Post car mobility: A perspective of transport system evolution

Kurzfassung

With growth rates of approx. 10% per year e-commerce is thriving the parcel market year after year and makes it the fastest-growing logistics submarket (BIEK, 2017; HDE, 2017). The online market is determined by an intense competition between online retailers battling for customers and market shares. Apart from price and quality retailers bait their potential customers by offering multiple delivery options: on-time delivery, choice of handover location and person on the day of delivery, same-day delivery climaxing in speed deliveries within 60 minutes are new requirements for courier, express, and parcel (CEP) service providers (Allen et al., 2017). Increasing transport driven by new business models and general market growth challenge the classic transport system ‘road’ in last mile logistics – currently using mainly light duty vehicles (LDV). Especially in urban context the increasing number of tours per vehicle and increasing obstructions by congestion, construction sites and parking restrictions are examples of growing challenges for parcel service providers (Allen et al., 2017; Voccia et al., 2017). Even access restrictions for vehicles with combustion engines not complying with EURO6 standard may be implemented by cities in the near future. In rural context, long travel times between customers make CEP services extremely expensive. Due to these challenges one might believe that they could be systemic limits of future growth for classic last mile logistics. Thus, CEP service providers are urged to innovate since established technology won’t meet future requirements. The latest developments are twofold: on the one hand, online retailers themselves are looking for alternative solutions. On the other hand, CEP service providers are piloting innovation projects themselves. Automated (electric) vehicles, electric cargo cycles, and air- or groundborne drones are currently considered as the major alternative key technologies (Visser et al., 2014; Stolaroff, 2014). Amazon, Alphabet or, more recently, 7Eleven are one step ahead to the major CEP integrators such as DHL, UPS, or DPD when it comes to deploy airborne drones (Bamburry, 2015). 7Eleven was the first company which carried out a commercial drone delivery in the US in July 2017 (Businessinsider, 2016) while Amazon has received a lot of media attention in 2017 filing patents on a new distribution concept with a dirigible (Zeppelin) as a flying warehouse in combination with drones as last mile distributors. Thus, airborne drones seem to be an interesting technology option for future last mile deliveries to overcome ‘road transport’ limits (Goodchild, Toy, 2017; Rao et al., 2016; Tavana et al., 2017)). However, literature shows that currently drones are too expensive and lack in payload, robustness, and compatibility with existing delivery procedures. From expert interviews and project result a drone delivery has approx. twice the price as LDV delivery (Liedtke, 2016). Economic feasible applications may only be specialized operations such as time-critical deliveries (e.g. vaccines), deliveries in disaster areas or of luxury goods (Haidari et al., 2016). Cost-benefit analyses show that the cost for implementation can be lower than its benefit – the key is new speed delivery services for which costumes (e.g. Amazon Prime members) are willing to pay more for (Welch, 2015). Thus, from literature the assessment of the drone-concept and characteristics induces that it is not yet a competitive (economic AND technological) alternative to traditional distribution concepts in the last mile delivery mass market. Is it therefore not worth for policy makers to consider airborne drones as part of the solution for future last mile logistics. Against this background, the research question of this paper is: Can airborne drones be a competitive alternative to traditional delivery procedures in the CEP market? This article discusses the competitiveness of airborne drones from an evolutionary economic point of view and aims to introduce a different perspective for a societal discourse of future solutions for last mile logistics. The analytical approach is based on the concept of transport system evolution by Müller and Liedtke (2017). The concept highlights four phases of transport system evolution with respective theories for explaining systematic phenomena: 1) stabilization phase (searching for a lock-in into a technical/organizational configuration), 2) technology transition phase (exploiting the Attacker's Advantage), 3) growth phase (being the Innovator's dilemma) and 4) degeneration phase (resting in a Stalemate of Technology). These four phases of a transport system’s evolution are mutual interdependent to evolutionary phases for alternatively existing transport systems. Thus, the evolution of a transport system and its specific evolutionary phase’ status creates the framework conditions for alternative’s evolution and vice versa (see the Figure 1 in the appendix). According to the scheme of Müller and Liedtke (2017), the CEP logistics mass market is in the phase of growth (3). As a consequence, the so-called innovator's dilemma is emerging. This innovator's dilemma is characterized by two aspects: a) intensifying the optimization of established technologies (vehicle technology, delivery concepts and business models) by an innovation competition on quality and convenience and, b) an active exclusion of alternative technologies as they threat the established technology path and with it patents, market power, and profit margins (in latent market equilibrium). At the end of the development of the innovator's dilemma, the ‘attacker's advantage’ of an alternative technology becomes likely. This advantage is given by the fact that the alternative technology is only at the beginning of a further refinement of performance and operational capability, while established technologies can be described as ‘throughout optimized’. Most likely, the performance of the alternative can be significantly increased by further agglomeration of capital and knowledge. A comparison with the first heavy duty vehicles (HDV) and its competition against horse-drawn carriages and horse-drawn tramways around 1910 is applicable. The performance of HDVs of this time has nothing in common with nowadays trucks’ performance in terms of capability, operational cost and robustness. Currently, the drone seems to be in the stabilization phase (1), in which suppliers are experimenting in market niches. Proves are visible: a) increasing number of tests using technology variants with demand responses (e.g. responses from 7Eleven or Amazon their customers), b) increasing number of drone technology providers, and c) initial attempts creating business models with drones. However, the lock-in is not given yet for this technology. Thus, the exploitation of the attacker’s advantage can be expected after having locked-in the drone technology in profitable and growing niche market (probably with characteristics such as short-term change of delivery location and person, and speed deliveries within 60 min after the order) to pioneer-costumer’s needs. Such niches may only be poorly or not at all served by LDVs or HDVs due to the above mentioned limitations of traditional delivery methods. The attacker's advantage would come effective if the future demand focused especially on these niches. Please note, retail giant Amazon and Google’s mother Alphabet are elaborating exactly these niches. The analysis demonstrates that airborne drones are baloney at the moment but have great potential to be part of the solution in future. While established delivery technologies are faced with systemic restrictions and cannot (or only poorly) satisfy future market demand and requirements, drones, however, can overcome existing limits, i.e. parking space, congestion, emission standards, etc. and meet future market demand and requirements. Thus, transport policies may explicitly promote the innovation ‘drone’ in the international competition for lead markets. In doing this, the drone could enter the discourse of sustainable and performant transport systems in parallel to the persistent requirement of increasing efficiency of established technologies.