© Michela Canalis

Logistics of the future

Right up to the last mile

by Davide Magnolia

Lawyer at  LCA Studio Legale

Danish shipping company A.P. Moller – Maersk has announced that it is going to buy US-based business-to-consumer (B2C) logistics company Visible Supply Chain Management (Visible SCM) for $838 million on the strength of record first-quarter results. It also plans to invest a further $86 million to purchase B2C Europe. These transactions are expected to enable A.P. Moller – Maersk to strengthen its position in the B2C market by focusing on last-mile logistics in Europe, the USA and Asia.

The impetus that digital platforms have recently given to the redefinition of business models is such that even everyday jargon has had to adapt to a phenomenon that is booming. For example, neologisms such as ‘Amazonization‘ (which takes its cue from the business model created by Amazon) and ‘Uberization‘ (in which, following the Uber model, services and work processes are transformed from being continuous to activities carried out only on demand by the consumer) have been coined, confirming how digital platforms are also revolutionizing the traditional language of business.

Therefore, it is not surprising that an operator of the stature of A.P. Moller – Maersk has chosen to invest in e-commerce which, at this particular moment in time, with a turnover of almost 26 billion euros last year alone, seems to be the main growth factor for the economy. While logistics, due to its ability to create continuity between goods transportation networks and digital channels, was initially one of the keys to the development of e-commerce, the situation has now been reversed, with e-commerce seemingly becoming the driving force behind logistics.

It is no coincidence that the exponential growth of online commerce is generating major changes, not only in terms of organization, but also in the practical aspects of the logistics sector: according to a recent study, over 300 million square metres will be needed in Europe alone by 2025 for the development of e-commerce logistics (which, according to estimates, could reach a turnover of around 1.5 trillion dollars in that year). The logistics of the near future will therefore have to be able to combine the ability to offer transport to all corners of the world with increasingly shorter delivery times to any location.

In this sense, the last mile is undoubtedly the key to the success of the entire delivery process, the dynamics of which are capable of determining customer satisfaction (or, on the contrary, dissatisfaction). The strategies of the large operators therefore seem to be oriented towards “think global and act local” so as to reach the end user without compromising the service or the product.

The concept of globalization is no longer limited to the mere internationalization of activities, but is taking on a much broader, different meaning. We are witnessing a phenomenon that Zygmunt Bauman, the sociologist who was the first to point out that the term globalization was no longer suitable for defining the new dynamics of markets and the economy, has called ‘Glocalization‘ or ‘Glocalism‘, in which global is adapted to fit to the local reality.

A.P. Moller-Maersk’s decision to expand its range of integrated logistics services to provide omnichannel solutions that are increasingly tailored to the needs of the end user is part of this context. So, if the game between the big players moves from the global to the local arena, whoever secures the last mile will most likely control the entire supply chain.

The paradox is that the control of major traffic routes could be decided precisely by the management of the last mile. In short, a new form of globalization (or glocalization) with the micro seeming to take over from the macro. The statements made by Vincent Clerc, CEO of Maersk Ocean & Logistics, on the occasion of the announcement of the two operations are therefore not surprising, according to which “the acquisitions will provide Maersk with a strong growth platform in the rapidly evolving field of e-commerce, where our investments in digitalization and integration will create significant synergies and make a big difference for customers’ ability to sell across multiple channels effectively. Furthermore, they will allow us to have a more comprehensive offering towards small and medium sized customers”.

This may well be exactly what is at stake, and A.P. Moller – Maersk seems to have moved ahead of the other big carriers to offer different solutions to small and medium-sized customers. Certainly, the technological investment decisions that companies will take in the near future will be the ones that allow them to gain decisive advantages over their competitors in terms of market share.

However, the road seems to be already mapped out: enhancing local realities within a global context, while seeking an entrepreneurial balance between efficiency and adaptation to the ever-changing expectations and needs of customers. The race for the (e)logistics of the future has already begun and will be played out to the last mile.

Translation by Giles Foster

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