Welcome to Transportation & Logistics Briefing, a new M-W-F morning email providing the latest news, data, and insight on how digital technology is disrupting transportation and delivery, produced by BI Intelligence.
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UBER'S PUBLIC STRUGGLES HAVEN'T DENTED ITS US BUSINESS MUCH: Uber has recovered from the effects of the #deleteUber social media campaign earlier this year, and is growing its business in the US, although not as fast as rival Lyft, according to new data from Second Measure, a firm that collects and analyzes credit card transaction data.
Uber's US sales increased 15% from March 2017 to September, after taking a nosedive in January and February. Uber lost 200,000 customers in one weekend as a result of the #deleteUber campaign, and continued to face a storm of scandals throughout the year that eventually culminated in the resignation of cofounder Travis Kalanick from the company's CEO post. However, the company's US business recovered rather quickly, and it continues to hold a dominant position the US ride-hailing market - 71% of US ride-hailing customers exclusively use Uber.
However, Lyft has grown faster than Uber in recent months, and taken away market share over the past year. Lyft's US sales rose 33% from March 2017 to September, twice as fast as Uber's. As a result of Lyft's rise, Uber's share of the US ride-hailing market fell from 83% in September 2016 to 74% in September 2017. During the same time frame, Lyft's market share rose from 15% to 22%. Additionally, the percentage of US ride-hailing customers who exclusively use Lyft rose from 13% in December 2016 to 19% in September 2017.
Both Uber and Lyft still have incredible room to run in the US, making it likely they will continue their recent growth in US sales. Only 10% of US consumers used Uber as of September 2017, while only 4% used Lyft. That demonstrates the US ride-hailing market is still very much up for grabs, with Uber and Lyft taking about 96% of the market between them, for now. More competitors in the space will certainly emerge, as automakers and tech companies begin to commercialize their self-driving car efforts through ride-hailing schemes. Uber and Lyft have significant head start though, and if they move quickly to grow their user bases, it will be difficult for other players to catch up, as the vast majority of ride-hailing customers (90%) only use one app, according to Second Measure's data.
BI Intelligence
HOW FEDEX IS EXPANDING ITS SAME-DAY DELIVERY CAPABILITIES: Last month, FedEx expanded its SameDay City urban courier service to 1,800 new cities in 30 regional markets to take advantage of growing demand for same-day deliveries, driven mostly by e-commerce. FedEx Office CEO Brian Philips recently spoke with BI Intelligence about the company's efforts to meet this growing demand.
FedEx has long offered same-day deliveries in cities for a variety of different use cases, and is using that foundation to expand its same-day e-commerce fulfillment, Philips said. For example, as one of the largest printing suppliers in the world, FedEx Office has long provided same-day delivery for print materials to businesses. Additionally, the company does special routes for businesses, such as delivering prescriptions from a lab to local pharmacies, or delivering car parts to local dealerships. These services give FedEx deep expertise in performing same-day deliveries that it is now applying to e-commerce parcel fulfillment.
Expanding SameDay City allows companies to deliver parcels to local customers within hours, enabling them to meet growing demand for faster delivery. A quarter of online shoppers surveyed in a study by research firm L2 said they would abandon a shopping cart if a retailer didn't offer same-day delivery. This proliferating demand for same-day fulfillment will drive up volumes of such deliveries to account for $200 billion in US online sales - about 25% of the US e-commerce market - by 2025, according to McKinsey.
Higher demand for faster delivery means that many companies, including traditional logistics providers and crowdsourced delivery startups like Postmates and Instacart, are now competing in the same-day e-commerce delivery space. Traditional providers, including FedEx, have developed many of the same technology tools, including allowing customers to track their orders in real time via a mobile app, that the startups have used to create better delivery experiences. Additionally, a logistics provider with FedEx's size has the ability to pull resources from other parts of its business to ensure fast delivery at peak demand times. That could become a problem for some of the crowdsourced delivery startups competing in this space, as they rely on part-time contractors hired through their apps, and their couriers often work for other crowdsourcing companies. That might make it hard for these startups to ensure they have enough couriers to meet demand at any given time, especially as same-day delivery volumes start to grow rapidly in the years ahead.
INDIA TAKES MAJOR STEP TOWARD DRONE DELIVERY: India's Directorate General of Civil Aviation (DGCA), the agency tasked with regulating the country's airspace, has unveiled draft guidelines for drone use in the country. Currently, it's illegal to fly drones in India without special permission from the DGCA. The draft guidelines specify that any company using drones weighing over 250 grams must register them with the agency, and that companies using drones weighing over 2 kilograms need to obtain a special air clearance. Further, all drone operators must be 18 or older, and the draft bans drones from flying over certain specially designated areas, like airports and national parks. However, this preliminary draft would only permit companies based in the country to use the unmanned aircraft. The draft guidelines will be up for public comment for 30 days before the agency finalizes and implements them.
The new guidelines would help retailers like Flipkart deliver goods by drone to the hundreds of millions of people in the country who live in hard-to-reach rural areas. Sixty-seven percent of India's 1.3 billion people are located rural areas. This leaves a majority of the country's population in places that are often inaccessible via its poor transportation infrastructure, a problem that delivering these consumers goods via drone would eliminate. Notably, Chinese e-commerce giant JD.com is already conducting drone deliveries in its home country for this purpose.
While stringent regulations are holding back drone delivery in the US, many countries in the rest of the world are racing to allow the aircraft to navigate their skies. Because of the US Federal Aviation Authority's (FAA) requirement that drones not fly outside the line of sight of the operator, large-scale drone deliveries are effectively outlawed in the country. In addition, a ruling last month from an FAA advisory panel indicates that requirement won't be softened or eliminated anytime soon. However, countries like France, the UK, Rwanda, and South Africa have permitted drone deliveries to begin in limited capacities; India is just the latest to try and do so.
IN OTHER NEWS
- Boston-based self-driving technology startup Optimus raised $18 million in Series A funding, according to The Drive. The company, which is a spinoff of a project from former MIT grad students, is working on designing Level 4 self-driving systems for electric vehicles. Level 4 autonomy refers to when a vehicle can drive itself without intervention from a human operator in most scenarios, but still has a steering wheel and pedals for an operator to take control in the case of emergency.
- Orders for heavy-duty semi-trucks in North America reached their highest monthly total in nearly three years in October, according to The Wall Street Journal, citing a report from ACT Research. In total, trucking companies on the continent ordered 36,200 Class 8 heavy-duty trucks - those that handle the majority of the region's freight - during the month, which is a staggering 60.4% more than they ordered in September of this year, and up 160% from October 2016. This rise shows trucking companies are confident that shipping volumes will continue to increase into 2018, as the fall is when trucking firms usually start making preparations for the following year.
- BMW, Mercedes-Benz, Volkswagen, and Ford have unveiled the first part of a network of electric vehicle charging stations across Europe, Electrek reports. The companies, which announced plans to build this network last year, said 20 of the stations are already up and running, and they expect the remaining stations will be operating by 2020. The automakers likely hope these charging stations will help spur electric vehicle adoption in the region, even as many auto suppliers expect the cars are still years away from becoming a major part of the auto business.