Opportunity, Innovation, and Entrepreneurship in Logistics and Transportation Sector

This report focuses on designing a last-mile fulfillment strategy and hub services to capture opportunities presented at the intersection between urbanization and e-commerce in the long-run. It identifies the megatrends that affect the transportation and logistics sector and the opportunities that can be adopted to become competitive.

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Opportunity, Innovation, and Entrepreneurship
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Introduction
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

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(Kersten, von See and Skirde, 2014, pp.17). This report thus will focus on creating an
understanding of the changing business environment.
Relation to Literature
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, Junevičius and Skačkauskas,
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

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as to why there is need for transport and logistics sector to address the enhanced city complexity
resulting from urbanization.
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

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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.
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

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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

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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

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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.

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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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