The freight transport industry is facing large challenges when it comes to e-commerce. This rapidly growing sector has high demands on service and performance from the freight system - demands that are seldom met with satisfaction. Digitization and digitalization are two forces of nature that the transport industry needs to harness and exploit in order to meet these demands.

1. E-commerce and
freight transport
Chasing the last mile -
one byte at a time
Per Olof Arnäs, PhD
Chalmers University of Technology
Service Management and Logistics
per-olof.arnas@chalmers.se
about.me/perolofarnas
Slides: slideshare.net/poar
@Dr_PO
OKIMG_5751 by taymtaym on Flickr (CC-BY)

2. Demographic
and social
change
Shift in
economic
power
Rapid
urbanisation
Technological
breakthroughsClimate
change and
resource
scarcity
5
GLOBAL
TRENDS
Source: PWC (google: pwc megatrends 2014)

3. Process
improvement
Service
developm
entInfrastructure
developm
ent
Customer
controls last
mile
Faster and
better
returns
Better
delivery
experience
Secure
identification on
pickup/delivery
Distribution
of food
Home
delivery
Support
companies that
want to add E-
commerce to
their business
Collect-in-store
Local
same-day
delivery
Improved
delivery note
Delivery and
pickup during
weekends
Marketing of
the E-channel
Sustainable and
climate friendly
3PL targeted at E-
commerce
Faster, more reliable
and secure
deliveries in Europe
Better
infrastructure on
consumer side
Better
security
Source: Svensk Digital Handel 2014 Bo Zetterqvist
Areas of development
for logistics
companies in relation
to e-commerce

4. Process
improvement
Service
developm
entInfrastructure
developm
ent
Customer
controls
last mile
Faster and
better
returns
Better
delivery
experience
Secure
identification on
pickup/delivery
Distribution
of food
Home
delivery
Support
companies that
want to add E-
commerce to
their business
Collect-in-store
Local
same-day
delivery
Improved
delivery note
Delivery and
pickup during
weekends
Marketing of
the E-channel
Sustainable
and climate
friendly
3PL targeted at
E-commerce
Faster, more
reliable and
secure deliveries
in Europe
Better
infrastructure on
consumer side
Better
security
Source: Svensk Digital Handel 2014 Bo Zetterqvist
Areas of development
for logistics
companies in relation
to e-commerce
Digital
development
needed in
freight
transport

5. Customer
controls
last mile
Faster
and better
returns
Better
delivery
experience
Secure
identification
on pickup/
delivery
Collect-in-
store
Improved
delivery note
Sustainable
and climate
friendly
3PL targeted at
E-commerce
Faster, more
reliable and
secure
deliveries in
Europe
Better
security
Source: Svensk Digital Handel 2014 Bo Zetterqvist
Digital development needed in freight transport
Process improvement
Use ICT to make the system more efficient
Real-time decision making, footprinting, better digital interaction between stakeholders
Service development
Use ICT to create new services
Digital information enables new business models
Infrastructure development
Use ICT to interact with infrastructure
Location Based Intelligence etc.

6. Customer
controls
last mile
Faster
and better
returns
Better
delivery
experience
Secure
identification
on pickup/
delivery
Collect-in-
store
Improved
delivery note
Sustainable
and climate
friendly
3PL targeted at
E-commerce
Faster, more
reliable and
secure
deliveries in
Europe
Better
security
Source: Svensk Digital Handel 2014 Bo Zetterqvist
Digital development needed in freight transport
Process improvement
Use ICT to make the system more efficient
Real-time decision making, footprinting, better digital interaction between stakeholders
Service development
Use ICT to create new services
Digital information enables new business models
Infrastructure development
Use ICT to interact with infrastructure
Location Based Intelligence etc.
The freight industry has work to do…

7. RESOURCE UTILISATION
LOW
Source: Kent Lumsden
Safety imbalance
Variation in resource demand
Chain imbalance
Caused by the chain
Technological imbalance
E.g. mismatch in equipment
Operational imbalance
Goods and resource flow not compatible
Structural imbalance
Uneven transport demand

8. RESOURCE UTILISATION
LOW
Source: Kent Lumsden
Safety imbalance
Variation in resource demand
Chain imbalance
Caused by the chain
Technological imbalance
E.g. mismatch in equipment
Operational imbalance
Goods and resource flow not compatible
Structural imbalance
Uneven transport demand
Several of these
imbalances can be
reduced by
reducing
uncertainties

9. January February March April May June July August September October November December
10%
Nov 25
When do we start generating profit?
Profit margin =
Sales - Cost
Sales

10. January February March April May June July August September October November December
10%
Nov 25
2%
Dec 25
When do we start generating profit?
Profit margin =
Sales - Cost
Sales

11. January February March April May June July August September October November December
10%
Nov 25
1%
Dec 29
2%
Dec 25
When do we start generating profit?
Profit margin =
Sales - Cost
Sales

12. The transport
industry does not like
real-time decisions.
At all.
Batch-handling
Zip codes Zones
Time-tables
DSC_9073.jpg by James England on Flickr (CC-BY)

13. Image: Alain Delorme, alaindelorme.com
The current
model is focused
on economy of
scale and
standardization

14. But the biggest problem in
transportation is time.
There is not enough of it.
Ever.
InSearchOfLostTimebybogenfreundonFlickr

15. The current paradigm

16. So…
What are we
doing about all
this?

17. Things are happening outside the
freight industry
(and have been for some time)

18. Things are happening outside the
freight industry
(and have been for some time)
Image: Richard Hancock, twitter.com/CanaryWorf

20. Stage Coach Wheel by arbyreed on Flickr
Development of transportation
technology has been
fairly linear
…for the last 5500 years

21. We are in the
middle of a
gigantic
exponential
development curve
beginning

22. A new global eco system
where new types of,
knowledge based,
industries compete with
traditional ones
http://jaysimons.deviantart.com/art/Map-of-the-Internet-1-0-427143215

23. Startups don’t compete with airlines...
by purchasing a bunch of planes
hiring a bunch of pilots
and locking up a bunch of terminals at airports.
Quote: bryce.vc/post/18404303850/the-problem-with-innovation
Image: Connecting the community, my Twitter strategy, and American Airlines at DFW by Trey Ratcliff on Flickr (CC-BY,NC,SA)

24. Startups compete with airlines by
inventing videoconferencing.
Startups don’t compete with airlines...
by purchasing a bunch of planes
hiring a bunch of pilots
and locking up a bunch of terminals at airports.
Quote: bryce.vc/post/18404303850/the-problem-with-innovation
Image: Connecting the community, my Twitter strategy, and American Airlines at DFW by Trey Ratcliff on Flickr (CC-BY,NC,SA)

25. 355:365:2015BWH by hermitsmoores on Flickr (CC-BY,NC,SA)
Make analogue
information digital
Digitization:

26. MobileWorldCongress2016byKārlisDambrānsonFlickr(CC-BY)
Increased use of
digital technology
Digitalization:

27. MobileWorldCongress2016byKārlisDambrānsonFlickr(CC-BY)
Increased use of
digital technology
Digitalization:
Make analogue
information digital
Digitization:
Both are important! (and interesting)

28. Ominous Windmill by Conrad Kuiper on Flickr (CC-BY,NC,SA)
Digit(al)ization
is not a trend

29. Ominous Windmill by Conrad Kuiper on Flickr (CC-BY,NC,SA)
Digit(al)ization
is not a trend
It is a force of
nature

31. Gartners Hype Cycle for Emerging Technologies
Augmenting
humans with
technology
Machines
replacing
humans
Humans and
machines
working
alongside each
other
Machines
better
understanding
humans and
the
environment
Humans better
understanding
machines
Machines and
humans
becoming
smarter

32. Gartners Hype Cycle for Emerging Technologies
Source: Gartner July 2015
Could affect transportation and logistics

33. The Last Mile - the holy Grail of e-commerce

34. Integration of digital and physical worlds
http://www.sygic.com/gps-navigation/addon/head-up-display

35. Say hi to the new sensors
http://mobsentech.com

36. ”New” modes of
transport
https://www.youtube.com/watch?v=50sv4M4rgBM
https://www.youtube.com/watch?v=HG76DcXySuw

37. More automation

38. The sharing economy hits freight transport
(again and again…)

39. Servitization
Move up in the
value chain
Upgrade drop points
Consumer services
Expose data
Mall of Scandinavia
http://www.smartcompany.com.au/growth/innovation/41765-online-retailer-offers-
a-courier-that-waits-at-your-door-fashion-advice-not-included.html
https://www.amazon.com/dashbutton
https://www.shyp.com

40. The Action of New York City by
Trey Ratcliff on Flickr (CC-BY,NC,SA)
Real-time (data driven)
decision making
Data collection
Data processing
Data exploitation
http://mindconnect.se/
http://waze.com
https://mydrive.tomtom.com/

41. Real-time decision making
not always successful…

42. Another
thing to
keep tabs
on

43. Bitcoin, bitcoin coin, physical bitcoin, bitcoin photo by Antana on Flickr (CC-BY,SA)
Block chain
technology
Records transactions and
data among actors that
do not trust each other
Fully
decentralized

44. https://news.bitcoin.com/nimber-disrupts-logistics-system-blockchain-matters/
http://www.economist.com/news/leaders/21677198-technology-behind-
bitcoin-could-transform-how-economy-works-trust-machine
Bitcoin, bitcoin coin, physical bitcoin, bitcoin photo by Antana on Flickr (CC-BY,SA)
http://www.coindesk.com/how-bitcoins-technology-
could-make-supply-chains-more-transparent/
https://news.bitcoin.com/future-use-cases-blockchain-
technology-parcel-tracking-regardless-courier/
Block chain
technology
Records transactions and
data among actors that
do not trust each other
Fully
decentralized

46. Big data in freight
transport
Film by Foursquare. Google: checkins foursquare

47. 2011 2013 2015
”Big data is an all-
encompassing term for
any collection of data sets
so large and complex that
it becomes difficult to
process using on-hand
data management tools or
traditional data
processing applications.”
- Wikipedia
2015

48. 892 by benmschmidt on Flickr (C)19th century shipping visualized through the logs of Matthew Fontaine Maury (1806-1873), US Navy
Shipping
movements in
the 19th century

49. Jawbone measures sleep
interruption during earthquake
https://jawbone.com/blog/napa-earthquake-effect-on-sleep/

50. Not statistics
Exhausted by Adrian Sampson on Flickr (CC-BY)
just

51. Not
Business
Intelligence
Basingstoke Office Staff Desk "No computer" by John Sheldon on Flickr (CC-BY,NC,SA)
just

52. http://dashburst.com/infographic/big-data-volume-variety-velocity/

53. Multicolour Jelly Belly beans in Sugar! by MsSaraKelly on Flickr (CC-BY)
Requirements on
Big data specific to
freight transport
Geocoded data
Decentraliseddata
Flows
Goods
Resources
Value
Information
Products
Multiple
perspectives
Strategic
Tactical
Operative Predictive

54. Human resources
Reduction in driver
turnover, driver
assignment, using
sentiment data
analysis
Real-time capacity
availability
Inventory
management
Examples of applications in freight
(Waller and Fawcett, 2013)
Transportation
management
Optimal routing, taking
into account weather,
traffic congestion, and
driver characteristics
Time of delivery,
factoring in weather,
driver characteristics,
time of day and date
Forecasting
Waller, M. A. and Fawcett, S. E. (2013), Data Science, Predictive Analytics, and Big Data: A Revolution That Will
Transform Supply Chain Design and Management. JOURNAL OF BUSINESS LOGISTICS, 34: 77–84

55. smile! by Judy van der Velden (CC-BY,NC,SA)
Anticipatory
shipping
http://www.scdigest.com/ontarget/
14-01-21-1.php?cid=7767

56. http://www.scdigest.com/ontarget/
14-01-21-1.php?cid=7767
Anticipatory
shipping Package item(s) as a package for
eventual shipment to a delivery address
Associate unique ID with package
Select destination geographic area for
package
Ship package to selected distribution
geographic area without completely
specifying delivery address
Orders
satisfied by item(s)
received?
Package
redirected?
Determine package location
Convey delivery address, package ID to
delivery location
Assign delivery address to package
Deliver package to delivery address
Convey indication of new destination
geographic area and package ID to
current location
Yes
Yes
No
No
smile! by Judy van der Velden (CC-BY,NC,SA)

57. 7Big Data Best Practice Across Industries
Usage of data in order to:
Increase Level of
Transparency
Optimize Resource
Consumption
Improve Process Quality
and Performance
Increase customers
loyalty and retention
Performing precise
customer segmentation
and targeting
Optimize customer
interaction and service
Expanding revenue
streams from existing
products
Creating new revenue
streams from entirely
new (data) products
Exploit data for: Capitalize on data by:
New
Business Models
Customer
Experience
Operational
Efficiency
Use data to:
• Increase level of
transparency
• Optimize resource
consumption
• Improve process quality
and performance
Exploit data to:
• Increase customer
loyalty and retention
• Perform precise customer
segmentation and targeting
• Optimize customer interaction
and service
Capitalize on data by:
• Expanding revenue streams
from existing products
• Creating new revenue
streams from entirely new
(data) products
New Business ModelsCustomer ExperienceOperational Efficiency
Figure 4: Value dimensions for Big Data use cases; Source: DPDHL / Detecon
DHL 2013: ”Big Data in Logistics”

58. http://blog.digital.telefonica.com/?press-release=telefonica-dynamic-insights-launches-smart-steps-in-the-uk
Vizualisation

59. Created by Oliver O'Brien (UCL Geography/UCL CASA)

60. Vizualisation/combination

61. Vizualisation/combination

62. Measure
real-time
system
behaviour
Emil Johansson - EJOH.SE

63. Manage complex systems

64. Avoid unpleasant surprises

65. Predict future events

66. Domain
knowledge
critical!
See for instance: Waller, M. A. and Fawcett, S. E. (2013), Data
Science, Predictive Analytics, and Big Data: A Revolution
That Will Transform Supply Chain Design and Management.
JOURNAL OF BUSINESS LOGISTICS, 34: 77–84
Data scientists - the new superstars
Create teams

67. The Challenger by Martín Vinacur on Flickr (CC-BY)
Not all ideas age with grace

68. The Challenger by Martín Vinacur on Flickr (CC-BY)
Not everyone will want to
adopt new things…

69. Customer
controls
last mile
Faster
and better
returns
Better
delivery
experience
Secure
identification
on pickup/
delivery
Collect-in-
store
Improved
delivery note
Sustainable
and climate
friendly
3PL targeted at
E-commerce
Faster, more
reliable and
secure
deliveries in
Europe
Better
security
Source: Svensk Digital Handel 2014 Bo Zetterqvist
Digital development needed in freight transport
Process improvement
Use ICT to make the system more efficient
Real-time decision making, footprinting, better digital interaction between stakeholders
Service development
Use ICT to create new services
Digital information enables new business models
Infrastructure development
Use ICT to interact with infrastructure
Location Based Intelligence etc.

70. Customer
controls
last mile
Faster
and better
returns
Better
delivery
experience
Secure
identification
on pickup/
delivery
Collect-in-
store
Improved
delivery note
Sustainable
and climate
friendly
3PL targeted at
E-commerce
Faster, more
reliable and
secure
deliveries in
Europe
Better
security
Source: Svensk Digital Handel 2014 Bo Zetterqvist
Digital development needed in freight transport
Process improvement
Use ICT to make the system more efficient
Real-time decision making, footprinting, better digital interaction between stakeholders
Service development
Use ICT to create new services
Digital information enables new business models
Infrastructure development
Use ICT to interact with infrastructure
Location Based Intelligence etc.
The freight industry has work to do…

71. Even if it hurts.

72. Even if it hurts. Although…
Indiana Jones

73. The Last Mile - the holy Grail of e-commerce

74. It’s not business as usual.
Get used to it.
This is the internet
happening to freight
transport.
There is no ’usual’
anymore.
Hello Kitty Darth Vader by JD Hancock on Flickr (CC-BY)

75. OKIMG_5751 by taymtaym on Flickr (CC-BY)
Logistikpodden.se
Eldsjälar
Experter
(Föreslå gärna…)
Torsdagar
E-commerce and
freight transport
Chasing the last mile -
one byte at a time
Per Olof Arnäs, PhD
Chalmers University of Technology
Service Management and Logistics
per-olof.arnas@chalmers.se
about.me/perolofarnas
Slides: slideshare.net/poar
@Dr_PO