You have likely heard the word disruption too many times lately. It has become a core component of thought leaders’ vocabulary. The usual claim is that industries are facing severe disruption, which in turn is completely changing the way business is done. And although part of the noise is just buzz, it is true that there is no smoke without fire. Based on my experience, I can say that this is especially true for mobility-related sectors such as transportation, logistics and car retail. There are three notable trends shaping the dynamics of mobility markets that I feel are important to highlight.
According to Cisco, 500 billion devices will be connected to the Internet by 2030, and no-one is arguing that transportation sector assets will somehow be a discrete entity. In fact, when looking at the visions of major transportation sector-related equipment providers, it certainly seems that future value creation will be built on data and connectivity. Companies like Wärtsilä, Volkswagen and Siemens each have visions for transportation assets with data-driven interconnected ecosystems built around them.
According to the WEF, although the rate of digital adoption in logistics is currently low, significant growth is expected, with the main benefits being gained by data sharing and predictive analytics which will decrease the friction related to handovers and improve tractability shipments that should remove the current supply chain inefficiencies. In addition to this, logistics chains are being disrupted by new logistic modes such as drones, AVs and 3D printing. These new modes will especially affect downstream last-mile logistics by enabling new operating models and delivery strategies.
The third trend, which is expected to be very powerful, will be a shift in consumer preferences regarding transportation usage. According to the KPMG Global Automotive Executive Survey 2018, some 43% of respondents believed that approximately 50% of global consumers will not want to own a car by 2025, whilst 56% expect that physical car retail outlets will be reduced by 30–50 percent by 2025. Instead of owning a car to move between places, people will increasingly prefer to flexibly combine different transportation options in order to find the most convenient and cost-efficient travel chains to reach their destinations. Obviously, this will decrease the demand for personal cars, whilst simultaneously creating a market for new transportation services and so-called MaaS (Mobility as a Service) integrators.
Disruption concerns the entire mobility spectrum. Evolution of the ways in which people and goods are moved is being driven by a shift in consumers’ mobility preferences as well as by the need to solve the existing current inefficiencies. This evolution will be built on data and data sharing. There will be new layers of data-related players – generators, aggregators and solution developers – who will not need to be legacy mobility players. This kind of ecosystem-driven economy will be receptive to fresh business models and innovative new entrants, and will be built on cooperation. Even though the dynamics are changing, legacy companies and new entrants will both be needed. They must only find their optimal role in the ecosystem. Therefore, as a mobility player you should assess the permanency of your business model and act accordingly. The above-described evolution is already happening and is visible in many ways.