Titans of the logistics industry are being shaking up as new tech companies gain market share in the 2 trillion-dollar E-commerce market.
Start up’s and tech savvy newcomers are opposed to disrupt the largest logistics and transportation companies like FedEx, UPS and XPO. Many are looking to find ways to maintain their control of the market share as last mile carriers are experience high levels of growth. These relatively new technology companies back by experienced venture capital funding have found low to no assets opportunities in the asset heavy service transportation industry. Fred Smith, chairman and founder of FedEx recently stated that he believes the e-commerce industry will continue to growth at a rate of 26% surpassing 2.4 trillion in 2018. Fred Smith proposed to the House Transportation and Infrastructure Committee, “E-commerce shopping isn’t a trend – it’s a fundamental part of retailing today in the U.S. and is growing exponentially worldwide”
Amazon might be the biggest kid in the park and a driving force behind a lot of this growth. This is a problem for a lot of the carriers that are currently servicing amazon. This is due to Amazon experimenting with its owner operators and fleet of logistical equipment to start to deliver to the technology driven last mile freight. This highly profitable opportunity space could have big payout’s for the tech giant. Many companies are already looking elsewhere to feed their businesses so they have other customers when Amazon transitions to its own private fleet.
There is a growing trend in logistic industry for investment in the last mile innovations as the old titans all have dedicated divisions to compete in this space. Estimations as high as 13 billion dollars there is a lot of money to be made. Luckily for these companies Amazon and Walmart are not only customers. The growth of E-commerce will also be driving by many small to medium sized businesses as they shift to the opportunity getting their products online.
The top carriers are not the only providers that will be competing for these services. There are a dozen start-ups that are recognizing the opportunity that has presented itself in the logistic industry. Many of them are hoping that their innovations will catch the attention of the logistic industry or consumer product giants alike. These small innovators are great acquisition opportunities to capture intellectual property that are gaining ground and can be better implemented on a larger scale. One of the mistakes that many of these companies are falling into is that they do not fully understand or take into consideration on the market that they are trying to break into. It is an already crowded market that has high cost of delivery and high rates of returns. Innovators should make partnerships with major retailers to leverage their experience and infrastructure to implement solutions.
The logistics industry is rapidly moving to an on-demand business that is becoming increasingly reliant on last mile technologies. This change in the culture of the business has created a huge opportunity for movement at the top ranks and large investments for the entrepreneurs.