Shared Economy in Logistics: Maximizing Resource Utilization
Logistics companies understand the vastness of their supply chains, which encompass not just the products being shipped but also the facilities, equipment, transportation, and workforce necessary for successful operations.
While some of the largest logistics firms can afford to own their assets, many smaller companies struggle to buy even a vehicle or a warehouse or hire more than a handful of employees. In these situations, how can logistics companies make the most of their resources without exhausting their budgets?
One potential solution is to adopt a unique economic model known as the “shared economy” or “collaboration economy.” This model focuses on asset owners offering their resources to those in need, allowing for more efficient use of available assets.
Within the last several years, companies like Uber, Airbnb, and Poshmark have all utilized the shared economy model to great success. The model allows users to share their goods and services with others without losing ownership of their assets.
The logistics industry is also experimenting with the shared economy model, as it can reduce wasteful resource consumption and improve operational efficiency and sustainability goals. However, is the shared economy model right for every logistics company, and how can you implement it successfully in your current operations?
What Does a Shared Economy Look Like in Logistics?
The logistics industry’s version of the shared economy model is based on logistics companies and carriers (the asset holders) providing their equipment, facilities, transportation, and labor to their shippers (the ones in need of said assets). There are several factors why the shared economy is being incorporated into logistics, including:
Growing E-Commerce Sector
Online shopping is rapidly taking over the retail market, with consumers increasingly purchasing from platforms like Amazon, Temu, and Shein. However, logistics companies struggle to keep pace, as traditional freight shipping is designed for larger, infrequent loads rather than the frequent, smaller shipments e-commerce generates.
By sharing resources with e-commerce-focused delivery services, logistics companies can enhance their shipping capabilities without needing to invest in additional equipment.
Technological Innovations
Self-aware of its traditional, old-fashioned way of conducting business, the logistics industry has been investing in new technological innovations, including digital platforms, AI and machine learning-driven data analytics software, route optimization and tracking systems, mobile technology, and automated matching vehicles.
All of this technology can cost a hefty price for logistics companies; sharing these advanced tools with each other or with a provider will help make the technology more accessible to carriers and shippers while increasing production and efficiency.
Cost and Resource Efficiency
Logistics is notorious for its high costs, with expenses for equipment and transportation sometimes surpassing a company’s total profits. To enhance production, companies must find ways to cut costs while still meeting customer expectations for accurate and timely deliveries.
By sharing facilities and fleets, businesses can lower infrastructure and transportation expenses while also minimizing resource use to what is essential for efficient freight shipping.
Increased Sustainability Efforts
Logistics companies have been working to incorporate eco-friendly initiatives into their supply chain operations for some time. However, the challenge lies in the high costs associated with sustainable technologies, such as hydrogen-fuel trucks and recyclable packaging.
One way to address this issue is by sharing resources among logistics providers, which can help optimize routes and reduce the number of vehicles needed. This cooperation can minimize waste and lower emissions. Additionally, companies can collaborate to share eco-friendly technologies, allowing those who may not be able to afford such innovations to improve their sustainability efforts.
Examples of Shared Economy in Logistics
Shared warehousing: Companies can share facilities, like warehouse space, to reduce costs from purchasing or renting spaces and improve overall space efficiency.
Crowdsourced deliveries: This method uses individual, independent contractors who provide their own vehicles to deliver packages. This doesn’t add additional expenses for in-house staffing or vehicles.
Collaborative transportation networks: Owner-operators can use load boards to find and bid on truckloads added on by carriers, which reduces the need for logistics companies to overspend on transportation and drivers.
Logistics data sharing platforms: By sharing data across logistics companies, teams can understand trends, evaluate carrier performances, and identify areas of improvement that can cut down costs and improve efficiency.
On-demand staffing: Temporary jobs can fill the void from a lack of laborers in warehouses, fulfillment centers, and vehicles.
Shared Economy Advantages and Disadvantages
The logistics industry’s adoption of the shared economy model has contributed to tremendous growth for logistics companies. However, the model also has a few weaknesses that could create financial issues down the road.
The Pros
– Greater economic flexibility
– Access to other resources companies previously unaffordable
– Decreased operational costs
– Increased resource efficiency
The Cons
– Decreased jobs with stable benefits
– Lack of government oversight and regulation
– Possible racial and gender bias for asset-sharer selection
– Shared economy platforms moving from shared to full-time creating economic issues
Ultimately, smaller businesses and individuals in the logistics industry stand to benefit the most from a shared economy. While larger companies have the financial resources to invest in their operations, smaller businesses often face challenges in securing funding. By leveraging shared economy systems, these smaller enterprises can access the resources they need without the burden of purchasing or leasing assets themselves.
Tips on How to Incorporate Shared Economy in Logistics
The shared economy model could be a worthwhile investment for logistics companies in need of assets like equipment or transportation or companies who wish to reduce or cut down on needless expenses and resources.
If you are considering integrating the shared economy model into your current operations, then try to utilize these strategies to get the most out of your new business model:
1. Assess your current operations. What issues are you having with your current resource consumption, and how can that change by sharing resources?
2. Explore other shared economy platforms within the logistics industry. Take note of why their platform is successful and what you can learn from it.
3. Seek out opportunities to utilize a shared economy. For example, try to share a new raw material with another company if you are considering expanding into new markets.
4. Optimize data analytics software and platforms to enable proper decision-making. Your team will be able to stay ahead of market trends and have a record of past transactions for future operations.
5. Foster collaboration and focus less on competition. While advancing ahead of competitors is typically a primary goal for any business, the sharing economy focuses on cultivating relationships with asset holders to leverage their resources.
The shared economy is centered on resource efficiency, digital connections, and collaborative platforms, which can transform logistics by improving resource utilization, cutting costs, and enhancing sustainability. Despite challenges like regulatory oversight and job security concerns, the benefits of reducing waste make this model attractive for logistics providers.
As the logistics landscape evolves, companies embracing the shared economy will be better positioned to handle market fluctuations and meet customer demands. Integrating shared warehousing, crowdsourced deliveries, and data-driven collaboration may be key to achieving long-term growth and resilience in this competitive industry. The shared economy in logistics has a long road to acceptance in the industry, but the results could be beneficial for everyone involved.
