Crowd logistics: transforming the face of last mile delivery

Last mile logistics comprises a large share of the total delivery cost. A variety of collaborative economy business models are rapidly emerging and growing across the globe, changing the way logistics services were traditionally provided and consumed. They are driven by technological, economic and societal factors.

Crowdsourcing logistics (or crowd logistics) is one of the possible strategies for providing fast shipping services. Crowdsourcing logistics is defined as the outsourcing of logistics services to a mass of actors.

To get a better understanding of the industry, a multiple case study of firms operating in crowd logistics was conducted by JAMK University of Applied Sciences student Brian Odongo.

The seven elements of crowd logistics business model
First, Brian described seven elements to describe a crowd logistics business model. These were identified based on technologies enabling crowd logistics. Moreover, two main classifications were identified, the so-called B2C and P2P companies finally it was indicated how crowd logistics impacts last mile efficiency.
Crowd logistics platforms enable individuals and other actors such as tech entrepreneurs and traditional logistics firms to offer new services. This creates new employment, flexible working arrangements thus helps smaller retailers to reach a wider market and customer base. Crowd logistics also make markets more competitive and efficient by improving matching between demand and supply. In addition to the role of mobile technology, societal drivers such as population density also appear to play an important role in the development of crowd logistics. Increasing population density within cities has provided the basis for a critical mass which is the backbone of crowd logistics platform.

Many start-ups
The thesis presents an overview of crowd logistics initiatives in Europe and outside Europe. Uber has provided an insightful blueprint on how to bring service providers and clients together. One of the objectives for the thesis was to find out if the “sharing economy” approach really works for both people and freight? The development of “uberization” for shipping solutions is real. The growing number of crowd logistics startups in the recent years suggests that the interest in this subject is increasing.

Crowd logistics has been introduced, mostly in urban logistics and facilitated by the development of ICT e.g. matching algorithms, track-and-trace, and routing software. The main motivation for a company to implement a crowd logistics strategy lies in the potential of economic benefits. The positive economic and delivery times impact is demonstrated through simulations and analytical models, showing as for same day delivery or on-demand delivery crowdsourcing can lead to a lower cost for the shipping company and then a lower price for the consumer.

The main result of applying crowd logistics is in an effort to reduce the overall number of delivery vehicles in the cities’ streets and by exploitation of the idle spaces in people cars, those leading to a reduction in travel distances and consequently in lower carbon emissions. Crowd logistics also promotes cycling, use of scooters, delivering by foot etc all which are environment-friendly compared to traditional delivery trucks.

Read the full thesis here.

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