New research examines how crowd logistics differs from traditional logistics service models and which type of crowd logistics might be the most disruptive.
The Journal of Business Logistics (JBL), published by the Council of Supply Chain Management Professionals (CSCMP), is recognized as one of the world's leading academic supply chain journals. But sometimes it may be hard for practitioners to see how the research presented in its pages applies to what they do on a day-to-day basis. To help bridge that gap, CSCMP's Supply Chain Quarterly challenges the authors of selected JBL articles to explain the real-world applications of their academic work.
THE UPSHOT
Since 2010 a flurry of startups have attempted to adapt the "Uber" or "Airbnb" model of crowdsourcing to logistics services. While much has been written on this development by the media, consultants, and industry analysts, this article by three professors from business schools and universities in France is the first academic paper that takes a close look at the emerging business model. As such, the article provides the first conceptual definition of what the authors call "crowd logistics": "Crowd logistics is done through collaborative platforms and mobile apps that connect individuals and firms to peers (travelers, movers, authorized drivers, owners of empty storage spaces, etc.) in order to make the best use of distributed, idle logistics resources and capabilities." The authors also delineate how crowd logistics differs from more traditional logistics service models, the main difference being that crowd logistics calls on individuals—mostly amateurs—to perform basic logistics services on an ad hoc basis.
What was the impetus for your research?
I began this research program with my two co-authors, Valentina Carbone and Christine Roussat, three years ago. We have been investigating the logistics aspects inherent in the sharing economy. This economy is booming, but it seems to underestimate the importance of controlling the physical flows it generates. In our first study, we identified four types of logistics characteristic of the collaborative economy: business logistics, peer-to-peer logistics, open logistics, and crowd logistics.
The second stage of our research, which is published in the Journal of Business Logistics, focuses on the logistics type that we considered to be most promising: crowd logistics. Although many researchers have investigated crowdfunding and crowdsourcing, the logistics and supply chain management literature is almost devoid of work on crowd logistics. So it was exciting for us to be the first to explore this field.
How does crowd logistics differ from traditional business logistics?
Our definition of crowd logistics highlights three features. The first is the fact that crowd logistics relies on amateurs rather than logistics professionals. The second is that it relies on resources that are spread among the crowd and are underused or even unused. This is extremely different from traditional logistics with its dedicated infrastructure (warehouses, trucks, boats, etc.). The final key feature is that this type of logistics has been enabled by the development of digital technologies, such as mobile apps. Crowd logistics does not rely on traditional corporate information systems, such as enterprise resource planning (ERP) systems or electronic data interchange (EDI).
What do practitioners need to know about the four main types of crowd logistics?
We believe two things need to be noted by practitioners. The first is that crowd logistics firms can provide four major types of logistics services: crowd local delivery, crowd storage, crowd freight shipping, and crowd freight forwarding. The second is that each type of crowd logistics service creates a different type of logistics value.
For example, crowd storage relies on real estate resources, such as cellars and garages, to offer local storage services to city dwellers. Crowd freight forwarding relies on other resources related to individual mobility, such as air or sea travel, to make products that are unavailable in a given country accessible economically or to transport goods. So, each crowd logistics service uses different crowd resources and offers the client a different value proposition.
Why did you choose to exclude some of the companies, such as Cargomatic and Shyp, that are often identified as "Uber for freight" from your study?
Crowd logistics, as we define it, is based on a crowd of amateurs rather than professionals, even though the boundary is becoming increasingly blurred. The two firms that you mention do not call on individuals. Cargomatic can be likened to a marketplace that uses new technologies to transform contacts with logistics service providers. Shyp uses professionals and offers logistics services to facilitate peer-to-peer transactions that have increased enormously with the sharing economy (for example, the types of transactions that occur on eBay). These two firms do indeed propose a form of logistics "uberization," in the sense that they use digital technologies to rethink logistics practices, but not in the precise field of crowd logistics as we have defined it. But it is interesting that the boundaries between these activities are becoming blurred: Some crowd logistics firms use traditional marketplace models, and some traditional businesses are investing in these startups. And the difference between the amateur individual and the self-employed courier is often tenuous!
In your paper, you and your co-authors predict that crowd local delivery will have the strongest disruptive impact. Why do you believe that to be true?
We believe that crowd local delivery is the most promising segment for two reasons. The first is that there is currently a great demand from city dwellers for cheap, personalized, and rapid delivery services. This is just the type of service that crowd local delivery firms are offering. They are using the crowd to make themselves more competitive than traditional logistics service providers, and they are offering brands, which are increasingly looking to develop multichannel distribution methods, a more flexible, modern, and attractive model.
The second is that the resources on which these services are based are widely available and possessed by a wide range of people; in towns, everyone moves around all the time and can easily take a parcel with them! So there is great potential for innovation and development in the field. Moreover, it is clear that firms such as Deliv, Postmates, and Instacart have already reached a significant size.
What impact could crowd logistics have on logistics service providers and their customers?
Crowd logistics is both a threat and an opportunity for logistics service providers. They are a genuine threat because the crowd can replace traditional logistics providers and reduce their market share. But crowd logistics also provides an opportunity to develop new activities. For that reason, service providers can look to include crowd delivery services in their offerings. They are better able to do so if they are positioned as "4PL providers," since by definition they have the skills to orchestrate logistics resources, which are precisely the skills needed by successful crowd logistics firms. DHL, for example, has tested a service of this type in Sweden, called MyWays.
For retailers the risk is that, with the emergence of crowd local delivery firms, they will lose their direct link with the consumer, which is strategically vital. A firm like Instacart is looking to position itself as a new intermediary between consumers and traditional retailers. The risk for the retailers is that they might become just suppliers, where Instacart's shoppers will go to shop for their clients.
What does an academic look at crowd logistics provide that could not be found in other types of analyses or media coverage?
An academic analysis provides multiple benefits. First, in methodological terms, our analysis is thorough, detailed, and, of course, is in no way biased by private interests. We are not here to promote crowd logistics or sell our services, and we provide an objective view of the subject. Second, the value of our approach is that it relies on a systemic analysis, sustained by our knowledge of logistics, logistics operators, and, more broadly, management science. For example, our analysis here is based on a theoretical framework, that of the service-dominant logic. This leads us to propose an original approach to crowd logistics in terms of value co-creation and, above all, to develop theoretical proposals about the boom in crowd logistics.
How has the crowd logistics market evolved since the article was written?
The crowd logistics market is very unstable, and it is difficult to monitor its rapid changes. Since our paper was published, we have observed numerous company creations and failures and mergers between startups. However, the most interesting trend is the fact that traditional players are buying up firms operating in this segment. For example, the French Post Office bought the crowd delivery service Stuart in 2017.
How can practitioners use the information discussed in your paper?
Professionals can use the information in our paper in two ways. First, traditional firms can use it to develop an overall strategy with regard to crowd logistics: Which crowd logistics services can I call on? What startups are currently in this market? What opportunities and threats does it represent for us? Meanwhile, firms that are entering the crowd logistics market can use the paper to develop a successful strategy in this extremely competitive market.
Editor's Note: CSCMP members can access JBL articles by clicking on the "Develop" tab at cscmp.org, selecting "Journal of Business Logistics," and using the secure link to the Wiley Online Library.
Artificial intelligence (AI) tools can help users build “smart and responsive supply chains” by increasing workforce productivity, expanding visibility, accelerating processes, and prioritizing the next best action to drive results, according to business software vendor Oracle.
To help reach that goal, the Texas company last week released software upgrades including user experience (UX) enhancements to its Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) suite.
“Organizations are under pressure to create efficient and resilient supply chains that can quickly adapt to economic conditions, control costs, and protect margins,” Chris Leone, executive vice president, Applications Development, Oracle, said in a release. “The latest enhancements to Oracle Cloud SCM help customers create a smarter, more responsive supply chain by enabling them to optimize planning and execution and improve the speed and accuracy of processes.”
According to Oracle, specific upgrades feature changes to its:
Production Supervisor Workbench, which helps organizations improve manufacturing performance by providing real-time insight into work orders and generative AI-powered shift reporting.
Maintenance Supervisor Workbench, which helps organizations increase productivity and reduce asset downtime by resolving maintenance issues faster.
Order Management Enhancements, which help organizations increase operational performance by enabling users to quickly create and find orders, take actions, and engage customers.
Product Lifecycle Management (PLM) Enhancements, which help organizations accelerate product development and go-to-market by enabling users to quickly find items and configure critical objects and navigation paths to meet business-critical priorities.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The Raymond Corp. has expanded its energy storage solutions business with the opening of a manufacturing plant that will produce lithium-ion and thin plate pure lead (TPPL) batteries for its forklifts and other material handling equipment. Located in Binghamton, N.Y., Raymond’s Energy Solutions Manufacturing Center of Excellence adds to the more than 100-year-old company’s commitment to supporting the local economy and reinvigorating Upstate New York as an innovation hub, according to company officials and local government and business leaders who gathered for a ribbon cutting and grand opening this week.
“This region has a rich history of innovation,” Jennifer Lupo, Raymond’s vice president of energy solutions, supply chain, and leasing, said in welcoming attendees to the ribbon cutting ceremony Monday.
Lupo referred to the new factory as an “exciting milestone” in Raymond’s history and described it as the next step in the company’s energy storage solutions business, which began nearly 10 years ago with the development of a lithium-ion battery to power its “walkie” pallet jack. That work has expanded to include larger batteries and other technologies to support battery-electric equipment.
“We’re not just keeping up with the electrification movement,” Lupo said. “We’re leading it.”
Raymond, a business unit of Toyota Material Handling, has been building forklifts, pallet jacks, and other material handling equipment at its nearby Greene, New York, headquarters since 1922. The Binghamton factory supports local efforts to boost manufacturing and innovation in New York’s Southern Tier, which was recently designated as a regional technology and innovation hub by the Biden Administration.
Raymond is leasing the 124,000 square foot facility at 196 Corporate Drive, situated in an established industrial park. The manufacturer is currently utilizing just 10,000 square feet of the space to produce its 8250 lithium-ion battery, which can power Raymond’s class 1 and class 2 fork trucks, as well as a smaller TPPL battery for powering pallet jacks.
The Binghamton factory employs 15 people, but the company expects to scale up quickly in space and personnel, adding 12 to 25 employees next year and ramping up to 60 employees by 2027, according to Jim Priestly, battery manufacturing manager for energy solutions at Raymond.
The Binghamton facility also represents Raymond’s larger commitment to helping develop greener, more sustainable supply chains, according to company President and CEO Michael Field.
“We recognize energy’s critical role in shaping our future,” Field told attendees at the grand opening, adding that Raymond is seizing the opportunity to participate in the clean energy transition locally and beyond.
“This facility is just the beginning,” Field said.
Economic activity in the logistics industry expanded in August, though growth slowed slightly from July, according to the most recent Logistics Manager’s Index report (LMI), released this week.
The August LMI registered 56.4, down from July’s reading of 56.6 but consistent with readings over the past four months. The August reading represents nine straight months of growth across the logistics industry.
The LMI is a monthly gauge of economic activity across warehousing, transportation, and logistics markets. An LMI above 50 indicates expansion, and a reading below 50 indicates contraction.
Inventory levels saw a marked change in August, increasing more than six points compared to July and breaking a three-month streak of contraction. The LMI researchers said this suggests that after running inventories down, companies are now building them back up in anticipation of fourth-quarter demand. It also represents a return to more typical growth patterns following the accelerated demand for logistics services during the Covid-19 pandemic and the lows of the recent freight recession.
“This suggests a return to traditional patterns of seasonality that we have not seen since pre-COVID,” the researchers wrote in the monthly LMI report, published Tuesday, adding that the buildup is somewhat tempered by increases in warehousing capacity and transportation capacity.
The LMI report is based on a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).