = collaborative planning forecasting and replenishment CTM = collaborative transportation management
Evolution of Logistical Collaboration: from rhetoric to reality?
vertical collaboration
ECR CPFR
Shippers
horizontal collaboration
opportunistic
systematic
network based
CTM
Carriers
Starfish CO3
30
Rationalisation by Collaboration
geography
Source: Cap Gemini (2008)
Horizontal Collaboration:
5- dimensional diffusion
31
1. Separate delivery operations 2. Groupage through 3PL
3. Collaborative synchronisation
Kg CO2 / tonne
1. Separate delivery 43.8
2. Groupage 27.3
3. Collaborative synchronisation 20.3
Nestle – Pepsico Horizontal Collaboration in Benelux
Source: Jacobs et al 2014
Collaborative bundling of freight to meet modal shift targets
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2009 actual without target with target
Road
Rail
IWW
% o
f to
nn
e-k
ms
Target: EC White Paper target for 30% of freight tonnes moving over
300km to move by rail or inland waterway
Without target: Business-as-Usual projection of modal split
Based on analysis by Tavasszy and van Meijeren (2011)
Will these targets ever
be achievable without
extensive horizontal
collaboration?
Shapley Value
Gain sharing calculator
Supply Chain Orchestration and Gain Sharing
Impending
paradigm shift
to ‘collaborative
commons’ ?
‘Physical encapulation’ of goods in a new generation of modularised containers’
applying the networking of principles of the internet to the physical movement of freight
longer term vision of ‘network-based’ horizontal collaboration ?
The Physical Internet (not the Internet of Things)
Source: Montreuil, 2012
22% less freight tonne-kms
15% greater efficiency
20% higher vehicle loading
50% less CO2
Endorsed by the new European
Technology Platform for Logistics
(ALICE)
Source: Ballot Long term vision or fantasy?
June 2014
World Oil Price
$ p
er
barr
el
Future Trend in Oil Prices
Source: Forbes, 2014
To stay with carbon emission limits consistent with maximum 2o C temperature rise by
2100: 70-80% of known reserves of fossil fuels must remain in the ground
Possible scenario: Imposition of binding carbon reduction targets + confidence in GHG
mitigation policies depresses the value of fossil fuel assets
Strong incentive to exploit these assets asap – collapse in their price – final fossil fuel
‘binge’ - era of cheap oil – deters switch to low carbon alternatives in the logistics sector
The Scale of the Climate Change Challenge
37
Source: Clark, 2013
Bn tonnes o
f C
O2 p
er
annum
Climate change likely to prove to be non-linear, requiring more rapid adaptation
Big increase in % of infrastructure budget going on climate-proofing
Step-change in Frequency, Intensity and Duration of Extreme Weather Events
Solar flares
Kühne Logistics University – the KLU Wissenschaftliche Hochschule für Logistik und Unternehmensführung Grosser Grasbrook 17 20457 Hamburg tel.: +49 40 328707-271 fax: +49 40 328707-109 e-mail: [email protected] website: www.the-klu.org
Professor Alan McKinnon