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Value Pool ReportWhatUrban Mobility Will Look LikeIn 2035ForewordDisruptions from new technologies and regulations in mobility are not only transforming the way we travel but are challenging executives to find new revenue streams and operating models.Rapidly expanding markets like electric vehicle charging and advanced driverassistance systems hold promise for a more sustainable,equitable,and efficient mobility future,while ondemand services and smart parking services are making travel more convenient and enjoyable.Business leaders looking to steer their firms through an uncertain economic climate should use this report to understand how to capitalize on uniquely growing markets.To that end,the Oliver Wyman Forum has compiled expert opinions and research on macroeconomic trends,social factors,and microeconomic drivers to forecast mobilitys growth to a$1.1 trillion industry by 2035.The analyses not only provide indepth insights into major mobility modes and services,but also revisit assessments and past forecasts on technology development to offer explanations on why certain segments have performed better or worse than previously expected.This report,which forecasts activity across 14 sectors and five regions to 2035,offers a novel opportunity to anticipate markets with an analytical depth not seen elsewhere.ContentsExecutive Summary 4Asia 16Africa 24Europe 30Middle East 37North America 43Revisiting The Mobility Industrys 2030 Forecast 50How We Measure Mobility Industry Growth 54Executive SummaryThe next generation of technology is intersecting with regulatory shifts and industry consolidation to drive global mobility industry growth to$1.1 trillion through 2035,from$389 billion in 2023,with the highest rates of growth forecasted in Asia.Individual mobility modes were the main drivers of past growth in the mobility sector,and former market disruptors like ridehailing and escooters are largely settled in most major markets.Now,digital services like advanced driverassistance systems(ADAS)and electric vehicle(EV)charging are set to account for much of the industrys growth.These digital services are projected to have average growth of 25%per year over the current decade through 2035,compared to 9%for the overall mobility sector.Digital services are expected to generate annual revenue of$610 billion in 2035,up from$42 billion in 2023,with potential gains for sustainability and the livability of cities.14 mobility services included in Oliver Wyman Forums value pool analysisCar-as-a-serviceCar-sharingCar subscriptionCar rentalRide-hailingCarpoolingMicromobilityBike-sharingScooter-sharingMoped-sharingDigital servicesSmart parkingCharging servicesNavigation servicesADASIn-vehicle digital servicesAir mobilityAir taxis4To gauge the impact,the Oliver Wyman Forum analyzed 14 mobility services from ridehailing and EV charging to navigation services across five regions:North America,Europe,Africa,the Middle East,and Asia.The forecasts included in this report represent a slight decrease in total expectations from the Oliver Wyman Forums previous Mobility Value Pool report,published in 2022.Then,we expected a total mobility market of$660 billion by 2030,while updated forecasts predict a$650 billion market by 2030.Original expectations for some nascent industries like air taxis,ridehailing,and car subscriptions have cooled,while forecasts for the charging services market have increased.Sectors like air taxis and bus pooling will not materialize to the degree expected in the previous report.Meanwhile,technological improvements to services like EV charging and ADAS,proactive government regulation that facilitates their broader use,and industry consolidation are driving the growth of many services in this report.In EV charging,for instance,large companies from the energy,manufacturing,and heavy industrial sectors across Europe,North America,and Asia are investing in charging service providers.Meanwhile,larger players are buying up smaller competitors and integrating companies across different stages of the supply chain.This consolidation will reduce the number of providers in the market and drive increasing uniformity in charging services and offerings,all while fostering overall market growth.The changing landscape holds sustainability implications for business,cities,and the climate.Cleaner modes of travel,like cycling and electric vehicles,may help reduce emissions from vehicles.Services like ridehailing,carsharing,and subscription offerings may help reduce congestion and boost traffic flow,further reducing emissions from idling engines and increasing asset utilization.However,emissions could rise if these new services rely on gasolinepowered vehicles or energy drawn from highemission sources.New and developing technologies may also improve consumer experiences and safety.Smart parking integration into cities could save travelers time and money,while ADAS features could reduce accident rates and keep drivers,passengers,and pedestrians safe.Invehicle services,ranging from enhanced vehicle connectivity to upgraded infotainment systems,could improve the experience and ease of driving a car.Cities can strike the right balance in lowering carbon footprints and managing traffic flow if these services are integrated with public transit systems.Infrastructure improvements,costeffective fares,and convenient connections for commuters to access a variety of services and modes will help.It is key for cities to partner with the private sector to implement these changes,as the private sector can contribute data and cuttingedge technology for cities to implement on their streets.The mobility ecosystem is adapting to new consumer appetites and changes in regulation,opening the door for untraditional 5Mobility Value Pool Report|Executive SummaryExhibit 1:Global value pool sizes by mobility serviceCar-as-a-servicein US$billionsCar-sharingCar subscriptionCar rentalRide-hailingCarpooling12.816.119.45.49.912.990.8130.5174.1223.1260.2284.72.73.23.6202320302035Micromobility in US$billionsBike-sharingAir taxisScooter-sharingMoped-sharing8.113.820.32.13.03.82.13.14.203.17.6Air mobilityin US$billionsDigital servicesin US$billionsSmart parkingCharging servicesNavigation servicesAdvanced driver-assistance systems In-vehicle digital services6.019.525.22.622.672.116.820.723.61.756.9307.214.987.4181.8Source:Oliver Wyman Forum mobility value pool analysis6Mobility Value Pool Report|Executive Summaryplayers like technology firms to offer whole new perspectives on techdriven solutions for sustainable,efficient cities.Publicprivate partnerships to implement new mobility solutions will reshape how we travel.The 2022 version of this report anticipated individual modes of travel as growth drivers of the mobility industry.Since then,the shift away from personal vehicles and the ascent of digital and assetlight services is poised to change commuter behaviors.Our analysis anticipates personal vehicles accounting for just under half of global modal mixes by 2035 down from 66%in 2023.The share of sustainable options like public transport,micromobility,and shared mobility is expected to rise.Asia leads among regions set to have the highest mobility growthWhile worldwide growth is expected across all mobility sectors,it is uneven across mobility services and regions examined North America,Europe,Africa,the Middle East,and Asia.Asia is expected to have the fastest overall growth at a rate of 11%,thanks to a growing middle class,much of which live in dense cities with a lack of parking and high regulatory barriers to car ownership.That creates a significant opportunity for ridehailing and carsharing and subscription providers to accommodate travel for consumers with increasing spending power.Asias early lead in electric vehicle adoption,with EVs becoming increasingly affordable,has created a significant need and potential for expanded charging services.Meanwhile,favorable government regulations and rapid technological advancement are giving ADAS services high headroom for growth.Mature mobility markets in Europe and North America account for slower growth.Europes dense cities and low rates of car ownership leave room for carsharing and subscription services to expand,but these services must compete against comprehensive public transit networks and the popularity of walking and cycling.North Americas low population density,long commutes,and relatively inadequate public transit all account for a cultural favor toward cars,which poses difficulties for micromobility services and some carasaservice providers.Like all other regions,North America and Europe will see the most growth in digital services namely,in EV charging and ADAS services given maturing technology and regulatory pushes.The popularity of personal cars in North America will also enable higher growth in smart parking services.Like North America,the Middle East is heavily dependent on cars.In Dubai,for example,more than 80%of all distances traveled was done via car,according to an Oliver Wyman Forum analysis.Carsharing and subscription services in the Middle East are poised for high growth thanks to an already high rate of utilization that is forecasted to increase.Recent government policies in the United Arab Emirates and Saudi Arabia to increase EV market share are set to grow the charging services market.7Mobility Value Pool Report|Executive SummaryExhibit 2:With smarter mobility,emerging shared services are cannibalizing the usage of overall traditional mobility,with no one dominant modePersonal carsCar-sharingCar subscriptionCarpoolingRide-hailingAir taxisBike-sharingMoped-sharingScooter-sharingCar rentalVehicle leasingWalking/bikingPublic transportTaxisSource:Oliver Wyman Forum mobility value pool analysis8Mobility Value Pool Report|Executive SummaryAfricas mobility market is expected to grow at a rate of 8%annually thanks to emerging auto and micromobility markets,slightly above the global growth rate to 2035 of the subset of mobility sectors analyzed in Africa.With low rates of car ownership in Africa,ridehailing and car rental,sharing,and subscription services all have strong growth potential compared to other regions given its lower market maturity and reduced access to these services.Low car ownership rates also enable a high expectation for micromobility services growth,particularly as micromobility habits are already deeply integrated into many of Africas cities.Digital services like electric vehicle charging and advanced driverassistance systems will lead global growthSome of the strongest growth will come from digital services,which are expected to grow at an average of 25%a year.These are expected to be the three most impactful technologies for the mobility industry in the next decade:Advanced driverassistance systemsADAS technologies are improving across the suite of services,from combined laneassist and cruise control to fully autonomous driving.Consumer demand and government mandates allowing for expanded testing of advanced assistance systems and the commercial implementation of Level 3 systems are merging with advancing tech to give ADAS services the overall fastest growing mobility sector,skyrocketing from a$1.7 billion market in 2023 to a forecasted$307 billion by 2035,at a whopping 54%annual rate.Most of the ADASrelated revenue today comes from what is known as Level 2 services,like cruise control and lane assist,which are cheaper than more robust autonomous capabilities.Our projections are focused on Level 2 and higher services that provide partial autonomous features,like steering,acceleration,and deceleration control.These services generate revenue through subscription services or onetime purchase fees.Level 3 offerings,in which cars can make informed decisions like moving past a slowmoving vehicle,are increasingly available in selected markets.Many consumers are interested in these services.Nearly half of global consumers say they would definitely or probably use autonomous private cars and 43%are willing to pay a premium for autonomous transit,according to a June 2024 Oliver Wyman Forum survey.This willingness suggests that original equipment manufacturers can further their value propositions and revenue streams by offering autonomous services and addons.Electric vehicle charging servicesEV charging will be the overall highest driver of growth globally among all mobility services,rising an expected 32%annually to grow from$2.6 billion in 2023 to$72 billion in 2035.It is a forecasted windfall that reflects changing consumer appetites and strong regulatory pushes for expanded charging infrastructure.Nearly a quarter of consumers intending to purchase a car plan to make it an EV,according 9Mobility Value Pool Report|Executive Summaryto a global Oliver Wyman Forum survey completed in June 2024.Despite a slight decrease in EV demand seen in the first half of 2024,many governments are investing billions into charging infrastructure.The US has established a$5 billion National Electric Vehicle Infrastructure Program,for example,to build EV charging infrastructure along highways.Elsewhere,the European Union announced$1 billion in grant funds available for the installation of alternate fuel infrastructure.The expected growth is also necessary to accommodate EVs that can travel further from one charge.Currently,EVs are driven shorter distances than gasolinepowered cars on average.This is likely due to a combination of the current profile of EV drivers,the selection of EVs for shorter trips,and the range limits of current models.As battery technology improves,trip distance will likely increase and create a demand for more charging infrastructure,particularly along highways.The charging industry will likely see consolidations as larger players purchase smaller providers.Many providers are purchasing land for charging infrastructure,but capital used to purchase that land is beginning to dry,further fueling consolidation.Charging providers will likely focus future growth on both public and ultrafast“destination”charging,the latter of which allows shoppers at supermarkets and shopping centers to enjoy charging times as fast as 15 minutes while they shop.The need for public charging points will increase as EV penetration rises.As more consumers drive EVs,a growing percentage will live in apartments and lack access to a private,athome charging point.Public charging infrastructure can serve these consumers needs.Exhibit 3:Oliver Wyman modal mix estimate,EuropePersonal vehicle20232035Public transportBikeWalkingOthers,including shared mobility66%4%5%6I%6%7%Source:Oliver Wyman Forum mobility value pool analysis10Mobility Value Pool Report|Executive SummaryInvehicle digital servicesInvehicle digital services in cars are subscription and onetime purchasebased offerings that offer enhanced capabilities in the car,from advanced infotainment systems to WiFi packages.These services do not include ADAS functionality,which is accounted for separately in this report.This market is projected to grow from$14.9 billion in 2023 to$181.8 billion by 2035 at a 23%annual rate.Growing adoption in car fleets particularly in Asia and North America customer willingness,and crossindustry partnerships are driving growth.Eightytwo percent of consumers who have tried a subscription service said they would definitely or probably consider paying for the service on a future new vehicle purchase,according to an S&P Global mobility survey.Meanwhile,partnerships between automakers and telecommunication providers are enhancing connectivity that supports connected car services.What this means for mobility playersTransformational shifts in consumer attitudes,technology adoption,and regulation will impact the mobility industry in the next decade.Industry players,from automakers to ridehailing and bikesharing providers,must act across three key principles to best capitalize on momentous growth.Forge partnerships across sectors and governmentsGovernment and industry leaders should work together to develop the right regulatory frameworks for the future of mobility.Emerging technologies like autonomous driving and air taxis,the spread of micromobility,and the growth of carsharing and subscription services will likely need new regulations to ensure effective and safe integration into existing transportation systems and provide a reliable framework for longterm investments by service and tech providers.Effective regulation will help the development and deployment of new mobility offerings by providing guardrails for the mobility industry to test and deploy new solutions.Autonomous driving,for example,will be a key area for new regulations,and governments can play an important role in shaping public perceptions and adoption of autonomous vehicles.Stricter safety regulations are the top factor for consumers to consider using autonomous vehicles,according to a 17nation Oliver Wyman Forum survey completed in June 2024.Government involvement also can provide a boon for providers looking for expansion.Consider charging services,which have enjoyed billions globally in government support that offered a launchpad for significant growth.Government investment in other areas of electrification and sustainable mobility,like micromobility infrastructure or carsharing and pooling encouragement,could further slash carbon footprints for the industry.11Mobility Value Pool Report|Executive SummaryProactively working with governments can help mobility firms anticipate regulation.Many CEOs are preparing for increased government intervention in the economy,and more than threequarters of them plan to adapt to this new environment in the next one to two years,according to a 2024 Oliver Wyman Forum survey of 112 CEOs of New York Stock Exchangelisted companies.Mobility firms also should consider bringing unconventional players into their ecosystem.Partnerships between original equipment manufacturers,tech companies,and startups will be key in new spaces like incar entertainment,advanced driverassistance systems,and other invehicle digital services.Some of these partnerships will be out of necessity,as the trend away from vehicle ownership is forcing many mobility providers to use the expertise of those outside the industry to offer new offerings.Prepare for business models to change amid tech disruptionsAutonomous technology will be a defining shift in the mobility industry over the next decade.Robotaxis are already on the streets in several North American and Asian cities,with more to follow.Carasaservice offerings,for example,will likely shift to autonomous fleets for car rentals or subscriptions as the industry faces increasing competition from robotaxi providers.And even sectors like micromobility could be impacted by autonomous technology,as cheaper ridehailing options sap the market share from bike and scootersharing.Other tech shifts beyond autonomous vehicles will similarly shake the mobility ecosystem.Consider insurance companies,which will be far more impacted by the rise of connected vehicles and their data than autonomous vehicles.The insurance industrys reaction to increasingly connected vehicles should be factored into strategic planning for many providers.Capitalize on differing trends across regionsThis report highlights how and why different mobility sectors will grow uniquely across five regions.Asia represents the largest and fastest growing market,driven by high digitization and popularity of alternatives to private car ownership;North America and Europe will be driven by digital services but see modest growth in other sectors like micromobility and carasaservice due to mature markets;and the Middle East and Africa will see the most growth in industries like micromobility and ridehailing.Within each of these regions,it is vital to acknowledge factors like existing mobility infrastructure maturity,the dominance of incumbent modes,and macroeconomic factors like the share of wallet in traveling from points A to B.Mobilitys winners in the next decade will be those that understand the forces shaping mobility on a regional level and tailor their offerings and strategies to meet these demands.12Mobility Value Pool Report|Executive SummaryRobotaxis pivot ridehailings growth expectationsRidehailing will likely be the first endcustomerfacing industry disrupted by autonomous tech,as robotaxis will offer cheaper prices for consumers as labor costs are lowered for providers,enabling higher usage rates.Younger consumers willingness may give robotaxis a strong foundation for early uptake,as just over half of consumers age 18 to 34 say they are willing to pay a premium for autonomous taxis or rideshares,according to a June 2024 Oliver Wyman Forum survey.By comparison,less than a third of consumers age 55 to 65 say they would be willing to pay a premium for the same autonomous services.But that increase in usage will not raise overall revenue for providers,as the price for consumers will decrease greatly and will not be fully offset by an expected increased volume of rides.However,ridehailing providers could see additional marketing revenue opportunities as the technology for incar entertainment and advertising becomes more widespread.While ridehailing growth continues,the industrys tech transformation is paused until autonomous driving is broadly introduced.The global ridehailing market is expected to rise from$223 billion in 2023 to$285 billion by 2035 at a 2.1%annual rate.The taxi and ridehailing players with the highest capacity to offer technology like robotaxis and incar entertainment will be the winners in a pivoting industry.Ride-hailing revenue by 2035$285 billion13Mobility Value Pool Report|Executive SummaryMobility Value Pool Report|Executive SummaryMOBILITYGROWTHby region15AsiaRapid industrialization,regulations to disincentivize personal car use,and a burgeoning middle class are fueling the highest overall mobility industry growth compared to any other region.Asias mobility market will grow by 11%annually,rising from$161 billion in 2023 to$573 billion by 2035.Asias mobility sector will be driven by rapid growth in car-as-a-service,micromobility,and digital services that accommodate the regions preference for convenient travel and charging technologies to serve a high market share of electric vehicles.Asia accounted for 41%of the global mobility market captured in this report in 2023.That share will rise to 50%by 2035.CarasaserviceThe Asian carasaservice industry can serve a growing middle class with convenient travel in dense cities as car ownership in many cities is restrictive.Car ownership is low in Singapore,for example,in part because of the$76,000 license that residents must pay to obtain the right to purchase a vehicle.And while some Asian cities like HongKong have comprehensive public transit infrastructure,those without will not be able to build it fast enough to keep up with rising mobility demand.Mobility services provide easier solutions for cashstrapped governments.The car rental market will likely grow from$28 billion in 2023 to$79 billion by 2035 at a 9%annual rate.Carasaservice is growing due to high barriers of car ownership in Asia,and rentals are currently the dominant and most traditional alternative.An expected tourism increase will drive rental market growth,as car subscriptions and sharing are generally longerterm commitments.Tourism in Japan,for example,is expected to surpass 155%of preCOVID levels by 2026.Car subscription services already are popular in Asia.Roughly 36%of consumers on average from Australia,Hong Kong,India,Indonesia,and Singapore reported using car subscriptions higher than the 22%global average,16according to a June 2024 Oliver Wyman Forum survey.The car subscription market is expected to rise 8%annually,increasing from$1.7 billion in 2023 to$4.3 billion by 2035.Consumers are similarly enthusiastic about carsharing,as nearly half of survey respondents said they used a carsharing service,while the global average was just 32%.India and Indonesia had particularly high usage rates,where 75%and 56%respectively said they used a carsharing service in a June 2024 Oliver Wyman Forum survey.Carsharing is projected to grow from$4.2 billion in 2023 to$7.1 billion in 2035 at a 4%annual rate.Ridehailing and carpoolingAsia represents the largest market for ridehailing services,with significant potential to stretch even further.Like carasaservice,barriers to car ownership and a lack of parking similarly account for the growth of hailed and ondemand services.But regulatory,business,and technological factors can also account for the markets headroom.Consider India,where a 2020 ban on hundreds of Chinese apps has nurtured a flourishing localized mobility services industry.Indeed,funding for Indian mobility services startups rose to$1.7 billion in 2023,up from$1 billion in 2022.The Indian mobility services market now represents 69%of Asian mobility services.Asias superapp model in which one app combines various services from mobility services like ridehailing to texting and mobile payments offers a frictionless way to use ridehailing or other services.WeChat,Chinas most popular superapp,has a ridehailing function that aggregates several thirdparty ridehailing providers.Asian consumers also enjoy more affordable prices compared to other regions,typically paying an average of just$1.48 per mile,compared to$3.77 per mile in Europe and$2.87 per mile in North America.Convenience and affordability help fuel ridehailings massive popularity in Asia.Nearly threequarters of consumers from Australia,Hong Kong,Indonesia,and Singapore reported using a ridehailing service in a June 2024 survey a rate roughly 30 percentage points higher than the global average of 43%.It is a usage rate that reflects a much larger market size than in other regions:An estimated 1 billion consumers use ridehailing services in Asia,compared to only 135 million in North America and 161 million in Europe.Asias ridehailing market is expected to increase from$98 billion in 2023 to$150 billion by 2035 at a 3.6%annual rate,reflecting the regions high population growth rate although there is a sharp regional contrast between developed metropolitan areas and underdeveloped rural areas where mobility services have no or low presence.17Mobility Value Pool Report|AsiaWhile ridehailing growth continues,the industrys tech transformation is paused until autonomous driving is broadly introduced.Robotaxis will offer cheaper prices for consumers as labor costs are lowered for providers,enabling higher usage rates.But that increase in usage will not raise overall revenue for providers,as the price for consumers will decrease greatly and will not be fully offset by an expected increased volume of rides.However,ridehailing providers will likely see additional marketing revenue opportunities as the technology for incar entertainment and advertising becomes more widespread.The taxi and ridehailing players with the highest capacity to offer technology like robotaxis and incar entertainment will be the winners in a pivoting industry.Carpooling will likely grow from just$1.2billion in 2023 to$1.7 billion by 2035 at a 3%growth rate.Slow growth is likely due to practical challenges the service faces,like delays due to multiple passengers,safety and trust in sharing a ride with strangers,and integration with existing infrastructure for pickups and dropoffs.Asias global mobility market share by 2035(up from 41%in 2023)50Mobility Value Pool Report|AsiaMicromobility servicesMicromobility is deeply ingrained in Asian culture,particularly in Southeast Asia.Mopedsharing is popular in India and Indonesia,where respectively 89%and 95%of consumers said they used a service in a June 2024 survey.And more than a third on average of those from Australia,Hong Kong,and India reported using any kind of shared micromobility mode.Affordable rates also may be driving many consumers to these services:An average bikesharing ride in Asia costs$0.19,compared to$6.79 in North America and$1.24 in Europe.Regulation also is facilitating higher growth as some governments are investing in micromobility infrastructure.Singapores“Friendly Streets”initiative,for example,plans to repurpose some roads to accommodate cyclists,while Manilla plans to build nearly 1,500 miles of bike lanes by 2028.And Seouls 2030 mobility plan aims to expand cycling paths with traffic management systems dedicated to active mobility modes.Cycling has been popular in China for decades,and the government has bolstered bike lane infrastructure across many cities to keep riders safe from traffic.However,parking regulations are lacking in many parts of Asia,including major cities like Beijing.That creates problems for cyclists as bike lanes may be blocked.Increased parking regulation could help cyclings modal share grow even further.The bikesharing market will likely rise from$7billion in 2023 to$18 billion by 2035 at an 8%growth rate.Mopedsharing in Asia is expected to show significant growth with a 7%compound annual growth rate through 2035,growing from$1.8 billion in revenue in 2023 to$3.9 billion in 2035.This is the highest growth of any region,and the only region expected to see significant growth thanks to mopeds entrenched use in many Asian countries.Mopedsharing is typically lowcost.The services ability to use existing infrastructure and,in some countries,to grant permission to lowpower drivers without a license makes it a convenient and affordable option for many.Fewer people in Asia use electric scooters than in North America and Europe despite its larger population.Despite this,there are still drivers of growth:Demand for shorthaul trips and the services penetration in South Korea,for example,will expand the market.Revenues are forecast to rise from$573 million in 2023 to$992million in 2030 and$1.5 billion in 2035.Digital servicesSmartphones are becoming increasingly commonplace throughout Asia as widespread adoption in rural areas combined with a rising middle class that gains more spending power creates large potential for digital services like smart parking.Meanwhile,an increase in electric vehicle market share necessitates an expanding charging services market.Advanced driverassistance systemsRising incomes,favorable government regulations,and rapid technological advancements are enabling Asias ADAS market to grow 56%annually,from$798 million in 2023 to a likely$170 billion by 2035.19Mobility Value Pool Report|AsiaOver half of consumers from Hong Kong,India,Indonesia,and Singapore said they would pay a premium to use autonomous transit higher than the global average of 43%who said the same.Those from India and Indonesia were the most willing of any Asian country,with 72%and 57%willing to pay a premium,respectively.Some governments continue to experiment with advancing autonomous technologies:China in June 2024 approved nine automakers to test vehicles with advanced autonomous driving systems on public roads in which drivers can take their hands off steering wheels(Level 3),while Japan allowed in 2023 selfdriving vehicles on public roads under certain conditions.Our analysis forecasts that roughly four out of five cars in Asia will offer paid smart technology from advanced cruise control to lanekeeping features by 2035,and that car owners will increasingly pay for these offerings.Creating stricter safety standards will help adoption of autonomous features and vehicles,as nearly 70%of Asian consumers said that safety standards are the top factor affecting their willingness to use autonomous vehicles.Electric vehicle charging servicesChina is a global hub for EV adoption,with just under 60%of new electric vehicle registrations located in China in 2023,with EV new vehicle registrations surpassing ICE sales for the first time in China in August 2024.And EV sales are rising throughout Southeast Asian countries like India,Vietnam,Malaysia,and Thailand the latter of which reached a 10%sales share in 2023,a similar share to that of the United States,according to the International Energy Agency.These market shifts have given Asia the largest EV fleet.A widening market share in Asia is in part fueling a charging services industry thats expected to grow from$1.9 billion in 2023 to$27billion by 2035 at a 25%annual rate.Some Asian governments have longterm visions to support expanded charging infrastructure.Hong Kongs government plans include a$2 billion subsidy package for installing charging points in existing private residential buildings and at parking spaces for new government buildings,while Singapore aims for 60,000 charging points by 2030.The broader EV ecosystem from raw material miners to battery manufacturers and recyclers is also expanding through a surge in venture capital into startups that support the full battery lifecycle.China has historically been a leader in this space,as the countrys startups collected$5.3 billion in funding between 2021 and 2023 although Japans automakers are investing heavily in allsolidstate battery technologies.Some of Asias incumbent players are joining with other institutions to explore battery technology,as one large automaker in 2023 partnered with Seoul National University to launch a battery research center.Invehicle digital servicesAsias growth in invehicle digital services is driven by consumer demographics and demand,as well as corporate partnerships.Asia has a large passenger fleet,creating a significant market for these services as connectivity offerings are a key part of car 20Mobility Value Pool Report|Asiapurchasing decisions in parts of the region,like China.Countries like China also feature high average monthly subscription rates for invehicle digital services,in part due to a growing middle class with increased purchasing power able to pay a premium for advanced services.Partnerships between original equipment manufacturers and large telecom providers are also ensuring connectivity across the AsiaPacific region to meet this demand.For instance,one Chinese auto manufacturer offers a service that connects smartphones as a companion device to vehicles,and another automaker offers an infotainment system that includes streaming services.The invehicle digital services market will likely rise from$6.6 billion in 2023 to$93billion by 2035 at a 25%annual rate.Smart parkingSmart parking in Asia is currently a small part of the global market,at just 1%of 2023 global revenues.The small size is in part due to Asias immature parking regulations.There are many unregulated and free parking spaces coupled with low compliance rates and parking regulations.This leads to underutilized offstreet parking,as most parking is done onstreet.In addition,there are no requirements for property developers to meet minimum parking standards in construction,making issues of illegal parking worse in many cases.This problem is exacerbated by the rapid driver population growth currently underway in Asia.In China,for instance,there are minimal parking fees,and more than 50%of parking spaces dont charge fees at all,even in cities.In India,there are similarly minimal parking fees and a lack of clear demarcation of onstreet parking that is further complicated by statutes providing space to street vendors.However,these same barriers highlight the promise of smart parking as a path to improved parking regulation in Asia,and the small size of the current industry means there is significant room for growth.Smart parking is expected to see a 25%compound annual growth rate through 2035,reaching an$862 million industry.Cities like Beijing are already making strides in parking digitization and enforcement.Beijing has implemented a parking management system that uses intelligent parking cameras to document parked vehicles and alert authorities in cases of nonpayment or illegal parking.Navigation servicesThe market for smartphone apps that provide navigational services will see moderate growth due to increased smartphone penetration and a growing population,likely rising from$7.9billion in 2023 to$12.9billion by 2035 at a 4%annual rate.These expectations are above the population growth rate of 0.6%as smartphones continue to become commonplace.While overall usage and demand will increase steadily,monetizing the surplus in demand and developing new revenue streams will remain challenging for providers.21Mobility Value Pool Report|AsiaSource:Oliver Wyman Forum mobility value pool analysisAsia has potential for further growthAsia accounted for 41%of the global mobility market captured in this report in 2023.That share will rise to 50%by 2035Car-as-a-serviceHow the new forms of mobility will change the way people get around2035 forecast of revenues per form of mobility,in US$billions MicromobilityAir mobilityAir taxisDigital services20232035$573 billionin 2035$161 billionin 20230.03.9Global mobility marketCar-sharing4.27.1Car subscription1.74.3Car rental28.379.0Ride-hailing98.5150.1Carpooling1.21.7Bike-sharing7.017.5Scooter-sharing0.61.5Moped-sharing1.83.9Smart parking0.10.9Charging services1.927.0Navigation services7.912.9ADAS0.8169.8In-vehicle digital services6.693.40.040.080.0120.0160.041PAfricaAfrica is an emerging mobility market with high potential for growth in digital services,car-as-a-service,ride-hailing,and micromobility.This is fueled by a rising middle class and increasing digitization and technology penetration amid a rapid expansion of these immature industries.Given data limitations,our model does not highlight the growth of some digital services like advanced driver assistance or smart parking technologies a large driver of growth in other regions.These factors are coalescing to grow the continents mobility market by 8%annually the same rate as Asia when accounting for sectors covered in Africa.The African mobility market is expected to rise from$6.9 billion in 2023 to$18 billion by 2035,making up 2%of the global market when accounting for the sectors analyzed in Africa.The region has an opportunity to leapfrog typical mobility ecosystem development by designing an infrastructure that emphasizes safe,sustainable,and equitably shared mobility services rather than traditional car ownership.CarasaserviceCar subscriptions,rentals,and sharing services all show strong growth potential compared to other regions thanks to a lower market maturity and their attractiveness in offering a more affordable cost of entry than personal car ownership.Some African countries are also building more comprehensive road networks,likely making these services more convenient to use.Egypt,for example,is in ongoing development of the Greater Cairo Ring Road project,which will expand road lanes in each direction to improve traffic flow in the Cairo area.Nairobi,meanwhile,aims to build or rehabilitate 3,400miles of roads as part of its Vision 2030 program.Car subscription usage rates are moderate in Africa,with 30%of South African consumers reporting use in a June 2024 24Oliver WymanForum survey higher than the global average of 22%.The car subscription market is expected to rise from$57 million in 2023 to$103 million by 2035 at a 5%annual rate.Several factors are contributing to the car rental markets growth:Tourism and business travel will grow in the short term as the postpandemic rebound continues,while many rental companies are updating their fleets with connected car technologies and advanced services to improve the customer experience and partnering with ridehailing companies to offer longterm deals to consumers.And like car subscriptions,longterm rentals are also gaining popularity as an alternative to ownership as the cost of living increases in many areas.Africas car rental market will likely grow from$4.1billion in 2023 to$7.4 billion by 2035.Africa has a low number of carsharing users compared to other regions although some countries see higher than average usage.More than half of South Africans reported using the service,while the global average was just 32%,according to a June 2024 Oliver Wyman Forum survey.The carsharing market is projected to double,from$6 million in 2023 to$12 million in 2035 at a 6%annual rate.RidehailingRidehailing is expected to grow in Africa at a far faster pace than the global rate 8%in Africa compared to just 2.1%globally due to an immature market compared to other regions.While ridehailing growth continues,the industrys tech transformation is paused until autonomous driving is broadly introduced.Robotaxis will offer cheaper prices for consumers as labor costs are lowered for providers,enabling higher usage rates.But that increase in usage will not raise overall revenue for providers,as the price for consumers will decrease greatly and will not be fully offset by an expected increased volume of rides.However,ridehailing providers will likely see additional marketing revenue opportunities as the technology for incar entertainment and advertising becomes more widespread.The taxi and ridehailing players with the highest capacity to offer technology like robotaxis and incar entertainment will be the winners in a pivoting industry.After the COVID19 pandemic,the demand for ridehailing services in Africa grew rapidly and outpaced the supply of drivers.This led to increased prices and longer wait times for passengers that will limit further growth until there are more drivers available.Yet shared mobility jobs are expected to have the strongest growth in Africa,increasing 113tween 2023 and 2030,and are giving the market a more comfortable equilibrium that potentially creates better experiences for riders and earnings for drivers.The cost of living also has increased in many parts of Africa,leading ridehailing companies to focus on offering lowercost products like carpooling and motorbike hails that still feature a driver.One potential barrier to ridehailing growth has been the imposition of ridehailing commission caps in some countries,including Kenya.25Mobility Value Pool Report|AfricaSome mobility leaders reportedly say that these commission caps reduce the amount of revenue they can generate,and in turn their ability to scale operations in new areas,placing unnatural limits on the market.Proponents of these policies argue that they protect consumers from increasing prices.Another method to promote shared mobility is via publicprivate partnerships.The Lagos State Government,for example,rolled out 1,000 ridehailing cars as part of its“Lagos Ride”initiative in collaboration with a Chinese car manufacturer and large mobility service provider.Lagos in particular is a melting pot for global mobility service providers.The African ridehailing market is expected to climb from$1.8 billion in 2023 to$4.7 billion by 2035 at an 8%annual rate.Micromobility servicesBike and scootersharing both show strong potential for growth in Africa,boosted by recent micromobility adoption,as commuters avoided public transit during the pandemic,and dedicated investments in road infrastructure and safety.That rise in demand enabled many micromobility providers to enter the market.Industry consolidation is expected to continue,as there were more than 10 platforms in Africa for micromobility and ridehailing in 2017.Now only a handful remain.That consolidation will provide more standardized offerings for consumers and may help drive penetration across Africa as large players look to expand from major urban areas.Growth also will be driven by regulation from some African governments to make micromobility safer and more convenient,as many African streets are dominated by speeding cars and lack sufficient sidewalks or cycle paths.Kenyas 2023 2027 Road Safety Plan,for example,calls for cycle path development and greater traffic and speedlimit harmony with motorized modes.And Cape Towns 2023 2028 plan aims to improve access to bicycles and provide more cycling infrastructure.As the infrastructure develops,bikesharing could gain prevalence over other modes like ridehailing,shortdistance rides in private cars,and motorcycling as commuters look for more affordable modes as the cost of living rises.And some bikesharing apps like AWA are trying to change perceptions of biking in places like Lagos,where it is seeking collaboration with the state government and is addressing womens safety concerns.The bikesharing market is projected to grow from$57 million in 2023 to$180 million by 2035 at a 10%annual rate.The scootersharing market is forecasted to double from$2.1 million in 2023 to$4.2 million in 2035 at a 6%annual rate.Digital servicesWhile the digital services market is small compared to other regions,there is a high headroom for growth particularly in charging services as electric vehicles become more ingrained throughout Africa and with smartphone penetration constantly increasing.26Mobility Value Pool Report|AfricaElectric vehicle charging servicesThe expansion of charging services in Africa is being driven by both industry and government activities.Some Chinese EV manufacturers,for example,are reportedly accelerating their entry into the African market amid trade tensions with Europe,while one Kenyan company is offering ebuses to East African operators as an alternative to their diesel fleets.And while subSaharan Africa has shown some of the lowest rates of EV transition,there is promising movement:South Africa saw a 47.1%yearoveryear rise in EV sales in 2023.Government activities are encouraging as well.Lagos Metropolitan Area Transport Authority has partnered with energy company Oando Clean Energy to offer ebuses,while Egyptian officials in 2024 announced a domestic manufacturing process for EVs,and Rwanda introduced policies like rentfree land for charging stations and reduced tariffs for EVs.The charging services market will likely rise from$213,000 in 2023 to$16 million by 2035 at a 43%annual rate,accounting for a slow start and an inflection point a couple of years down the road.Invehicle digital servicesGrowth in ondemand services will come from an increased adoption of the technology in Africas car fleets.Our analysis forecasts that a growing number of cars will offer paid smart technology with similar customer adoption by 2035 as seen in other regions.Original equipment managers will continue to expand their ondemand offerings and benefit from new revenue streams.The invehicle digital services market is expected to grow from$363 million in 2023 to$4.6 billion by 2035 at a 24%annual rate.Navigation servicesModerate growth in navigation services can be attributed to increased internet penetration and growing population size the latter rate being 2.26%,with the expectation that average revenues will increase per user.The market is poised to increase from$465 million in 2023 to$1.1 billion by 2035 at a 7%annual rate.27Mobility Value Pool Report|AfricaAfrica has potential for further growthThe African mobility market is expected to rise from$6.9 billion in 2023 to$18 billion by 2035,making up 2%of the global market when accounting for the sectors analyzed in Africa Car-as-a-serviceHow the new forms of mobility will change the way people get around2035 forecast of revenues per form of mobility,in US$billions MicromobilityAir mobilityAir taxisDigital services20232035$18 billionin 2035$6.9 billionin 2023Global mobility marketCar-sharingCar subscriptionCar rentalRide-hailingBike-sharingScooter-sharingCharging servicesNavigation servicesIn-vehicle digital services0.00.00.10.14.17.41.84.70.02.04.06.08.00.10.20.00.00.00.10.00.00.51.10.44.6Source:Oliver Wyman Forum mobility value pool analysisEuropeDriven by growing adoption of electric vehicles,digital services like advanced driver-assistance systems,EV charging services,and smart parking give Europe the second fastest-growing mobility market after Asia.Strong regulations to decarbonize mobility are increasing an already high rate of EV ownership and micromobility,while safety regulations are making advanced driver-assistance features mandatory in cars.European cities are often dense,with comprehensive public transit and cycling infrastructures that will lead to slow growth in services like ride-hailing and car rental,sharing,and subscription.Europes overall mobility market will likely rise from$92 billion in 2023 to$246 billion in 2035 at a 9%annual rate.Europe will account for 22%of the global mobility market by 2035.CarasaserviceCar ownership levels are steadily rising in Europe,climbing 14%from 2012 to 2022,but its cities have high levels of public transit usage and consistently invest in its improvement,drawing commuters from other modes.Zurichs public transit system,for example,accounts for 41%of total transportation volume,while Stockholm keeps public transit fares low and has reduced walking distances to stations and transit travel times.Yet there will still be modest growth in carasaservice sectors thanks to increasing postpandemic travel in the short term and increasing costs and inconveniences of car ownership in the long term,including the reduction of public parking spaces.Consumers reported higher rates of carsharing in France,Germany,Italy,and the United Kingdom in June 2024 compared to April 2023,according to an Oliver Wyman Forum survey.Carsharing is expected to rise from a$4.9 billion market in 2023 to$7 billion by 2035 with a 3%annual growth rate.While the car subscription market is set for a higher growth rate than is carsharing,Europes car subscription startups saw a 30Mobility Value Pool Report|Europereduction in funding in 2023,according to an Oliver Wyman analysis,and the regions market is more mature than in Asia,the Middle East,and Africa.Germany offers a market with a relatively large number of car subscription customers,where some studies suggest that the subscription model will account for up to 40%of the market share by 2030.Indeed,16%of German consumers reported using a car subscription,up from 11%in April 2023,according to a June 2024 Oliver Wyman Forum survey.The European car subscription market will likely grow from$1.4 billion in 2023 to$2.9 billion in 2035 with a 6%annual growth rate.Europe has a mature car rental market,and there are many alternatives for longdistance travel,such as highspeed trains.Still,shortterm rentals will increase as the classic rental business continues to digitize and travel rebounds from the pandemic.The car rental market is forecasted to increase from$11.7 billion in 2023 to$21.2 billion in 2035 with a 5%annual growth rate.Ridehailing and carpoolingComprehensive and affordable public transit networks challenge ridehailings room for growth in Europe.But ridehailing providers that integrate themselves into existing mobility infrastructure can protect themselves against being cannibalized by other modes.The ridehailing market will have the slowest growth compared to any other mobility service,inching from a$59 billion market in 2023 to a projected$62 billion by 2035 at a 0.5%annual rate.While ridehailing growth continues,the industrys tech transformation is paused until autonomous driving is broadly introduced.Robotaxis will offer cheaper prices for consumers as labor costs are lowered for providers,enabling higher usage rates.But that increase in usage will not raise overall revenue for providers,as the price for consumers will decrease greatly and will not be fully offset by an expected increased volume of rides.However,ridehailing providers will see additional marketing revenue opportunities as the technology for incar entertainment and advertising becomes more widespread.The taxi and ridehailing players with the highest capacity to offer technology like robotaxis and incar entertainment will be the winners in a pivoting industry.That said,European consumers have been trending toward ridehailing:There was at least a 10%increase of those in France,Germany,Italy,and the UK who reported using a ridehail service between April 2023 and June 2024,according to an Oliver Wyman Forum survey.Carpooling is uncommon in Europe,as many consumers can afford more private and convenient travel modes.Theres potential for growth,particularly in rural areas,but it is expected to remain a relatively small market,rising from$334 million in 2023 to$476 million in 2035 at a 3%growth rate.Further growth can be fueled by initiatives like Frances 2023 plan to offer a roughly$100 premium for drivers who begin shortdistance carpooling.31Mobility Value Pool Report|EuropeAffordable public transit networks challenge ridehailings room for growth in Europe.But ridehailing providers that integrate themselves into existing mobility infrastructure can protect themselves against being cannibalized by other modes.Micromobility servicesCycling is deeply ingrained in European culture,as dense cities and moderate trip distances make it and other micromobility solutions ideal for many commuters.And many cities with existing strong micromobility infrastructures are doubling down on even further expansions in tandem with carbon emissions goals.Consider Amsterdam,commonly referred to as a world capital of cycling.The city government will soon expand cycling lanes and parking availability with the goal of having the mode account for 35%of all trips by 2030.Government pushes for active mobility are in part driving Europes bikesharing growth from$532 million in 2023 to$1.3 billion in 2035 with an 8%annual growth rate.Scootersharing is predicted to rise from a$743million market in 2023 to a$1.1 billion market by 2035 at a 4%growth rate.Yet while there is room for growth,regulatory challenges remain in some markets.Paris,for example,banned escooter rental services in September 2023 after congestion and safety concerns,while the Berlin Senate Administration limited the number of escooters in Berlins SBahn ring.Meanwhile,funding to European scooter startups dropped off,falling from$800million in 2022 to zero in 2023,according to an Oliver Wyman analysis.Europe is home to the second largest market for mopedsharing and several top global providers.Madrid,Paris,and Milan are among the biggest mopedsharing cities globally with fleet sizes around 5,000 to 7,500 each.However,moped ridership in Europe has fallen by 5%from Q1 2022 to Q1 2023.Though we expect the number of users to stay stagnant from 2023 to 2030,the average revenue per user is expected to increase.Collaborations with other organizations and expanded availability and convenience can help fuel growth.One European mobility provider launched ebikes in Sligo,a small Irish town,along with a wide range of parking locations built in collaboration with local businesses.32Mobility Value Pool Report|EuropeMore convenient parking infrastructure led to Bolts Sligo operation seeing significantly aboveaverage utilization rates.But like ridehailing and carasaservice options,micromobility providers will have to compete with Europes comprehensive public transit systems and high rates of personal bike,moped,and scooter ownership.Digital servicesStrong yet expanding electric vehicle penetration,advancing technology,and European Union mandates for more safety features are contributing to rapid growth of digital services like EV charging,advanced driverassistance systems,and invehicle digital services.Advanced driverassistance systemsNo other mobility service will have nearly as high of a growth rate in Europe as ADAS,projected to rise from a$327 million market in 2023 to$54 billion by 2035 at a 53%annual rate.A mix of regulatory pushes,advancing technology,and industry investments are driving sector growth.The European Commission mandated that all new road vehicles must have advanced driverassistance systems like intelligent speed assistance,reversing direction with cameras or sensors,drowsiness or distraction warnings,event data recorders,and emergency stop signals as of July 2024.Separately,the UK government in May 2024 passed a law that enables selfdriving vehicles to drive on British roads by 2026,while Germany in 2022 hosted Europes first sale of cars with the ability for handsoff automated driving in traffic.Funding for connected and selfdriving vehicle startups in Europe rose to$1.6 billion in 2023,as the UK jockeys for prominence as an autonomous vehicle hub after China and the United States,according to an Oliver Wyman analysis.Yet regulators and businesses may still need to foster consumer acceptance.An average of 36%of those from France,Germany,Italy,Spain,and the UK said they would definitely or probably use autonomous transit.Thats below the 46%global average of consumers who said the same,according to a June 2024 Oliver Wyman Forum survey.European consumers listed stricter safety as the top factor that would make them more likely to use autonomous vehicles.Electric vehicle charging servicesEurope enjoys a large and increasing market share of electric vehicles.New electric vehicle registrations climbed to more than 3 million in 2023,an increase of 20%from 2022.And nearly a quarter of consumers in France,Germany,Italy,and the UK say they plan to buy an EV as their next car,according to a June 2024 Oliver Wyman Forum survey,Annual growth rate for ADAS revenue in Europe through 2035533Mobility Value Pool Report|Europedespite a slowdown in EV sales in early 2024.Charging services will need to expand to serve an increasing number of EVs.The distance commuters travel as EV battery technology improves will likely increase,further driving the need for more charging infrastructure particularly along highways.Strong regulation at all tiers of government is enabling that expansion.The European Commission announced in 2024 a$1 billion grant to support electric and hydrogen refueling infrastructure,while a ban on fossil fuel car sales is mandated by 2035.At a more localized level,many countries and cities have their own mandates to expand charging stations.Amsterdam,for example,aims to have more than 80,000 charging points by 2030 up from the 9,600 charging points that it had in 2020 while Finland allocated$14 million in 2023 in part to support more public and private charging points.The electric charging services market is expected to grow from$471 million in 2023 to$35 billion by 2035 at a 43%annual rate.Invehicle digital servicesThe significant growth in ondemand services is due to the increased adoption of the technology across Europes car fleets:Roughly four in five cars will offer paid smart technology allowing consumers to buy,for example,upgradable infotainment systems by 2035,according to our analysis.Consumers will likely be increasingly willing to pay for these offerings,and original equipment manufacturers will gain new revenue streams.The invehicle digital services market is expected to rise from$4.1 billion in 2023 to$44billion by 2035 at a 23%annual rate.Smart parkingEurope is the leading region in smart parking payment services,and digitization is now mature in countries such as Estonia,the Netherlands,and Sweden.In Nordic cities like Copenhagen,Oslo,Stockholm,and Helsinki,90%to 95%of residents use a parking app.Growth will come from the digitization of stillmaturing markets such as Italy and Spain.The smart parking market is expected to grow from$4 billion in 2023 to$12 billion by 2035 at a 10%annual rate.Navigation servicesA stagnant navigational services market can be attributed to the sectors maturity and the dominance of a few players,as well as the overarching difficulty of monetizing these services as the general willingness to pay is low.The market is expected to remain at$3.7 billion from 2023 to 2035,with any uptick in line with a population growth rate of 0.01%.34Mobility Value Pool Report|EuropeEurope is well positioned for micromobilityEuropes overall mobility market will likely rise from$92 billion in 2023 to$246 billion in 2035 at a 9%annual rate.Europe will account for 22%of the global mobility market by 2035 Car-as-a-serviceHow the new forms of mobility will change the way people get around2035 forecast of revenues per form of mobility,in US$billions MicromobilityAir mobilityAir taxisDigital services20232035Car-sharingCar subscriptionCar rentalRide-hailingCarpoolingBike-sharingScooter-sharingMoped-sharingSmart parkingCharging servicesNavigation servicesADASIn-vehicle digital services4.97.01.42.911.721.259.062.30.30.50.020.040.060.00.51.30.71.10.30.30.00.14.112.10.534.83.73.70.354.04.144.2$246 billionin 2035$92 billionin 2023Global mobility market24Source:Oliver Wyman Forum mobility value pool analysisMiddle EastThe Middle East is an emerging mobility market with a strong car-centric culture.That gives headway for outsized growth in services that prioritize cars,like EV charging services,car subscriptions,and on-demand services.Given data limitations,our model does not highlight the growth of advanced driver-assistance systems,moped-sharing,carpooling,and smart parking in the Middle East some of which are large drivers of growth in other regions.Factoring out those services gives the Middle Easts overall mobility market a growth rate of just 4%annually through 2035 a rate on par with North America compared to the 6%global average.The Middle Easts mobility market will rise from$11 billion in 2023 to$18 billion by 2035,accounting for 2%of the global market when accounting for mobility sectors with comparable data.CarasaserviceThe Middle Easts emphasis on cars holds promise for carasaservice providers,driven by high utilization of carsharing and subscription services.An average of 67%of consumers from Saudi Arabia and the United Arab Emirates reported using a carsharing service in June 2024 much higher than the global average of 32%.The carsharing market is expected to rise from$294 million in 2023 to$499 million in 2035 at a 4%growth rate.Car subscriptions are also popular in the Middle East,with 58%of those in Saudi Arabia and the United Arab Emirates reporting using the service in June 2024,a substantially higher rate than the 22%global average that said the same.The car subscription market will likely grow from$94 million in 2023 to$236 million by 2035 at an 8%annual rate the highest rate among carasaservice modes.The car rental market is projected to grow from$542 million in 2023 to$772 million by 2035 at a 3%annual rate.Some Middle Eastern governments are expanding their road networks,which may make car rentals or subscriptions more convenient 37Mobility Value Pool Report|Middle Eastand attractive for consumers.Qatar,for example,is expanding its Al Wakra Main Road,a major avenue connecting Doha to the coastal city of Al Wakra,to increase capacity by 50%.Elsewhere,Bahrain in 2022 developed and improved 90miles of roads to boost connectivity.RidehailingDespite the small market size,ridehailing and taxis are popular in the region:83%of Saudis and 77%of Emiratis reported using a ridehailing service or taxi in June 2024 both rates much higher than the 43%global average.Yet some regulatory struggles remain,not unlike what is seen in other regions like Europe.Key regulatory barriers include the overall limitation of vehicles and licenses in the region.Still,the ridehailing market is projected to grow as the industry consolidates in the Middle East from$8 billion in 2023 to$10.2billion by 2035 at a 2%growth rate.While ridehailing growth continues,the industrys tech transformation is paused until autonomous driving is broadly introduced.Robotaxis will offer cheaper prices for consumers as labor costs are lowered for providers,enabling higher usage rates.But that increase in usage will not raise overall revenue for providers,as the price for consumers will decrease greatly and will not be fully offset by an expected increased volume of rides.However,ridehailing providers will see additional marketing revenue opportunities as the technology for incar entertainment and advertising becomes more widespread.The taxi and ridehailing players with the highest capacity to offer technology like robotaxis and incar entertainment will be the winners in a pivoting industry.Micromobility servicesThe micromobility market is relatively small in the Middle East but shows potential for growth thanks to enthusiastic consumers and government investments.Roughly 55%of those from the United Arab Emirates and Saudi Arabia said they used a micromobility service in a June 2024 survey more than double that of the global average of 24%.Some governments are investing to make micromobility more attractive for residents.Dubais 2040 plan,for example,plans for a“20minute city”in which residents can reach their destinations via micromobility,while Bahrain has plans to develop a network of cycling lanes throughout the country.Some government initiatives are also addressing the viability of micromobility in the Middle Easts hot climate.Dubai has plans for a roughly 58mile,climatecontrolled cycling highway called“The Loop.”Middle Eastern consumers face higher prices than those in Europe or Asia,paying$5.45 on average per ride.Still,the sector will grow.The bikesharing market will likely rise from$87million in 2023 to$272 million in 2035 at a 10%annual growth rate,while scootersharing is forecasted to increase from$50 million in 2023 to$101 million in 2035 at 6%annually.38Mobility Value Pool Report|Middle EastDigital servicesAdvanced driverassistance systemsConsumer sentiment and government initiatives are promising for the sectors growth:53%of Saudis and 56%of Emiratis said they would definitely or probably use autonomous transit.They are also the most likely among consumers from 15 other nations to pay a premium to use autonomous services,according to a June 2024 Oliver Wyman Forum survey.Some Middle Eastern governments are also investing in autonomous capabilities:In August 2023,Abu Dhabi announced that its selfdriving taxi fleet the first in the United Arab Emirates completed 17,000 passenger journeys as of November 2022,while Dubai aims to automate a quarter of all transportation,including metro,buses,and taxis,by 2030.Electric vehicle charging servicesCharging services are set to have the highest growth of any other mobility service in the Middle East thanks to a blend of geopolitical and macroeconomic forces.In a region long dominated by the oil industry,electric vehicles are increasingly seen as a new way to create jobs and diversify the economy.Meanwhile,strengthening ties between Asia and the Middle East are giving the latter more access to Chinas strong EV sector.Some Chinese EV brands are leading exporters to and burgeoning investors in the Middle East.And without local automakers to protect,the Middle East is more open to EV imports and investments from Asia.Middle Eastern governments are likewise investing in electrified mobility.The United Arab Emirates,for example,partnered with Etihad Water and Electricity to provide a governmentowned,nationwide network of 1,000 fastcharging stations by 2030;while separately aiming for EVs to account for 50%of vehicles on the road by 2050.Qatar aims to have a fully electric bus fleet by 2030,while Saudi Arabias Public Investment Fund launched an EV infrastructure company to install more than5,000 charging stations across the country by 2030.More charging infrastructure will likely convince consumers to transition to EVs,as roughly half of Emiratis and Saudis cited charging station availability as the top factor influencing EV purchase decisions in a June 2024 Oliver Wyman Forum survey.Some Middle Eastern governments are expanding their road networks,which may make car rentals or subscriptions more convenient and attractive for consumers.39Mobility Value Pool Report|Middle EastThe charging services market is expected to increase from just$5.6 million in 2023 to$145million by 2035 at a 31%annual rate.Invehicle digital servicesSignificant growth in the invehicle digital services market can be attributed to an increased adoption of the technology across the regions car fleet.Our analysis predicts that a growing number of cars will offer paid smart technology,with customers adopting these services in tandem by 2035.Consumer willingness and technology penetration will create new revenue streams for original equipment manufacturers and service providers.The market is predicted to rise from$265 million in 2023 to$3.4 billion by 2035 at a 24%annual rate.Navigation servicesThe Middle East will see moderate growth in navigation services,attributed to increased smartphone penetration and a growing population.The navigation services industry will likely grow from$1.5 billion in 2023 to$2.4billion by 2035 at a 4%annual rate.40Mobility Value Pool Report|Middle EastMiddle East has potential for further growthThe Middle Easts mobility market will rise from$11 billion in 2023 to$18 billion by 2035,accounting for 2%of the global market when accounting for mobility sectors with comparable dataCar-as-a-serviceHow the new forms of mobility will change the way people get around2035 forecast of revenues per form of mobility,in US$billions MicromobilityAir mobilityAir taxisDigital services20232035Car-sharingCar subscriptionCar rentalRide-hailingBike-sharingScooter-sharingCharging servicesNavigation servicesIn-vehicle digital services0.30.50.10.20.50.88.010.20.05.010.00.10.30.10.10.00.20.00.11.52.40.33.4$18 billionin 2035$11 billionin 2023Global mobility market#Source:Oliver Wyman Forum mobility value pool analysisNorth AmericaNorth Americas car-centric culture,sparse public transit,long commute distances,and sprawling cities are fueling the most growth in digital services that cater to private cars.Advanced driver-assist systems,EV charging services,and smart parking will have the most growth among the region in an otherwise sluggish forecast.With an overall mobility market rising by 8%annually,North America only ranks higher than the Middle East in terms of growth rate due to an already mature market.North America accounted for 31%of the mobility market in 2023 when it totaled$119 billion,and is projected to slip to 25%of that share in 2035 when the market will grow to$285 billion.CarasaserviceCars are the dominant mode in North America.An average of 92%of consumers reported using a personal car,according to a June 2024 Oliver Wyman Forum survey,reflecting population density sprawled over large countries with relatively sparse public transit to serve them.And while carasaservice providers are entrenched in a mature market without much room for growth,a shift away from car ownership among urbanites may fuel growth.Car rental is popular in North America,accounting for 42%of North Americas consumer mobility spending on mobility modes in 2023.That mature market leaves room for only modest growth,and three major players dominate the vast majority of the airport and offairport markets.North Americas car rental market is projected to rise 3%annually,from$46 billion in 2023 to$66 billion 2035.Car subscriptions and sharing could be a popular option for city residents who find it inconvenient to own a car,but providers may have to first increase awareness.Many car subscription providers in North America are not yet profitable due to high customer acquisition costs and the new nature of the sector.The car subscription market is expected to grow from$2 billion in 2023 to$5 billion by 2035 at an 8%annual rate.43Mobility Value Pool Report|North AmericaSome North American cities are integrating carsharing into their broader mobility plans.BlueLA,for example,is a partnership between Los Angeles and California authorities to provide a shared EV fleet,while Vancouver advertises carshare vehicles available near other transit hubs.While adoption is currently low in the US and Canada 25%and 22%of residents report car sharing,respectively half of Mexican consumers report usage.The carsharing market is expected to grow from$3 billion in 2023 to$5 billion by 2035 at a 3%annual rate.Nearly a quarter of consumers on average from the US,Canada,and Mexico reported using car subscription services in a June 2024 survey an increased average from the 15%average that said the same in April 2023.And while relatively high pricing and stricter regulations pose challenges for providers,the appeal of flexibility and convenience in comparison to owning a car is poised to fuel growth.The car subscription market is expected to rise from$2.2 billion in 2023 to attract revenues of$5.4billion in 2035.Ridehailing and carpoolingNorth Americas ridehailing and carpool markets are large,accounting for just under half of all mobility revenue in the United States.Ridehailing in North America has the highest average distance per ride at about six miles per ride compared to any other region,although usage rates vary by nation:43%of US consumers reported ridehail trips,compared to 72%of Mexican consumers and 36%of Canadians,according to a June 2024 Oliver Wyman Forum survey.Ridehailing is popular in North America,and providers are transitioning to electric and autonomous options.One ridehailing provider is partnering with automakers and charging providers,for example,to give drivers easier access to EVs and charging options,and partnered with an autonomous driving company to develop autonomous ridehailing services.The overall North American ridehailing market will likely rise from$56 billion in 2023 to$57 billion in 2035,at a 0.3%annual rate.While ridehailing growth continues,the industrys tech transformation is paused until autonomous driving is broadly introduced.Robotaxis will offer cheaper prices for consumers as labor costs are lowered for providers,enabling higher usage rates.But that increase in usage will not raise overall revenue for providers,as the price for consumers will decrease greatly and will not be fully offset by an expected increased volume of rides.However,ridehailing providers will see additional marketing revenue opportunities as the technology for incar entertainment and advertising becomes more widespread.The taxi and ridehailing players with the highest capacity to offer technology like robotaxis and incar entertainment will be the winners in a pivoting industry.The carpooling market is small and likely to see low growth,with some mobility providers discontinuing carpooling offerings.Given 44Mobility Value Pool Report|North Americarelatively inadequate public transit and the high number of suburban commuters in the US,there is much headroom for growth although it has yet to materialize due to factors like consumer preferences and carpooling economics.The market is expected to grow from$1 billion in 2023 to$1.4 billion by 2035 at a 2%annual rate.Micromobility servicesConsumer penchant for car travel and long average trip distances pose a challenge for micromobility services.Roughly a third of US and Canadian consumers say they use micromobility services in an average month,with just over half of Mexicans saying the same,according to a June 2024 Oliver Wyman Forum survey.And a high growth in personal ownership rates of escooters and bikes saps customers away from sharing services:Sales in the US have increased by nearly 30%since 2020,and ebikes saw an approximately 240%growth between 2018 and 2022.Yet there will still be modest growth,mostly concentrated until 2030.The bikesharing market is expected to rise from$457 million in 2023 to$688 million in 2030 and$920 million in 2035 at a 6%annual growth rate.Scootersharing will have slower growth,rising from$736 million in 2023 to$905 million in 2030 and$1 billion in 2035 at a 3%annual growth rate.More commuters will still likely use these services over time:There were just 13.8million bikesharing users in 2023,but there are expected to be 27.8 million by 2035.Ride-hailing revenue in North America by 2035$57 billion45Mobility Value Pool Report|North AmericaSome services,like mopedsharing,have been launched in some cities,but rollout has been slowed by high upfront costs of establishing a fleet and consumer disinterest in licensing and safety protocols that must be followed to drive mopeds.Shared moped services were offered in San Francisco,New York,and Austin,but all of these programs have been abandoned in part due to low uptake.Other services,like bikes and scooters,are not a relatively popular mode in the US as cycling infrastructure is largely inadequate,but many cities have made recent investments in access,safety,and convenience in using micromobility.New York,Los Angeles,and Montreal,for example,are expanding bike lane infrastructure.Scootersharing has rapidly expanded in many North American cities,particularly those in California,but regulatory,user,and safety challenges have hindered growth.Strict bans on scooter sharing in some major cities like New Orleans and Las Vegas create an uneven regulatory environment across the US.And there are safety concerns,with scooters involved in significant injuries and accidents involving riders,cars,and pedestrians.In San Francisco,an early adopter of escooters,recent regulations fine commuters for riding on sidewalks and limit the number of devices permitted in highuse areas.These policies can improve traffic flow and safety,but the burden of regulatory limits led,in part,to an exodus of some scootersharing operators from San Francisco.Digital servicesDigital services that cater to cars,like EV charging,advanced driverassistance systems,and smart parking,will have the largest growth of any other mobility market in North America.Advanced driverassistance systemsNo other mobility market is set to have as meteoric a rise as advanced driverassist systems in North America,likely rising from$539 million to$83.5 billion in 2035 with a 52%annual growth rate.Regulation is helping standardize some of these systems in new cars.The US Department of Transportation finalized a new standard in 2024 San Francisco and Phoenix both offer robotaxi services to the public,and Dallas held tests of the technology in 2024.46Mobility Value Pool Report|North Americathat requires emergency braking to be standard on all passenger cars,SUVs,and light trucks by September 2029.And localized activity across the US is progressing autonomous vehicles into the mainstream.San Francisco and Phoenix both offer robotaxi services to the public,and Dallas held tests of the technology in 2024.Meanwhile,the Massachusetts Institute of Technology opened a research center to study autonomous vehicle and other transportation in 2023.Exponential growth in ADAS also can be attributed to an increased adoption of the technology across North American vehicles.Up to 80%of vehicles in the region will offer ADAS technology by 2035,growing at a 22%annual rate.A quarter of car owners with ADAS capabilities will adopt subscriptionbased ADAS services by 2035,rising by 21ch year,according to our forecasts.The expectation is that original equipment manufacturers will see increased average monthly subscription revenue.That will balance the time it takes to implement new features and the price difference between those that are more basic like cruise control and emergency braking from those that are more advanced,in which vehicles can manage certain scenarios without human intervention.Yet the industry may have to foster more consumer acceptance of autonomous technologies.More than a third of consumers in Canada and the US say they will probably or definitely use autonomous transit,while 57%of Mexican consumers said the same.American and Canadian rates fall below the 46%global average.Electric vehicle charging servicesMore charging infrastructure is critical for the uptake of EVs.Half of consumers in the US,Canada,and Mexico said the availability of charging stations was the most important factor for considering buying or leasing an EV.Recent regulatory pushes will increase charging infrastructure in the region,such as the United States$5 billion program to build charging stations along highways or the Canadian federal governments aim to build 679,000 public charging ports by 2040.The wider charging ecosystem in North America is primed for growth as well:The US Inflation Reduction Act has encouraged investments in electric battery research and production,fueling a roughly 50%share of the overall global funding for mobility startups in 2023.And USbased EV and gridscale battery markets are projected to more than double,from$78 billion in 2024 to nearly$193 billion by 2030,according to an Oliver Wyman analysis.Although many original equipment manufacturers have tempered their expectations for meeting ambitious EV sales targets in North America,the charging services market is projected to grow from$207 million in 2023 to$10.1 billion by 2035 at a 38%annual growth rate.Invehicle digital servicesCustomizable services in cars,like upgradable entertainment systems and WiFi capabilities,are set to have a significant growth in North America as automakers continue to expand these offerings and create new revenue streams.47Mobility Value Pool Report|North AmericaBy 2023,more than 70%of the regions cars will offer this technology.The invehicle digital services market is forecasted to increase from$3.5 billion in 2023 to$36 billion by 2035 at a 21%annual rate.Smart parkingThe US is one of the largest markets for parking thanks to high rates of car ownership.Yet a high ratio of parking spots to cars eight to one contributes to a low utilization rate of parking spots,suggesting a high potential for optimization from smart parking services.A high digitization rate of on and offstreet parking is driving this growth,with a 13%annual growth rate in the former and a 15%annual growth rate in the latter.The North American smart parking industry is expected to grow from$1.9 billion in 2023 to$12.3 billion by 2035 at a 17%annual rate.Navigation servicesA slow growth in navigation services is attributed to the markets maturity and the dominance of a few players,increasing largely in line with the population rate.The navigation service market will inch from$3.2 billion in 2023 to$3.5 billion by 2035 at a 1%growth rate.48Mobility Value Pool Report|North AmericaCar services are an essential driver of growth in North AmericaNorth America accounted for 31%of the mobility market in 2023 when it totaled$119 billion,and is projected to slip to 25%of that share in 2035 when the market will grow to$285 billionCar-as-a-serviceHow the new forms of mobility will change the way people get around2035 forecast of revenues per form of mobility,in US$billions MicromobilityAir mobilityAir taxisDigital services20232035Car-sharingCar subscriptionCar rentalRide-hailingCarpoolingBike-sharingScooter-sharingSmart parkingCharging servicesNavigation servicesADASIn-vehicle digital services3.44.82.25.446.165.855.757.51.11.40.020.040.060.080.00.50.90.71.00.02.41.912.30.210.13.23.50.583.53.536.1$285 billionin 2035$119 billionin 2023Global mobility market%31Source:Oliver Wyman Forum mobility value pool analysisRevisiting The Mobility Industrys 2030 ForecastNew developments in regulation,consumer appetites,economic conditions,and technology have shifted the growth forecasts of some mobility sectors since the Oliver Wyman Forums previous edition of this report,published in 2022.Regulatory pushes for electric vehicles in Asia and Europe,for example,have fueled more optimistic outlooks for the charging services market,while urban air mobility still needs to gain acceptance from many government agencies.Profitability and operating model challenges also have dimmed projections for services like carpooling and car subscription.In revisiting our original forecast,the Oliver Wyman Forum has reset expectations and methodologies in the following areas.Inflation is not factored into our mobility revenue projectionsThe previous edition of this report factored inflation into future industry revenue value predictions.Given the uncertain inflationary environment globally,the Oliver Wyman Forum has not factored inflation into this reports projections to 2035.This allows our analysis to focus on real growth in mobility value pools,rather than inflation impacts.All values are reported in 2023 United States dollars.While any comparison between the 2022 and 2024 editions will differ due to inflation,the contrasts in the projections highlighted below are primarily driven by factors beyond inflation.Regulatory and tech setbacks damper air taxi projectionsAir taxis were initially forecasted for significant growth through 2030,but slowdowns due to regulatory hurdles and difficulties associated with deploying the technologies have slowed expectations.The air taxi market is now expected to grow up to$3.1 billion by 2030.While this growth remains relevant to the overall mobility industry,it is significantly slowed compared to previous projections.While a handful of companies are developing and preparing to massproduce air taxi vehicles,challenges that have hampered expectations include developing new systems of air traffic control to manage simultaneous flights,creating highly connected autonomous vehicle flying systems that can operate in urban areas,and dealing with negative public perception due to safety about fully autonomous flight.Meanwhile,airports still need to integrate air taxis into their operating and business models.Regulation provides some optimism for the industry.The US Federal Aviation Administration released an implementation plan outlining steps that regulators and companies must take to safely enable advanced air mobility operations in the nearterm,featuring plans to scale solutions at one or more sites by 2028.Meanwhile,the European Commission in 2024 finished a regulatory framework that allows for the launch of air taxi services.Bus pooling has been removed from this reports scopeLike air taxis,bus pooling similarly had high expectations but will likely not materialize significantly by 2030.The business model is not considered widely viable due to lack of interest from consumers and more effective methods of addressing commuter needs through other mobility services like carpooling,carsharing,and ridehailing.However,there is a remaining need for rural mobility solutions,outside of densely populated areas,where bus pooling can play a role.The original 2030 projection for the global bus pooling market was$5.6 billion.Bus pooling has since been removed from this reports projections.Previous 2030 projection2022 value pools report(US$billions)Current 2030 projection2024 value pools report(US$billions)Bus pooling5.6N/AAir taxis21.93.1Car subscription32.69.9Carpooling20.73.2Micromobility services27.219.9Charging services1222.6Exhibit 4:Projections for several modes changed significantly due to changes in consumer preferences,regulatory environments,and tech adoptionSource:Oliver Wyman Forum mobility value pool analysis51Mobility Value Pool Report|Revisiting The Mobility Industrys 2030 ForecastShortterm carpooling projections are reducedLike bus pooling,carpool expectations have been scaled back due to practical challenges and consumer preferences.Multiple riders involved can raise the potential for delays,while trust and safety remain a concern for consumers wary of sharing a vehicle with strangers.And,in some countries,carpooling pickup and dropoff still needs to be integrated with existing infrastructure like bus stops to avoid safety concerns.However,there may be methods to integrate carpooling into existing infrastructure to make these services easier and more accessible.Major ridehailing players discontinued pooled rides in 2023.Profitability challenges curtail car subscription expectations The car subscription model is still rather new,and all players must still invest heavily in customer acquisition and face high costs.The business model is still being refined,and residual value management remains challenging particularly in the face of electrified mobility.These challenges have pushed providers to focus on businesstobusiness segments rather than businesstoconsumer.Yet some companies have faced similar profitability challenges in offering car subscription services to businesses.Still,consumers are gravitating toward the service.An average of 22%of global consumers reported using a car subscription service in a June 2024 Oliver Wyman Forum survey.Thats up from 14%of those who said the same in an April 2023 survey.Shared micromobility services fall short in North America and EuropeReduced projections are due to slow growth in micromobility services postpandemic,as barriers like insufficient infrastructure and regulatory headwinds remain.The original 2030 projection for shared micromobility services in North America was$4.7 billion.That outlook has been reduced to$1.6 billion by 2030.In Europe,the original 2030 projection was$7.1 billion significantly higher than this reports$2.2 billion forecast for 2030.Increased EV charging growth expectations in Asia and Europe are due in part to the large share of the global EV market these regions represent.52Mobility Value Pool Report|Revisiting The Mobility Industrys 2030 ForecastExpectations for Asian and European electric vehicle charging services markets increase while North America declinesIncreased growth expectations in Asia and Europe are due in part to the large share of the global EV market these regions represent.China alone accounted for 60%of new electric car registrations in 2023 and Europe accounted for 25%.The original 2030 projection for the Asian charging services market was$1.4 billion,with a current 2030 forecast of$12.6 billion.Europes market was originally pegged to$5.8 billion by 2030.That projection has been increased to$7.9billion by the same year.Lower growth expectations in North America are driven by a reduced pipeline for EV deployment,as ambitious projections by original equipment manufacturers have become more measured.However,high growth in charging and EV deployment in general are still expected.The original 2030 projection for the North American charging market was$4.9 billion.That forecast has been reduced to$2 billion by 2030.53Mobility Value Pool Report|Revisiting The Mobility Industrys 2030 ForecastHow We Measure Mobility Industry GrowthThis report combines wide-ranging research and expert perspectives from within Oliver Wyman and the broader mobility industry to offer a comprehensive view of the industrys growth over the next decade.Known as a“driver tree approach”to arrive at 2023,2030,and 2035 revenue figures,our analysis allows for region and sectorspecific views by combining macroeconomic trends,social factors,and microeconomic drivers.Our analysis first assembled key drivers,including current assumptions such as population,fleet sizes for different mobility offerings,costs of different mobility services,and measures of how people use mobility services,such as average trip distances.These drivers are used to calculate a 2023 market size and revenue for each mobility sector included in the report.And while the exact approach varies for each sector,all 2023 figures are built bottomup from key assumptions.The 2023 figures are then validated against industry reports and internal and external experts,setting a baseline for projections.To project value pools through 2030 and 2035,we assume how each underlying driver behind the sectors may change over time.Some assumptions include a growth rate for a regions population,or a growth rate based on whether a given market is becoming commoditized,leading to lower prices over time.Assumptions also consider whether industry consolidation or new product developments may increase prices over time.These trends are developed based on research and expert input from both Oliver Wyman and those in relevant industries.Inflation is not included in the analysis given its uncertainty,and all values are reported in 2023 United States dollars.Removing inflation allows the analysis to focus on real growth in mobility value rather than nominal growth from inflation.This analysis focuses on nascent markets and longterm views,and its predictions are subject to change amid an accepted level of uncertainty.Given the uncertainty of the current macroeconomic market,we have in part updated the assumptions of projections from the previous edition of this report,published in 2022.In many cases,nascentmarket analyses are based on expertled assumptions,but these markets may not fully materialize in some cases or may exceed expectations in others.Our report offers a unique opportunity to see how market projections change over time.Some players in the mobility space are“market makers,”just as the major players were who created ridehailing.The success of predicting new markets will rely on the activities of key companies in this space and includes an inherent amount of unpredictability.This analysis is completed to the Oliver Wyman Forums best knowledge of the mobility industry as of the date of publication,and that knowledge is limited based on assumptions made for the analysis.Our analysis allows for region and sectorspecific views by combining macroeconomic trends,social factors,and microeconomic drivers.55Mobility Value Pool Report|How We Measure Mobility Industry GrowthAbout the Oliver Wyman ForumThe Oliver Wyman Forum is committed to bringing together leaders in business,public policy,social enterprises,and academia to help solve the worlds toughest problems.The Oliver Wyman Forum strives to discover and develop innovative solutions by conducting research,convening leading thinkers,analyzing options,and inspiring action on three fronts:Reframing Industry,Business in Society,and Global Economic and Political Change.Together with our growing and diverse community of experts,we think we can make a difference.For more information,visit AuthorsAndreas Nienhaus,Steffen Rilling,David Markey ContributorsLudovic Cartigny,Evelyn Chavez,Andrew Culver,Hlose De Paulou Massat,Jodie Gadd,Scot Hornick,Dustin Irwin,David Kaplan,Jonas Junk,Dan Kleinman,Eddison Lee,Jeff Leavitt,Nick Liptak,Malvika Manoj,Jack McCann,Adam Mehring,Jilian Mincer,Augusto Mongrut,Brooke Price,Colson Santiago,German Shumakov,Marc Stanke,Sam Tiltman,Wald Truter,Pam Wiener,Emma Xu Art&DesignKaori Hayama,Agnieszka Kwapisz,Karen Lara,Adrien SlimaniCopyright 2024 Oliver Wyman Forum;all rights reserved.This report may not be reproduced,redistributed or sold,in whole or in part,without the written permission of Oliver Wyman.Oliver Wyman shall not have any liability to any third party in respect of this report or any actions taken or decisions made as a consequence of the results,advice or recommendations set forth herein,or for any consequential,special or similar damages even if advised of the possibility of such damages.Oliver Wyman has made every effort to use reliable,uptodate and comprehensive information and analysis,but all information is provided without warranty of any kind,express or implied.Oliver Wyman disclaims any responsibility to update the information or conclusions in this report.The opinions expressed herein are valid only for the purpose stated herein and as of the date hereof.Information furnished by others,upon which portions of this report are based,is believed to be reliable but has not been verified.No warranty is given as to the accuracy of such information.Public information and industry and statistical data are from sources Oliver Wyman deem to be reliable;however,Oliver Wyman makes no representation as to the accuracy or completeness of such information and has accepted the information without further verification.This report does not represent investment advice or provide an opinion regarding the fairness of any transaction to any and all parties.This report does not represent legal advice,which can only be provided by legal counsel and for which you should seek advice of counsel.
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Out of homedeliveryin Europe 2023PUDOs and automatedparcel machinesJune 2023 Media partners:Prepared with the support of:June 2024OUT OF HOMEDELIVERYIN EUROPE2024PUDOs and automated parcel machinesCONTENTSExecutive summaryIntroductionAbout the authors and partners Background to the reportChanging online shopper behaviour OOH PUDOs and APMsCountry analysisSupplementThe power of agnostic OOH networksA quick look at countries with OOH potential-MexicoGreen Last MileRe-commerceConclusions471325424664105116123128134140Media partners:Media partners:Prepared with the support ofEXECUTIVESUMMARYEXECUTIVE SUMMARY4EXECUTIVE SUMMARY 1 Source 1:NATIONAL E-COMMERCEE-commerce in Europe has been steadily developing since the mid-90s,but it experienced a significant acceleration during the Covid-19 pandemic.2021 witnessed a rapid increase in e-commerce,which further heightened the demand for efficient last-mile solutions.Subsequently,the impact on consumer uncertainty caused by the war in Ukraine coupled with a return to the high street led to a dip in the market,with 2022 revenue dropping to USD 596 billion.However,the market is now gradually recovering with moderate inflation adjusted e-commerce growth of some 2%in 20231.OOH delivery and e-commerce are mutually supportive,with OOH making e-commerce more financially and operationally viable and e-commerce driving the growth of OOH.Moreover,B2C e-commerce volumes have returned to growth mode with expected volume growth in 2023 at around 4.9%.acording to data from our partner,Effigy Consulting*.Data includes 32 countries in Europe(with Ukraine,Russia and Turkey).This growth is actually higher than we expected at the beginning of the year,when the estimate was around 3.9%.With a 4.9%increase,total European volume in 2023 is estimated at about 19 billion parcels(excluding letters).*At the time of preparing this report,Effigys data base has not been finalised and this figure as an approximation.EXECUTIVE SUMMARY5EXECUTIVE SUMMARY 2 Source 2:Green Last Mile Europe Report 2024,Last Mile Experts.Consumers continue to favour consumer to consumer(C2C)second-hand resale platforms such as Vinted,OLX or eBay,which report relatively high sales growth.Low price and sustainability appear to be the main factors behind this,and most consumers indicate that cost inflation is a key motivator to buy pre-owned goods.This trend is supported on the supply side by more brands moving into re-commerce;several retailers have launched take-back schemes,in which customers can trade in old apparel in return for a voucher to spend in-store or a donation to a worthy cause.In 2023 the European re-commerce market was already valued at some EUR 75 billion,and it is expected to reach EUR 120 billion by 2025.Sustainability within the European e-commerce space is not just limited to the goods bought by consumers:in fact,it impacts all aspects of the logistics chain,including environmentally friendly and OOH delivery alternatives.Unfortunately,while some studies confirm that the green last mile is a real opportunity for carriers,we have the feeling that greenwashing continues to be an issue(for more details see the Last Mile Experts Green Last Mile Europe Report 20242 Fortunately,economic reality and consumer preferences are making OOH more popular and,simultaneously,helping create a greener and more efficient last mile.New technologies are also gaining ground in postal services.In 2022,Universal Service Providers and other postal service providers invested around 3.34 billion euros in the sector.Technological trends such as automation,artificial intelligence,and autonomous delivery vehicles have obtained the interest of the sector,with autonomous delivery trials already in place in selected cities.These new technologies could directly compete with out-of-home but also support and contribute to it.Notwithstanding this,investments in out-of-home delivery options still show a clear commitment to this sustainable and operationally efficient solution from carriers.What is important in unlocking the potential of OOH is a business model and strategy which addresses the relationship between OOH network density and further e-commerce take-up as well as new segments such as C2C and re-commerce.Data shows that Europeans are by far the fastest compared the other continents to convert to OOH delivery.The preference for home delivery fell from 73%to 64%in Europe,this clearly illustrates that online sellers can use the frugality to their advantage.Free delivery can be used as the proverbial carrot or a stick to lure online shoppers away from to-door delivery to cheaper OOH alternatives.EXECUTIVE SUMMARY6EXECUTIVE SUMMARY In this years report we noted 154,900 unique APMs,which is 29%up on 2022 and the totalnumber of PUDO points grew by 6%year on year to 349,230 unique points.Key unique PUDO markets are:UK 50,910France 50,530Italy 48,310Germany 47,420Poland 40,090Key unique APM markets:Poland 39,500UK 15,390Germany 15,340France 12,840Czech Republic 10,070Key OOH carriers are:Deutsche Post/DHL with 109,570 PUDOs,38,640 APMs,148,210 OOH points in total*DPD(GeoPost)Group with 87,010 PUDOs,18,850 APMs,105,860 OOH points in total*GLS(IDS)with 63,720 PUDOs,13,080 APMs,76,800 OOH points in total*InPost with 32,220 PUDOs,35,550 APMs,67,770 OOH points in total*UPS with 37,040 PUDOs,10,270 APMs,37,310 OOH points in total*Including partners and shared points.Last years figures show that some operators have accelerated with the expansion of OOH networks where their customers can pick up or send parcels.This is probably due to the growing popularity of OOH outlets,but also to much lower operating costs and a better customer experience.This translates into lower prices for consumers and,not to be underestimated,lower emissions in the last mile.Two operators stand out from the top five,with the highest year-on-year percentage growth.Thus,in terms of the growth rate of PUDO points,InPost led the way with a 32%increase,while GLS in the number of APMs available at 125%over 2022.As OOH develops,and the availability of space becomes more limited,the deployment strategies employed by OOH operators will be a critical factor in determining their success.We strongly believe that partnerships and alliances will be the game changer in creating a more efficient and customer centric OOH last mile.They are already happening as demonstrated by partnership between DHL and Cianiao or Poste Italiane,albeit this is still far from what is needed and hope to see more such collaboration in next years report.Media partners:Media partners:Prepared with the support ofINTRODUCTIONINTRODUCTION8ABOUT THIS REPORT Background to the reportThe earlier rapid growth of the CEP industry,driven by COVID 19 related e-commerce deve-lopment,was abruptly halted due to Eurozone inflation reaching 3.4%YoY and general uncerta-inty resulting from the ongoing war in Ukraine.All this has translated into a slower increase in parcel volumes in the European CEP sector.Expected volume growth in 2023 is estimated at around 4.9ording to data from our partner,Effigy Consulting.*This growth is actually higher than we expected at the beginning of the year,when the estimate was around 3.9%.Accordingly,with a 4.9%increase,total European volume in 2023 is estimated at about 19 billion parcels(excluding letters).Over the past few years,there have been significant shifts in market shares of parcel types,particularly between B2C(business to consumer)and B2B(business to business)as well as in first-or last-mile delivery chan-nels,including P2P(point to point)and D2D(door to door).OOH(Out of home)delivery,including PUDOs(pick-up and drop-off points)and APMs(auto-matic parcel machines),is playing an increasin-gly important role.Our updated and improved report covers market structure,countries,players,growth and key trends.In this report we seek to understand what is behind the OOH delivery trends and to assess what future impact this will have on the various stakeholders.*At the time of preparing this report,Effigys data base has not been finalised and this figure as an approximation.Effigy data includes 32 countries in Europe(with Ukraine,Russia and Turkey).The report covers all key players in the European market for OOH operations.We define the OOH market as encompas-sing PUDOs and APM parcels.These mainly include B2C and C2X(consumer to anybody)parcels and cover the P2D(point to door),D2P(door to point)and P2P channels.OOH can be used in the first and last mile.We analyse the evolution of B2C parcel volumes before,during and after the pande-mic so as to bring the right market insights on 27 EU countries plus the UK.For the first time,this year,we also add data for Norway,Switzerland and Ukraine.The latter,in particular,is relevant due to the fact that its market leader,Nova Post has the second largest network in any individual country,ahead of even Deutsche Post&DHL in Germany.The report is intended for:Owners and operators of OOH networks.CEP companies.Online retailers.Investors in these businesses.Market regulators and policy makers.Journalists and editors of newspapers and magazines.Analysts,consultants and other stakehol-ders.Academics.INTRODUCTION9ABOUT THIS REPORTThe market is served by a combination of carriers,ranging from the national postal operators to parcel locker operators and CEP players.The report also covers new types of OOH delivery providers.There are a number of new OOH factors and players which have become more relevant in recent years,such as a growing understanding that PUDO and parcel locker networks highly complementary and,in factnecessary for any optimised OOH model.LME has in-depth knowledge of this market and has made various studies on OOH delivery in Europe and elsewhere.Our team has a strong entrepreneurial background,including the creation of DPD Polska(formerly Masterlink Express,a leading player in the Polish CEP market)and the integration of companies as was the case with UPS Poland.Our consulting work involves providing advice and guidance to numerous companies,including e-commerce businesses and carriers,on the establishment or enhancement of nationwide PUDO/locker models and the implementation of supporting IDM tools for players such as eMAG-Sameday,OXXO and Trendyol.What are the sources?The main sources for the report are:Data presented comes directly from the OOH network operators.Extensive desk research on the OOH market and its operators covering company press releases,websites and other sources.Published information on key market drivers such as economic data and estimates of home shopping levels and practices.Interviews with CEOs,senior-level CEP and e-commerce executives,experts and retailers to develop our core database.LMEs own in-depth,expert knowledge.Important notes:Where possible,we obtained data directly from the OOH network operators,some data was obtained from official press releases or websites.Where an operator refused to provide data,we assumed estimated values based on our own analyses and historical data.Despite our best efforts,we have not yet been able to accurately reflect the number of APM cells or the theoretical capacity of PUDO points in this report.There are various reasons for this,including lack of source data,problems with interfaces or external databa-ses,and the previously mentioned reluctance of operators to share data.As a result,this years report focuses on the number of PUDO locations and APMs as a benchmark for size and network density,rather than the capacity of each specific location.The analysis of PUDO points and APMs con-tained in this report reflects the situation as of the end of December 2023.We can produce tailor-made,more detailed country reports if needed.If this is of interest,please contact for more information.INTRODUCTION10METHODOLOGYOOH is not a new parcel delivery solution,but it is still developing fast.To ensure that the collected information*is up to date,we have conducted:*It is not possible to state the exact numbers of PUDOs or APMs for allcompanies.Many companies do not provide figures at all or provideincomplete or incomparable data on the capacity of PUDO outlets or parcel lockers.Compared to last years report,some countries new players emerged as completely new operators or by extending their existing coverage.In other cases,some networks have disappeared from the list,having been acquired by other operators(acquisitions and consolidations)or having closed down their OOH operations.Extensive desk research on PUDO and APM networks in Europe,using company accounts,websites,press reports and other sources.Several interviews with CEOs,other senior-level management,experts on the CEP industry and PUDOs,APM operators and retailers.Evaluation and analysis of 28 countries(EU plus the UK)and 283 networks(ne-twork by network for each country in scope).Where actual or published data was not available,estimations have been made based on our market knowledge.As of this year,we have added a supple-ment with 3 new countries:Norway,Switzerland and Ukraine.INTRODUCTION11TERMS&DEFINITIONS APM B2B B2C C2C C2X CEE CSEE CX D2D D2P DIY EV FTD IDM LAST MILELME OOH P2D P2P PUDO ROS RPL SLASOHO USO Automated Parcel MachineBusiness to BusinessBusiness to ConsumerConsumer to ConsumerConsumer to AnybodyCentral and Eastern EuropeCentral,Southern and Eastern EuropeCustomer ExperienceDoor to DoorDoor to PointDo It YourselfElectric VehicleFirst-Time DeliveryInteractive Delivery Management Leg of a journey comprising the movement of goods from a distribution centre to a final destinationLast Mile ExpertsOut Of Home Point to DoorPoint to PointPick=Up and Drop=Off locationReturn On SalesResidential Parcel LockerService-Level AgreementSmall Office/Home OfficeUniversal Service ObligationINTRODUCTION12COMMENT Prof.Arkadiusz KawaManaging Director of ukasiewicz Poznan Institute of TechnologyOut-of-home(OOH)delivery is revolutionising the re-commerce sector,providing greater convenience and efficiency for both buyers and sellers.In re-commerce,where second-hand goods are bought and sold,OOH delivery options such as parcel lockers and pick-up points offer practical solutions to manage logistics.These methods allow sellers to easily drop off sold items at nearby locations and buyers to pick up parcels at convenient locations,eliminating the need for home deliveries,which can be less reliable and more time-consuming.In addition,OOH delivery supports the sustainability efforts inherent in re-commerce by reducing the carbon footprint associated with traditional delivery methods.It also facilitates more efficient returns and exchanges,improving the overall customer experience.By streamlining the shipping and receiving process,OOH delivery helps build trust and reliability in re-commerce,encouraging more consumers to participate in the circular economy.OOH also improves cross-border e-commerce by offering more flexible and reliable delivery options for international consumers.With OOH delivery,customers can collect their orders from parcel lockers,pick-up points,or designated retail locations,which is particularly beneficial given the complexities of cross-border shipping,such as different time zones and unpredictable delivery schedules.This approach not only reduces the risk of missed deliveries but also simplifies the customs clearance and handling process,as these designated points are often equipped to efficiently manage such logistics.Whats more,OOH delivery can reduce shipping costs and delivery times by consolidating shipments at central locations rather than delivering to multiple residential addresses.It also provides a secure method of parcel collection,minimising the risk of loss or theft that can occur with home delivery.By integrating OOH delivery solutions,cross-border e-commerce companies can increase customer satisfaction and expand their global reach,making international shopping more accessible and convenient.Media partners:Media partners:Prepared with the support ofABOUT THE AUTHORS AND PARTNERSLast Mile Experts is one of the very few specialist e-commerce last mile and CEP(courier,express&parcel)consultancies.Our experts have joint experience of several hundred years in our specialist areas and real hands-on knowledge in a broad spectrum of last mile related topics.While many of us have been consultants before,all of us are practitioners and therefore the solutions we suggest have usually already been tested by us before.We have relationships with many key suppliers of hardware and software for optimising sortation,middle and last mile courier and parcel logistics.Our goal is to help CEP companies,postal operators,e-commerce players,potential investors or other stakeholders to improve their performance,operations,organisation and technology as well as strategy development or M&A.Experience&knowledgeOur experts have the necessary know-how,resulting from years of experience in the CEP industry.FlexibilityFor the duration of the project,Last Mile Experts becomes part of your company.We adapt to your processes and structures.CommitmentWe believe that only full commitment can bring success,so we devote ourselves fully to our clients projects.AnalysisWe conduct in-depth analysis of operational processes,taking into account the specificity of a given enterprise.They result in recommendations of specific solutions together with an optimal implementation program.EthicsBecause we believe that the basis for effective cooperation is trust,we always maintain the highest ethical standards.InnovationWe are constantly looking for new solutions.We have a great understanding of the processes in the CEP industry and know the future technologies dedicated to the last mile.14ABOUT THE AUTHORS AND PARTNERSAdvises clients on strategic and commercial matters with a focus on e-commerce(especially PUDOs&Lockers)and M&A related activities.He has been part of the start-up team in Poland for DHL,and was the founder of Msterlink Express,now DPD Polska.As CEO of GeoPost CSEE,he created a region of 16 countries under the DPD brand.Until 2015,he was VP Amazon Logistics EU,and part of the Amazon Logistics start up team.Marek was deal Advents advisor and then Supervisory Board Member at InPost.More than 30 years in courier business starting as a courier,managing several projects in Poland and abroad,and finishing as COO for UPS Poland.While at MS Stolica,he has worked with several companies including OCS,Airborne Express,Fedex,Aramex and GDA.In 2005 Mirek joined UPS following the acquisition of Stolica.As an industrial engineering manager,he coordinated the integration of the network,including operational procedures and system implementation,as well as many other operational UPS projects across Europe.MAREK RYCKIManaging PartnerMIREK GRALVice President,PartnerAUTHORS15ABOUT THE AUTHORS AND PARTNERSPARTNERFounded in 1924,Quadient is the leading provider of intelligent communication automation,parcel locker,and mail-related solutions.We not only help businesses transform their operational processes and automate how they leverage data to enhance their customer experience,but we also help businesses transition to low-carbon first-and last-mile delivery strategies through our parcel locker solutions.With the acquisition of Parcel Pending in 2019,Quadient has become the global leader in parcel management solutions for residential,retail,carrier,university,and corporate/business properties.With the combined strength of our innovation,power,reach,and offerings,Parcel Pending by Quadient now services more than 20,000 locker locations across Europe,Asia-Pacific,and North America.Clients can leverage Parcel Pending by Quadient lockers to offer secure parcel pick-ups and returns for their customers exclusively or tap into the Open Locker Network a carrier-agnostic solution for both first and last-mile deliveries.The Open Locker NetworkParcel Pending by Quadients Open Locker Network is transforming the delivery landscape,helping carriers to facilitate more parcel collections and returns.Our offering is the only widely available option that allows multiple carriers to access and share a unified network of lockers for package delivery and collection.2023 research conducted by Parcel Pendings UK team revealed that consumers are becoming increasingly dissatisfied with the home delivery and parcel return options available to them for security,environmental,and traffic-based reasons.In fact,47%of respondents worry parcel deliveries are not sustainable and have concerns that services will get worse and more expensive.This shift comes as carriers are under increased pressure to find more efficient,sustainable methods of delivery,opening the door to widespread consumer adoption of out-of-home delivery options,like parcel locker delivery networks.The Open Locker Network is a game-changing out-of-home solution that benefits consumers,retailers,and carriers by lowering operational costs,contributing towards a greener last-mile,while creating a more convenient solution for consumers.We provide centralised,secure locations for packages,offering 24/7/365 package drop-off or collection.Originally launched in Japan in 2016,Parcel Pending has added several Open Locker Networks in Europe and has since onboarded five of the major carriers in the UK(representing a potential 70%coverage of the market)and three in France.Our latest user surveys in France and Japan showed that an overwhelming 97%of respondents were satisfied with their parcel locker pickup and drop-off experience.For more information about our Open Locker Network,please refer to our case study on page 116.16ABOUT THE AUTHORS AND PARTNERSPARTNERMORE Solutions for Carriers NeedsInitially introduced for carriers as part of our Open Locker Network,Parcel Pendings award-winning Drop Box locker solution with built-in label printer is an industry-first solution designed to address the growing need for convenient and cost-efficient returns and C2X management.The Drop Box also creates added customer convenience,as the built-in label printer allows customers to print return labels and drop off parcels directly from the locker terminal.By consolidating package deliveries and returns into centralised locker locations,our Open Locker Network is helping carriers to cut fuel costs,reduce delivery costs per package,and improve operational efficiencies by reducing the number of stops.In fact,delivery to lockers can reduce handling costs by up to 50%.Source:2023 Parcel Pending by Quadient Retail Customer Experience Survey Global Report.Carriers can reduce first and last-mile delivery costs up to 50%by consolidating deliveries and returns to open locker network locationsDrop Box LockersThe award-winning solution with integrated printer,purpose-built for fulfilling parcel returns and exchangesPrint Return Labels:Offers convenience for customers and driversMaximise Package Capacity:Reduce carbon footprintOptimise Driver Time:Quickly unloadDrop Box LockersThe award-winning solution with integrated printer,purpose-built for fulfilling parcel returns and exchangesPrint Return Labels:Offers convenience for customers and driversMaximise Package Capacity:Reduce carbon footprintOptimise Driver Time:Quickly unload packages17ABOUT THE AUTHORS AND PARTNERS18PARTNERMORE SustainabilityParcel Pending by Quadients Open Locker Network is the most effective offering in the market today to solve first-and last-mile challenges in a sustainable manner.With multiple major carriers onboard,more consumer deliveries can be facilitated through our centralised locker locations.This thereby reduces vehicle miles travelled without compromising on delivery efficiency.MORE Parcel SecurityGrowing concerns about safety are also reflected in rising numbers of parcels stolen from outside homes.In fact,recent research reveals reported parcel thefts increased more than 500%in just four years1.Instead of leaving packages on a doorstep,the secure construction of our parcel lockers keeps packages safe until recipients are ready to collect.Parcel Pending by Quadient:Delivering MoreAs a service-oriented company,we truly value and prioritise our clients(and their customers),their experiences with our parcel locker solutions,and the effects that our solutions have on their lives.We are dedicated to providing the highest quality products and services,but our passion is delivering the best parcel management experience for all our users.Parcel Pending by Quadients dynamic product range ensures safe,secure,and convenient parcel deliveries and returns for businesses and consumers around the world.Our comprehensive range of indoor and outdoor solutions and award-winning Drop Box lockers support clients varying needs and business requirements.Learn more at .SERVING CLIENTS AROUND THE WORLD:Residential Retail Carrier University Commercial100 Years in Business20K Installations Worldwide4M Users ServedSource 1:2023 Parcel Pending by Quadient Freedom of Information Request to UK Police ForcesABOUT THE AUTHORS AND PARTNERSCONTRIBUTORMicha WjcikPartnership Director,Alsendo.Micha Wjcik is a seasoned e-commerce expert with a proven track record in digital strategy and marketing automation.With extensive experience in leading e-commerce initiatives for companies like Leroy Merlin and Carrefour Polska,he is an expert in maximising online sales performance and driving omnichannel projects.Michas expertise lies in crafting tailored e-commerce strategies,optimising technology solutions,and fostering cross-functional collaboration to achieve business objectives.In Alsendo he is responsible for expanding the organisations reach through strategic partnerships.Alsendo is the leading platform empowering business through the democratisation of tech-driven shipping and delivery management services.Alsendo is dedicated to providing businesses,from SOHOs to large enterprises,with the tools and support necessary for success.Proven track record ensures reliable,high-quality services worldwide.Our solutions,driven by customer feedback,modern technology and sustainable development,are designed for convenience and efficiency.The Alsendo brand encompasses shipping services established in Poland,Romania,Czechia,and Slovakia:Innoship,Apaczka,Zaslat,or Ecolet.Innoship is the advanced delivery management platform that helps retailers to improve customer experience by streamlining the delivery process.The shipping services belonging to Alsendo in Poland include Apaczka(intended for business clients)and Sendit(dedicated to consumers).With 15 years of experience in the industry,Apaczka provides ready-to-use tools for daily logistics management,with clients sending over 2,5 million shipments each month using their unique technologies.19ABOUT THE AUTHORS AND PARTNERSCONTRIBUTORArkadiusz Kawa,PhDManaging Director at ukasiewicz Pozna Institute of Technology.Managing Director at ukasiewicz Pozna Institute of Technology,Professor at Poznan School of Logistics,former Managing Director of ukasiewicz Institute of Logistics and Warehousing and Associate Professor at Poznan University of Economics and Business,an author of 300 scientific and popularisation papers dealing with e-commerce,logistics,last mile,out-of-home delivery(PUDO,parcel lockers-APM),CEP(courier,express,parcel)industry,and supply chain management.He has delivered over 60 projects for organisations,such as:Polish Post(Poczta Polska),Landmark(bPost),Volkswagen,GS1,DHL,UPS,DPD,Deloitte,A.T.Kearney,KPMG,BCG,4Kraft,Pepco,SABMiller,Horizon(Knapp).He was a visiting professor at University of Primorska in Slovenia(2016,2017)and provided invited lectures and talks at Corvinus University of Budapest(Hungary),InnoRenew CoE(Slovenia),and University of Edinburgh(Scotland).He participated in the Erasmus programme at University of Osijek(Croatia)and Valencia University of Technology(Spain).Lukasiewicz-Poznan Institute of Technology is a modern scientific and research unit,part of the Lukasiewicz Research Network.It creates innovations,participates in international research projects,and responds to business needs.The Institute includes four Research Centers:Sustainable Economy,Digital Transformation,Laboratory Research and Modern Mobility.It is within the latter that the Logistics Research Group operates,which conducts consulting services,applied research,development and implementation work in the field of logistics and supply chains,both at the level of process organisation and infrastructure.Lukasiewicz-PIT is a continuation of the Poznan-based Institute of Logistics and Warehousing.20ABOUT THE AUTHORS AND PARTNERSCONTRIBUTORMathilde CarlierTransportation and Logistics research expert,STATISTA.Research expert at Statista,specialising in vehicles and road traffic worldwide,as well as sustainable transport and logistics.Author of various Statista reports including ones on the postal service market and electric vehicles worldwide,she focuses mainly on new energy vehicles,green trucking,and startup brands,with a particular interest in how these reshape the transport and logistics sector.Her research pairs industry insights with in-depth contextual analysis and structure.The transportation and logistics research team is a part of the Editorial Content division at Statista.As a team,their focus is on providing insights on dynamic market changes and development in the transport industry,including maritime shipping,vehicles and road traffic,active mobility,metal manufacturing,and sustainable transportation.With more than one million statistics,Statista is one of the worlds leading data platforms for strategic market analysis,statistics,editorial research,and data storytelling.S is a hub for data,insights,and trends on 9,000 topics across 170 industries,composed of proprietary surveys,exclusive secondary sources,and aggregated data from around 44,000 sources.Since 2007,Statista has grown to approximately 1,400 employees at 13 locations worldwide and offers its more than 5.5 million registered users from business,science,and the public sector access to high-quality and reliable data and statistics.Statista also supports other companies with this expertise:Statista carries out analyses and studies for clients,as well as conceives,realises and graphically edits topics for specific target groups.21Henk Slotboom.Co-founder and Managing Partner at the IDEA!.Henk Slotboom has over 40 years of professional experience in the financial industry.He worked for several prominent banks in various management roles.In 1989,he was asked to set up the institutional equities desk at Amstgeld NV,a subsidiary of Dutch insurer NN Group.In 1999,he joined Julius Br as Managing Director to set up and lead its Dutch subsidiary.Thereafter,he headed the international institutional equities business at Bank Insinger de Beaufort.In 2007,he became the co-founder and Managing Partner at the Idea-Driven Equities Analysis company the IDEA!,an employee-owned research boutique.In the early years of its existence,the IDEA!merely focused on providing self-initiated in-depth,idea-driven investment research and bespoke research assignments to institutional investors,hedge funds and private equity,which includes the biggest names in the industry.Because we do not merely focus on individual companies alone and also extend our research to its suppliers,clients and competitors,we can provide a much broader perspective on whats happening in the market.As a result,an increasing number of corporations are using our research alongside their own research and market intelligence to make better strategic decisions.We also assist these corporations as an advisor or sparring partner in complex financial issues and offer strategic advice regarding business valuations,M&A and other issues.In his current role,Henk is specialised in e-commerce and the e-commerce logistics sector.ABOUT THE AUTHORS AND PARTNERSCONTRIBUTOR22ABOUT THE AUTHORS AND PARTNERSCONTRIBUTORKenya Vzquez Fulfillment Commercial Manager,OXXO.Kenya is an experienced retail category development and management professional.She aims to ensure expedient execution of commercial and operational strategies in order to bring the best customer and partner experience.She helped in launching and implementing the PUDO category at OXXO(a FEMSA subsidiary).Currently she is responsible for growth through strategic alliances with carriers and eCommerce merchants.Enrique Chanes Fulfillment Strategy Manager,OXXO.Enrique Chanes is an experienced professional specialising in E-Commerce ventures for retail.Over the past few years,he helped built the last mile delivery architecture for the miOXXO app,launched the first OXXO self service store and is part of the team developing the PUDO concept.His main interest is enabling Mexicos E-Commerce ecosystem via OXXOs network of over 22K stores in order to increase the digital share of market in the country.FEMSAs Proximity Division generates economic and social value in the countries where it has a presence.It operates different small-format retail chains in Latin America and Europe,among which are OXXO stores.It also operates service stations under the OXXO GAS brand in Mexico,and Valora,a European retail unit that operates convenience stores and food service.Through its business units,FEMSAs Proximity Division serves more than 13 million consumers every day and employs more than 160 thousand employees,promoting inclusion,diversity and Sustainability practices in its teams to operate in harmony with the planet,community and value chain.23ABOUT THE AUTHORS AND PARTNERSCONTRIBUTORVytautas AtkocaitisVice President of Vinted Go.Working on a mission to transform the parcel logistics industry by leveraging cutting-edge technology and creating a unique pan-European log-tech business.Previously Vytautas led tech innovation in supply chain and operations management,both at Vinted Marketplace and at Amazon.With a mission to make second-hand the first choice worldwide,Vinted enables people to sell and buy second-hand clothes and lifestyle items from each other,helping give those items a second or even third life.Vinted Go,the logistics arm of Vinted,was launched in 2022.Dedicated to the reinvention of parcel shipping,Vinted Go offers Vinted marketplace users a convenient,affordable,and less polluting(compared to home deliveries)shipping option through the use of an extensive network of carriers and PUDO points.Currently,Vinted Go is present in 20 countries through more than 50 carriers,sending parcels across 200,000 delivery points.Vinted Go shipping solution is not only available to Vinted Marketplace users,but other customers as well.This product is called Routes by Vinted Go and is available in France,Belgium,Italy,Spain,Portugal,the Netherlands,and the United Kingdom.Users in France,one of Vinteds biggest markets,benefit from Vinted Gos enhanced shipping value proposition.Vinted Go is building its own PUDO network in France,consisting of five sorting facilities,over 200 electric vehicles,and bloq.it-powered parcel lockers.This network is operational in 90 French cities,with more than 2000 available points.24Media partners:Media partners:Prepared with the support ofBACKGROUNDTO THE REPORTWith the rapid growth of e-commerce,the number of parcels to private recipients has increased.During the courier working hours,most of these people are usually at work,school or elsewhere.In addition,the range of delivery hours is still generally quite wide,and it is difficult for customers to predict the moment of arrival of the courier,who usually does not even give an estimated time of delivery.A way of solving these problems are so-called out-of-home(OOH)deliveries.These involve the delivery of a parcel to a point(pick up drop off-PUDO)or parcel machine that the customer indicates at the time of purchase.The parcel can be picked up along the customers route,e.g.home,work,school,at a time that is convenient for the customer,within a time frame of up to several days.OOH makes it possible to consolidate and deliver multiple parcels to one location,which increases delivery efficiency.Resources(cars,couriers)and processes are reduced(delivering more parcels in the same place reduces the number of stops necessary and eliminates failed deliveries due to an absent recipient).In addition,both delivery costs and average delivery times are significantly reduced.Out-of-home delivery,however,involves the customer in the last mile process.Customers must do some of the work that is normally done by the courier,i.e.they have to go to the OOH point and pick up(or drop off)their parcels themselves.OOH points must therefore be easily accessible to customers.They should not be too far from someones home or workplace,in places where it is difficult to get to without a car or to park there.If a parcel cannot be delivered to the door,the diversion should be as close as possible to the delivery address indicated during the order.The use of OOH also has benefits for carriers and retailers close to the pick-up points.In the former case,they improve the economics of parcel operations by enhancing consolidation and increasing the efficiency of delivery,thus leading to lower costs.In the case of the latter,they provide additional customer traffic and can thus contribute to increased revenues for receiving locations(cross selling).OOH requires cooperation with external parties.This cooperation involves not only access to infrastructure,but also the integration of IT tools.Given the dynamic development of last-mile services,interoperability of the IT systems of all entities involved in the process is needed.It should also be added that Automated Parcel Machines and PUDO points are not a separate market.They are substitutes and sometimes complements,for other last mile channels such as home delivery and click&collect.26BACKGROUND TO THE REPORTOUT-OF-HOME DELIVERIESParcel lockersA parcel locker(parcel machine,automated parcel machine-APM)is a device that is used to send and pick up parcels.It usually consists of between a dozen and a few dozen compartments.Such devices are usually open 24/7 and are fully self-service.Parcel lockers are integrated into the operating system using the Internet of Things,so it is possible to monitor which compartments are empty or full and it is possible to update information on changes in the status of a parcel(delivered,waiting to be picked up,picked up).The compartments can be accessed via digital receipt codes,QR codes,Bluetooth,or a mobile app.In this case,the last mile logistics are much easier and cheaper for the CEP operator.The courier carries a large number of parcels at one time and delivers(or collects)them to one specific location.Lockers are usually located in easily accessible and high-traffic areas such as grocery shops,public places,public transport stations,public places(train or bus stations),petrol stations.The customer can indicate a convenient location and pick up the parcel at any time,so it is a good solution for those who are more mobile,flexible and want freedom of choice.For this reason,they are described as being born out of the frustration of customers who are not at home when the courier attempts delivery.A potential disadvantage of this solution is that the customer must walk to such a point and therefore make the first or last leg of the journey.There are also restrictions on the size,form,and weight of parcels.In addition,there are still relatively few such facilities in rural or less populated areas.This can be an inconvenience for people who are unable to pick up a parcel,e.g.due to a disability.The problem also arises with larger goods such as fridges,washing machines,gardening equipment or tyres.Parcel lockers have weight and size restrictions for parcels.Large products are still generally delivered directly to the address indicated albeit some XXL lockers are now in use at retail sites.Increasingly,APMs are being equipped with new functions.For example,in some countries they can be used to deposit cash,withdraw money(ATM function),charge a car or scooter,pick up temperature-controlled groceries.In addition to convenience,the environmental benefits are also important.According to the World Economic Forum,they can reduce delivery costs by 2%to 12%while reducing road congestion by 5%to 18%.In addition to parcel lockers,there are other solutions that perform a similar function.These are controlled access systems(smart locks)and individual or collective parcel lockers.The former are solutions that allow the courier access to a locked space or separate area to leave the parcel.When ordering products,the customer indicates their home or vehicle as the delivery location.The courier uses a one-time digital key to open,for example,a garage or boot and puts the parcel inside.Delivery information is then sent to the customer.Such solutions are being tested or used by retailers,car manufacturers and CEP operators alike.In the future,they may offer an alternative to parcel machine deliveries.Individual or collective parcel lockers,located at the place of residence,perform a function similar to traditional post boxes,only they have a larger capacity.They allow the delivery person to leave a parcel in the box,even if the recipient is not at home.The customer also has the option of sending the parcel.The box combines the advantages of courier deliveries(door-to-door delivery)with parcel lockers(possibility to pick up the parcel at any time).Such solutions are already considered when designing the building,so that the device is an integral part of the infrastructure.They are independent of the operator,so there is no need to multiply them.Residential Parcel boxes can also handle parcel returns.The key disdvantage of small personal parcel lockers(PPLs)is that they still require the courier to go to an individual address.BACKGROUND TO THE REPORT27$PUDO pointsPUDOs are places where parcels can be sent or picked up.They are located in areas that are relatively easy to access and regularly visited by customers,such as convenience stores,grocery shops,kiosks,service points,shopping centres and petrol stations.They often have long opening hours and are near to the recipients home or office address.The service is derived from the click&collect concept,which was initially developed by companies trading mainly at fixed points(e.g.retail chains),but gradually shifting part of their sales to the Internet.It meant that customers did not have to wait for a courier and pay for delivery.Points where parcels can be picked up and sent are not new.Such places already existed much earlier in the form of post offices.It was only a decade or two ago that they were noticed by CEP companies,which had a problem with undelivered parcels to individual customers.PUDO eliminates the problems of establishing the correct address or the absence of the addressee at home.Using this type of delivery is simple.When shopping online,all you have to do is select the right point and pick up the parcel there later.When choosing a point,the customer pays attention to the distance from home or work,so the density and distribution of outlets is also important.There is currently a very strong trend towards the development of the PUDO service,which is why CEP operators are constantly expanding the network of points on their own and through external partners.They are promoting it as a convenient form for customers they can pick up or send a parcel at the time and place of their choice.Due to the greater consolidation of parcels,the cost of delivery to the points of sending or picking up a parcel is lower than the cost of door-to-door courier services.However,this does not always mean a lower price for the customer.Some parcels are diverted after the courier cannot successfully deliver the parcel to the addressee,and some go directly to PUDO points.This results in the cost of delivery to the points and the cost of handling parcels at these points.However,due to rising last-mile costs(mainly due to rising labour costs),the difference between direct and point-to-point delivery prices will increase.The disadvantage of PUDO is that the availability of the service is limited by the opening hours of the points,which became the impetus for the automation of the service based on the parcel machines described earlier,most of which can be accessed 24 hours a day.Like parcel machines,PUDO is characterised by restrictions on the size,weight etc.of parcels accepted,albeit these restrictions are sometimes less stringent except for the smallest PUDO points.Pick-up and drop-off points are also a very efficient solution for CEP operators and online retailers,as they involve fewer questions from recipients,who are automatically informed of the status of their parcel.They also reduce the number of undelivered parcels due to the recipients absence.PUDO points can be successfully used for returns.Recipients can easily and cheaply,and sometimes even free of charge(depending on the retailers offer),send back the product.With the development of out-of-home delivery networks,CEP operators are extending their services.For example,some are being equipped with fitting rooms where customers can check the products they have ordered.In addition,they BACKGROUND TO THE REPORT28Rationale for further development of out-of-home deliveryAmong the most important considerations for the further development of out-of-home delivery are:Lack of available labour and rising fixed costs will drive the decline of D2D courier services,which will become more expensive and transform into a premium service.Sales platforms with cheaper products will offer free delivery,while preferring OOH delivery(the main drivers are the growing popularity of solutions such as Amazon Prime,Allegro Smart,high availability of points and changes in customer behaviour).The re-commerce trend and new entrants such as Vinted,OLX,Zalando Pre-owned make C2X services increasingly in demand,and they fit the OOH model due to the low cost of both the first and last mile.BACKGROUND TO THE REPORT29In December 2023,the European Council adopted its general approach to new rules for the accounting of greenhouse gas emissions from transport services,including the road freight options used for parcel delivery.Concurrently,global parcel volume reached over 161 billion in 20221,a 1%increase from 2021 which still heightened pressures to make road freight more sustainable.Pitney Bowes forecasts this volume to grow steadily up to 225 billion by 2028.The 2022 volume amounted to some 441 million parcels per day being shipped across the globe,though most of these parcels remained within the borders of their country of origin.According to data from the Universal Postal Union,the largest share of parcel deliveries took place within the same country they were dispatched from,while cross-border international services were less popular.The courier,express,and parcel(CEP)market in Europe dropped to an estimated 18.2 million parcels in 2022,but this decline in parcels shipped did not lead to a decrease in revenue2.Comparatively,some 21.2 billion parcels were shipped in North America while 143.56 billion were sent in the Asia-Pacific region.These regions were homes to the largest e-commerce markets,which contributed to the parcel volume.Along with changes within local markets,last mile networks have also been evolving locally,boosted by start-ups generating investment in the sector.The investment value varies throughout regions,partly as start-ups are more prevalent in some regions than others3.BACKGROUND TO THE REPORT30THE GLOBAL LAST MILEForecast e-commerce revenue in Europe,China,the United States,and worldwide from 2017 to 20291 Source 1:Pitney Bowes.2 Source 2:Effigy Consulting.3 Source 3:Deloitte.Notes:Data shown is using current exchange rates and reflects market impacts of the Russia-Ukraine war.Source:Statista,Mar 2024.01234562017201820192020202120222023202420252026202720282029Revenue in trillion USDChinaEuropeUnited StatesWorldwideThe last mile is estimated to be the biggest cost driver in the entire logistics process,and delivery modes directly to the customers door are one of the drivers of this cost.Out-of-home delivery has been gaining popularity in the past years,which could help reduce not only last mile costs but also greenhouse gas emissions,as OOH solutions can shorten delivery routes and enable dropping off various parcels at the same time.However,over three quarters of European online shoppers still usually chose home delivery,compared to nearly a quarter having their purchases delivered at a parcel shop4.As governments are setting zero-emission targets and increasing their emission standards for vehicles,the impetus to switch to greener vehicles is placed on fleet operators.Global developments led by postal operators are ongoing:Between 2012 and 2022,22 of these companies had increased the share of alternative fuel vehicles in their fleet from 12%to 26%,with electric vehicles accounting for 20%of the postal fleet5.However,these slow advances are met with various challenges,including consumers preference for free and fast shipping over sustainable delivery.As e-commerce remains popular among customers,online shoppers adoption of out-of-home options is a crucial issue for the last mile sector.BACKGROUND TO THE REPORT4 Source 4:Geopost.5 Source 5:International Post Corporation.Respondents were allowed to pick multiple answers.Results exclude respondents choosing the“Other”and:Nothing is important to me when it comes to shipping”answers.France:Survey conducted from September 18 to September 21,2023,with 1,050 online shoppers.Germany:Survey conducted from September 8 to September 14,2023,with 1,043 online shoppers.UK:Survey conducted from September 7 to September 14,2023,with 1,042 online shoppers.Source:Statista,Oct 2023.When thinking about online shopping,which of the following criteriaare important to you in terms of delivery?0 0Pp%Time window of the delivery freely selectableCO2 neutral shippingReceiving several parcels in one deliveryEnvironmentally friendly packagingGood customer ratingsLittle packaging wasteFast shippingFree return shippingShipment trackingFree shippingUnited KingdomGermanyFrance31304.5327.8358.4472.0551.2476.3475.5529.8602.8670.8731.4776.7811.801002003004005006007008009002017201820192020202120222023202420252026202720282029in billion USDBeauty&Personal CareBeveragesDIY&Hardware StoreElectronicsEyewearFashionFoodFurnitureHousehold EssentialsLuxury GoodsMediaOTC PharmaceuticalsTobacco ProductsToys&HobbyEUROPEAN E-COMMERCEE-commerce took off in Europe at the beginning of the COVID-19 pandemic and rapidly increased in the next years,boosting the need for last mile solutions for online shops wishing to improve their delivery service offers.In 2023,geopolitical issues,supply chain pressures,and the impact of inflation are estimated to have prompted a slight drop in the e-commerce market size,down to some 475.44 billion USD in Europe.However,forecasts project 2024 revenue to reach around 529.8 billion USD,boosted by the high rates of e-commerce user penetration in the region.The United Kingdom,Denmark,and Norway boasted the three largest user penetration rates worldwide in 2023 at 80.1%,75.1%,and 73.5%,respectively6.These elevated rates made these three countries part of the five countries with the highest e-commerce penetration at a global level,along with the United States and Sweden.Quick commerce,a relatively emerging market in Europe,also depends on last mile logistics for its operations.It relies on some of the same solutions as other e-commerce platforms to provide its services,focusing on express goods delivery.In 2023,European quick commerce was forecast to amount to 9.73 billion USD and represents a shift in last mile logistics towards faster-paced delivery.However,while e-commerce on-demand and instant delivery became sought-after logistics services during the pandemic,they still trail behind the more general e-commerce and its last mile needs.BACKGROUND TO THE REPORTForecast e-commerce revenue in Europe from 2017 to 20296 Source 6:Statista.Notes:Data shown is using current exchange rates and reflects market impacts of the Russia-Ukraine war.Source:Statista,Mar 202432E-commerce represents an increasingly large share of the total global retail sales.In 2022,eMarketer estimated this share to amount to 19.5%.B2C sales were a particular driver of this market throughout 2022 and 2023 and contributed to the rapid increase in parcels dispatched across the globe.At the center of this transaction,consumers intrinsically influence how companies interact with their service providers.Free and fast shipping were the most important criteria for consumers in the United Kingdom,France,and Germany in terms of delivery,but data from Statista Consumer Insights global survey shows that up to a third of respondents in selected European countries mentioned they preferred express shipping services.This is partly due to the costs of express services,which might not always be outweighed by the urgency of consumers purchases.An increasing number of retailers and brands have also only recently started to offer faster deliveries as an answer to the growing volume of online sales.Convenience is a factor of paramount importance for consumers when selecting a delivery method and provider.However,while online shoppers prioritize ease at the time of delivery,they also break with patterns observed in the overall postal market.While most parcels hauled across the world were domestic parcels,57%of European online customers had purchased products from foreign websites at least once7.This presents two different challenges for last mile providers,who must contend with consumers preferences and an increasingly cross-border e-commerce market.BACKGROUND TO THE REPORTOriginal survey question:Which of these statements about online shopping do you agree with?(multi-pick)Source:Statista.All surveys conducted between January and December 2023.Number of respondents:France(12,173),Germany(35,938),Italy(12,209),Netherlands(12,150),Spain(12,174),United Kingdom(24,187).Share of respondents who prefer express shipping in selected European countries7 Source 7:Geopost.27!(3%0%5 %05%United KingdomSpainNetherlandsItalyGermanyFrance33MARKET DISRUPTIONSThis accelerated transition to online shopping and digital services,propelled by the COVID-19 pandemic in 2020 and 2021,altered the way logistic services operate and increased the demand for e-commerce last mile,e-fulfillment,and instant delivery instead of traditional store distribution.While e-commerce revenue lowered as lockdown measures eased and physical stores fully reopened,the e-commerce market size remained higher in 2022 and 2023 than its pre-pandemic levels and is forecast to keep growing.However,as consumers and distributors adopt the changes linked with the rise of e-commerce,they have also led to new challenges for the sector.Geopolitical and macroeconomic tensions resulting from high inflation rates,energy costs,and conflicts in various parts of the globe led to both supply pressures for providers and economic pressures for consumers.In Europe,increased competition in the Schengen area could also impact the logistics sector in 2024,especially as companies are increasingly looking towards automation and artificial intelligence as ways to expand efficiency.Last-mile and third-party logistics could play a key role in these developments,particularly in markets more reliant on e-commerce,such as China and the United States,which were estimated by Statista to be the countries with the largest e-commerce revenue in 2023.BACKGROUND TO THE REPORTSource:Statista,Mar 2024.The map was colored based on gradient,with the darkest shade(China)representing estimated revenue of 1,4690.00 billion USD compared to the lighest color(Gambia)with revenue of 0,05 billion USD.E-Commerce revenue comparison by country in 2023estimated revenue(in billion USD)1,4690.000,0534European e-commerce was still emerging in 2023.The United Kingdom and Germany were among the five countries with the highest e-commerce revenue that year but generated 10 and 13 times less than China.Breaking through this market saturation will be one of the main challenges for European B2C online sales,particularly as the American giant Amazon holds a large share of the e-commerce delivery market in the region.Around 65%of French online shoppers and over three-fourths of UK e-commerce consumers reported having received a parcel from Amazon in the past 12 months,as of September 20238.Maintaining sustainable growth is another hurdle for European providers,in part due to competition in the sector.The growing e-commerce market,especially cross-border,reinforces the need for postal services internationalization,which contrasts with the European Unions relatively granular postal network.Increased globalization of postal services benefits the third-party logistics sector,projected to reach over 310 billion USD in 2028,and incentivizes national postal operators to collaborate.European e-commerce could tap into its growing consumer base to tackle these macroeconomic challenges.While European e-commerce revenue lowered in 2022 and 2023,its consumer base has been steadily growing and Statista forecast is to reach over 485 million by 2029.The rising popularity of social commerce(the use of social networks for e-commerce transactions)could further attract new customers to e-commerce platforms.Nearly 5%of the European e-commerce revenue was estimated to come from social commerce in 2023.However,while the sector is still projected to grow through 2028,it should be at a slower pace.Heightened costs of living and inflation have also led an increasing number of online shoppers to turn to C2C second-hand resale platforms,particularly in the fashion sector.Some 72%of regular e-shoppers reported using a C2C platform to buy and sell second-hand products9,highlighting the potential of the second-hand market in the European e-commerce space.As consumers turn to more sustainable consumption,so must all levels of the logistics chain.This can include providing environmentally friendly and out-of-home delivery alternatives.This growing focus on green logistics adds to the new challenges and opportunities arising in the European last mile logistics sector.BACKGROUND TO THE REPORT8 Source 8:Statista.9 Source 9:Geopost.35BACKGROUND TO THE REPORT36NEW TECHNOLOGIESService providers are increasingly adopting environmental measures as they make theirfleets and buildings more sustainable,including the development of local fulfillment centers,which are geographically closer to the buyers.Other measures were also put in place at all levels of parcel delivery:Out of 30 European National Regulatory Authorities10,19 reported using electric vehicles at the delivery phase,while 12 made use of parcel lockers and 7 had route optimisation tactics put in place.However,these efforts also faced a lack ofdefinition for an environmentally sustainable postal service in countries of the EuropeanUnion.In a 2023 survey by the European Regulators Group for Postal Services(ERGP)11,28 of 30 National Regulatory Authorities mentioned there had been no new legislative initiatives regarding environmental sustainability in the postal legislation since the 2021 and 2022 editions of this survey.This disconnect between a heightened need for sustainability in the transport sector,including to meet the European transport decarbonisation targets,and the lack of new legislation on the sustainability of postal services is due to national and European postal legal frameworks predating the recent changes related to sustainability.Thisvacuum puts part of the responsibility on European operators and service providers to create new sustainability initiatives.There is,however,still a disconnect between these operators and consumers.In this 2023 survey,28 of 30 National Regulatory Authorities believed it to be their role to provide users with information on environmentally friendly delivery options.These are the same options that are less attractive to European online shoppers than fast and free shipping.Most National Regulatory Authorities also considered providing information on out-of-home delivery as part of their roles,and the availability of parcel lockers climbed by 110.7tween 2018 and 2022 for Universal Service Providers,and by 737.2%for other postal service providers illustrating the sectors interest in providing better OOH solutions.New technologies are also gaining ground in postal services.In 2022,Universal ServiceProviders and other postal service providers invested around 3.34 billion euros in the sector.Technological trends such as automation,artificial intelligence,and autonomous deliveryvehicles have obtained the interest of the sector,with autonomous delivery trials already in place in selected cities.These new technologies could directly compete with out-of-home spaces,offering a more sustainable alternative to home delivery.However,investments in out-of-home delivery options still show a clear commitment to this sustainability solution from delivery companies.10 Source 10:ERGP.11 Source 11:ERGPBACKGROUND TO THE REPORT37CEP INDUSTRY CHANGESIn line with fast market developmentand the growing popularity of theinternet,e-commerce has becomeincreasingly important,Amazon,inparticular,has played a key role inchanging the face of last-mile deliveryin Europe over the last decade.In the late 1990s,the mail and parcels market started to grow worldwide,fuelled largely by growing e-commerce related volumes.The incumbent players were forced to look fornew,more efficient and economic solutions.Originally there were three main OOH shipping streams:Business mail and parcels.B2C mail and parcels as a result of distance shopping.Field engineering service delivery.Since the start of Russias war in Ukraine,incre-ased input costs have forced carriers toseek cost reduction,while inflation has made customers look for economies such as thoseoffered by re-commerce.Both favour OOH development.This trend has continued with increased consumer acceptance of OOH and,in particular parcel lockers.BACKGROUND TO THE REPORT38E-COMMERCE NEEDS BETTER SOLUTIONS AND CXE-commerce needs,above all:CapacityQuality/first-time delivery(FTD)ChoiceWhere?How?When?For how much?Out-of-Home is one of the key pillars of Geoposts business strategy for tomorrow.While the trends towards Out-of-Home delivery are more than confirmed,we are proud to have been one of the major and pioneering players in this field,reaching more than 100,000 Pickup points.Going forward,we will continue to support our customers in their development needs and expectations by further investing in our Out-of-Home delivery network and services across Europe while strengthening our teams expertise.Alberto NavarroEVP and COO Europe of GeopostBACKGROUND TO THE REPORT39DELIVERY PREFERENCESACROSS EUROPEWhile we do not have any accurate andquantitive assessment of the ranking ofmain delivery places,both PUDOs andespecially APMs are clearly increasingin importance.This is due to the increasingproximity of points and more APMs(with highCX)as well as the fact that re-commercedelivery is only commercially viable at scalewith OOH.We anticipate that only the mostdeveloped OOH European markets are unlikelyto experience an increase in OOH delivery asopposed to D2D due to the already exisitng dominance of OOH.Customers are increasingly demanding interms of deliveries.They want transparency,flexibility and greater influence over theirdelivery logistics.More and more customersvalue the fact that online shopping offers avariety of delivery options.Whats more,if delivery is free of charge,consumers are willing to wait.Customers may even decide to abandon a purchase if the delivery option they want is not available.Given this,and the fact that the trend observed for years has been growth in CEP(B2C and C2X)volumes,it is essential to offer OOH deliveries.Customers expect features such as:Time-slot delivery.Alternative delivery options.APMs/PUDOs.safe drop/leave with neighbour(UK or DE).In-flight redirection or time-slot changes.Consolidation of deliveries.Same day or even same hour!According to DHL EUROPEANONLINE SHOPPER SURVEY 20231European consumers still(average of the survey)prefer home delivery.The result of the survey shows the following consumer preferencesfor the place of delivery:Home delivery 64%Parcel locker(APM)14%Left at neighbour or safe place 12%Parcel shop(PUDO)10%The report shows,however,that Europeans are by far the fastest among other continents to convert to OOH delivery.The preference for home delivery fell from 73%to 64%in Europe,APMs rose from 13%last year to 14%,and parcel shops increased from 9%to 10%in the same period.As the authors of the report comment,this 1%increase may seem small,but across the region as a whole,almost one million people each year switch from parcel to out-of-home delivery.In addition,based on our review of a number of surveys and studies of consumer behaviourover the last few years indicates that,depending on the country and habits,up to 70%of consumers want to be able to redirect their parcel(change the place/time of delivery).The second most important trend is the possibility of picking up a parcel from a PUDO or APM,where Polish consumers are at the top of the ranking with more than 50%preference and the fastest growing countries in this respect are Estonia,Hungary Sweden and the Czech Republic.1 Source 1:DHL.BACKGROUND TO THE REPORT40MERCHANTS ONLY HAVE ONE CHANCE TO MAKE A FIRST IMPRESSIONConsumers want to have a choice,so various delivery options at checkout are a must.only return if the CX is good!Offering a range of delivery options incre-ases the probability of closing a basket,which in turn leads to more revenue.A positive delivery experience increases the probability of repeated orders,and thus more revenue.Above all,successful first-time delivery-means a closed sale and less chance of a return.Empirical data shows that a failed first-ti-me delivery increases the chance of a service failure severalfold.BACKGROUND TO THE REPORT41LAST MILE THE MAJOR CHALLENGEOOH using PUDOs and APMs is currently the best solution to the last-mile capacity problem.It helps sustain B2C(and C2C)parcel volumes and the demand from vendors and consignees for ever more consumer-centric route,and provides high quality and customer choice,which are so very important.Locker routes can serve over 1300*parcels vs.an absolute ceiling of around 200 for a dense D2D urban courier route.OOH AS A SOLUTION TO THE LAST-MILE PROBLEM*Based upon actual urban deliveries for InPost in Poland.Online shopping,as opposed to traditional trade,involves delivery to the final custo-mer,a process that is complicated and costly.According to Eurostat in the EU in 2023,among all the individuals aged 16-74 years surveyed,92%used the internet within the last 12 months in 2023 while 69%bought or ordered goods or services,an increase of 1%compared with 2022.The highest shares of online customers were declared in 2023 by the Netherlands(93%),Sweden(91%)and Denmark(90%).The lowest shares were reported by Italy(58%),Romania(55%)and Bulgaria(54%).While the EU as whole recorded an incre-ase of 18tween 2013 and 2023,in the following countries,the growth was over(30%):Romania(40%),Hungary(37%),Czechia(36%),Croatia(32%),Lithuania(32%),Bulgaria(32%)and Slovakia(31%).The last mile is a critical point in the entire supply chain and one that is often still mis-managed.As such,it represents the biggest challenge for operators,espe-cially in light of the ever-growing expecta-tions created by e-commerce.It is important to note that transport at the last-mile stage is responsible for even up to 65%of all transport costs generated between the producer of the good and the consumer.Media partners:Media partners:Prepared with the support ofCHANGING ONLINE SHOPPERBEHAVIOURAlthough the Benelux is often regarded as a heterogeneous region within Europe,there are still some material differences between the Netherlands and Belgium when it comes to online shopping.In terms of Internet usage,both countries belong to the top-12 in Europe,with scores of 96%and 95%respectively.However,when it comes to online shopping there is a big gap between Dutch(90%)and Belgian consumers(68%).One of the main reasons is that Belgian rules on night labour(that is after 8PM)used to be rather tight.This meant very early cut-off times.French(e.g.,Amazon.fr)or Dutch(e.g.,Coolblue and )web shops and platforms offered much later cut-off times(midnight or even later)in combination with next day delivery.Although this cross-border buying offered a perfect alternative for the early adopters,it initially posed a hurdle for less-experienced online shoppers,as is shown in the table below.In 2022,the Belgian federal government eased the rules on night labour in an attempt to create a more level playing field for the domestic online sellers.Even though the online landscape is still very much dominated by foreign players,Belgium has been catching up versus countries like e.g.,the Netherlands,both in the growth of online shoppers and in absolute spending.In 2023,total online spending in Belgium was 16.3 billion1,which is less than half of the 34.7 billion2 in the Netherlands.When looking at the growth in online spending in 2023,Belgium clearly outpaced the Netherlands with 10.7%and 3.1%respectively.It must be noted though,that in both countries,the growth was mainly driven by spending on services as well as higher prices.Spending on products was up approx.3.5%in Belgium but down 0.8%in the Netherlands.This is also reflected in the reporting by the two market leaders in parcels,which shows that bposts online volume growth( 6.3%)clearly outpaced that of PostNLs(-0.3%),moreover since the bpost growth figure merely relates to domestic volumes,whereas PostNLs includes the more rapidly growing cross-border volumes,particularly from China.Figure 1:Share of cross-border buying has increased.Source:Geopost e-commerce barometer 2022 and 2024.1 Source 1:BeCommerce Market Monitor.2 Source 2:Thuiswinkel Markt Monitor.SHOPPER BAEHAVIOURBEHAVIOURAL CHANGE FROM ONLINE SHOPPERS ON THE HORIZON EXPERIENCED ONLINE SHOPPERS LESS RESTRAINED TO BUY ABROAD43Figure 2:Year-on-year percentage volume growth in parcels.Source:bpost group and PostNL quarterly reports.What the Dutch and the Belgian online shoppers have in common,is their preference for to-door delivery at home(75%and 74%respectively).Next the shared preference for home delivery,online buyers in both countries say that free delivery is their single biggest driver to shop online,followed by free returns3.Having to pay a delivery fee is the most important hurdle for Belgian online shoppers and the third most important one for the Dutch.It is unclear how much longer online sellers can continue to accommodate their clients.Challenges like e.g.,the environment,cost inflation and scarcity on the labour market are making it ever more difficult to meet all these demands.Increasingly,this will force online sellers to confront their clients with a choice between convenience(to-door delivery,albeit at a price)or free and more environmentally sustainable delivery by means of the OOH route.Kicking off with the environment,the implementation of the EUs Corporate Sustainability Reporting Directive(CSRD)can be seen as a game changer.From this year onward,this directive requires all large companies and all listed companies(except listed micro-enterprises)to disclose information on what they see as the risks and opportunities arising from social and environmental issues,and on the impact of their activities on people and the environment.This will increase the pressure on the last mile logistics providers to step up their efforts in greening the last mile,for example by replacing fossil-fueled vehicles with fossil-free alternatives.In the Netherlands,for example,34.9%of all parcels were delivered fossil-free in 2022,versus 20.3%in 2021.Although this reduces the CO2 footprint of the last mile,it does not deal with several other challenges,like e.g.,congestion of the inner cities and labour shortages.A study4 commissioned by the Dutch equivalent of the House of Representatives(“Tweede Kamer”)showed the resources required to handle the 2020 parcels volumes in the Netherlands.Even excluding the delivery of meals and“flash”delivery of groceries,the 2021 online orders created anywhere between(a rounded)50,000 to 80,000 vehicle movements per day and required the availability of between 60,000 and 100,000 deliverers of a FTE basis.The actual number of deliverers on the road will be even higher,because not all deliverers work on a full-time basis.Since churn rates among delivers are relatively high(in some cases even 30-40%),the parcel logistics firms are already facing a major challenge finding enough delivery staff in the current environment.Hand in hand with labour scarcity,labour cost inflation has become an increasingly important issue as well.When using the development in regulatory minimum wages as a benchmark,one will see that minimum wages have gone up by an accumulated 21.6%in the Netherlands and by 20.2%in Belgium versus 2021.With labour costs being the single biggest component of the costs of the last mile,this increasingly challenges the room for web shops to offer free to-door delivery.SHOPPER BAEHAVIOURBPOSTGROUPS VOLUME GROWTH OUTPACING THAT OF POSTNLS3 Source 3:Geopost e-commerce barometer.4 Source 4:Parlement en Wetenschap Bezorgeconomie:de effecten op mobiliteit,milieu en leefomgeving(September 2021).44Switching to a system whereby the online buyer will have to pay for(at-home)delivery cannot be implemented from one day on another.The earlier mentioned Geopost e-shopper barometer shows that having to pay for delivery is one of the main obstacles for Dutch and Belgian consumers to shop online.However,there may be change on the horizon.In its comments on the most recent edition of its e-commerce survey,Geopost stated:“Frugality is the new hype”.E-shoppers have adapted their habits in the face of the uncertain geopolitical environment and economic restraints.The late Dutch soccer star Johan Cruyff once said:“Every disadvantage has its advantage”.That this view still holds is illustrated by the Wehkamp case.In the Netherlands,Wehkamp is the sixth largest online seller of fashion and other consumer durables.Each year,its clients return 11 million products.Apart from the shipping costs of these returns,it takes 150 people to handle these returns.Just as a comparison,it merely takes 28 people to send 11 million articles to the online buyers.As one of the first movers,this triggered Wehkamp to introduce a return fee of 50 eurocents per returned item in February 2023.Since then,the number of returned articles dropped by 10%.This triggered other online retailers like e.g.,Bever Sport(EUR 3.95/return),H&M(EUR 1.99/return)and Zara(EUR 1.95/return)to follow Wehkamps example,albeit with one difference:unlike Wehkamp,they all have physical stores and if the buyer drops the returns here,this remains for free.In October 2023,Wehkamp decided to take a next step:it introduced a charge of 50 eurocents per order for to-door delivery.Delivery at OOH points remains free.To even further encourage the online buyers to opt for this route,Wehkamp even promised to donate a certain amount to a well-known Dutch charity(Jantje Beton);a donation that could easily add up to EUR 100,000 or more.The results were surprisingly good.In key-note speech at the 2024 Emerce Retail conference in March of this year,Wehkamps COO Mr COO Frans Falize said that half of the orders are now being delivered via DHLs OOH network of PUDOs and APMs in the Netherlands.To further stimulate the OOH route,Wehkamp has decided to double the fee for to-door deliveries to EUR 1.00.This clearly illustrates that online sellers can use the frugality to their advantage.Free delivery can be used as the proverbial carrot on a stick to lure online shoppers away from to-door delivery to cheaper OOH alternatives.At the same time,the last mile logistics providers have stepped up the density of their OOH networks,whereby the emphasis is on deploying APMs on top of their already very dense networks of PUDOs.These efforts are increasingly paying off,as was illustrated by a press release issued by DHL e-Commerce Netherlands during last years peak season.The company then reached a new all-time high in the number of parcels handled on one single day(1.6 mln)as well as in the number of parcels delivered through one of its OOH locations(300,000).It will not stop here.At the presentation of his companys FY23 results,bpost groups new CEO also announced a strategic review,whereby he also specifically referred to the companys strategy for PUDOs and APMs.PostNL increased both its number of PUDOs and APMs last year and plans to add another 600 APMs in FY24.The InPost example has demonstrated that the density of an OOH network is one of the main factors driving the adoption and use of OOH points.Various studies have shown that this requires that the receiving client lives within a seven minutes distance of a pickup point.Increasingly,this is the case for a growing number of OOH points in the Netherlands and Belgium.Combined with the fact that some of the more prominent online platforms have begun to charge for to-door delivery,we feel this will lead to behavioural change among online shoppers in the Benelux.SHOPPER BAEHAVIOUR45Media partners:Media partners:Prepared with the support ofOOHPUDOs&APMsOOH PUDOs&APMs47OOH delivery consists of delivering a shipment to a point or machine located in a convenient place for the customer.They can pick up a parcel on their commuting route at a convenient time,within a timeframe of a few days.OOH most commonly takes one of two forms:APM and PUDO.A PUDO point is a place where parcels can be collected or store,larger market,parcel shop or a urban depot/micro depot.An APM is a machine located inside or outside a building,from where packages can be collected or shipped without interacting with another person.OOH allows the consolidation of shipments,and can reduce delivery costs.It reduces the use of resources(cars,couriers)and increases means fewer stops are required and eliminates unsuccessful deliveries where recipients are unavailable).OOH delivery involves the customer in the last-mile process.Customers must do some of the work that the courier would otherwise do,as they must go to the OOH point and pick up(or drop off)parcels for themselves.OOH facilities have to be easily accessible to everyone.In bposts words,they must be“slipper distance”from the customers residence,workplace or another place that they regularly visit or pass by.If a consignment cannot be delivered to the door,it should be redirected as close as possible DEFINITIONS/CHARACTERISTICS OF OOHOOH PUDOs&APMs48OOH PROVIDERSOOH are provided by various players:National postal operators which histo-rically had the largest last-mile infra-structure,usually with a mixture of traditional postal outlets,third-party agency/PUDO points and,increasingly,lockers.CEP companies such as DPDgroup,DHL,InPost/Mondial Relay,UPS,Evri/Hermes,GLS or FedEx and local heroes such as Packeta/Zsilkovna,Orlen Paczka,Matkahuolto,Sameday or Colis Priv have their own PUDO.E-commerce-Amazon and AliExpress(Cainiao)as well as local heroes such as eMAG or Allegro are being more active as OOH providers,albeit with mixed results.Re-commerce,notably Vinted,continue to be increasingly involved in OOH.Retail point owners such as OXXO,7-Eleven,abka,Orlen,Lidl,PayPoint or Valora subsidiaries.Infrastructure owners such as public transport,rail companies,local or city authorities or,more recently,private(parking)infrastructure owners/opera-tors.IT platforms/consolidators The evolution of courier brokers such as Alsendo,Asendia,Auctane or Seven Senders involves the adoption of IT solutions that integrate various forms of(usually third party)delivery and the establishment of physical PUDO points or APMs.OOH PUDOs&APMs49ADVANTAGES OF OOH*Where operating at reasonable capacity.OOH offers ever more consumer-centric and flexible last-mile services.Almost 100%first-time delivery.Proximity to customers(best-in-class urban networks are 350m away)so they can pick up their package“on the way”,e.g.when shopping or coming back from work.Convenient 24/7(outside APMs)or extended PUDO opening times.Contactless(APMs).Cheap and easy returns.More flexibility;long period of storage(5 days in most PUDOs).Operationally and financially efficient.Ecologically superior where the PUDO or locker is proximate to customer homes.Fast and relatively cheap means of incre-asing capacity*.OOH PUDOs&APMs50REASONS/DRIVERS FOR OOH DEVELOPMENT The reasons for OOH success are:More choice for the customer.Ease of locating and accessing by couriers.which can increase last-mile capacity severalfold.Some 60wer carbon emissions in urban areas and even less in rural ones*.*Reduction in carbon emissions due to a higher delivery success rate.The Covid-19 pandemic and recent eco-nomic crises further accelerated the popularity of OOH.The lack of available labour and an incre-ase in fixed costs can be expected to reduce the significance of D2D courier services,which will become more expen-sive and evolve into a premium alternative.Economy delivery services and sub-scription models will further drive the demand for OOH capability,which will be the only way to achieve acceptable cost levels.Re-commerce(second-hand)trends and new entrants such as Vinted,OLX and Zalando are further increasing the demand for C2X services,which is ideally suited to OOH networks due to the low cost of both the first and last mile(only to/from the access point,with the custo-mer/consignee doing the rest).OOH PUDOs&APMs51OPEN/AGNOSTIC VS.CLOSED NETWORKSDiscussion of open(carrier-agnostic)or closed OOH networks has become increasingly topical as e-commerce has driven this area of the last mile forward and created a need for new ways of approaching it.Traditionally,incumbent OOH networks(usually postal operators due to their legacy infrastructure)have been unwilling to allow others to use their networks,as they consider them to be part of their competitive advantage.However,this is beginning to change as players become more knowledgeable in this space and as governments and local authorities push for a shared last mile,due to environmental concerns.While most networks are still closed,the emergence of an open model began in China,where the largest network in the world,HiveBox,operates under an open model.in our view they should be the“go to”model.In the end it is arguably the customer,and possibly local government,who will push for fewer but larger and more proximate OOH networks.Agnostic networks in Europe include Parcel Pending by Quadient(FR,UK),Myflexbox(AT,DE),Direct4.me(CR,SK),AlzaBox(CZ,SK)YEEP!(UK)and many others.$Many carriers and postal operators dont understand the valueof an open(agnostic)network heres why they make sense.SHARINGBENEFITSMOREEFFICIENTFASTERDEVELOPMENTMORE POINTS/PROXIMITYOPENNETWORKOPENNETWORK$OOH PUDOs&APMs52PREFERENCES BY GROUPFor consumers(consignees),the key is to have a choice of delivery options.Not only carrier brands,but also various types of services that best match their current shopping needs.For merchants,the key is of delivery methods that will increase the basket closing indicator and ensure high scores for and the all-important CX.For carriers,the key last-mile capacity and good customer service OOH is a key element,without which it is unlikely that subscription models OOH PUDOs&APMs53CONSUMER VIEWD2D is theoretically the most convenient(if the consignee is home),but parcel lockers create the best overall customer experiencePARCEL LOCKERSCOLLECTION ATMY CONVENIENCEPUDOPARCEL SAFELY DELIVEREDCARRIER HOME DELIVERYTHERES NO PLACE LIKE HOME?Convenience:access 24/7*Located on my way,with easy access and parking Physical proximityConvenience:Its on my way,in my shop or petrol station,etc.Physical proximity it is nearby but not generally 24/7(unlike lockers)Convenience:Location comfort unlimited geographical coverage Delivery comfort it comes to my doorstep as long as Im at homeCustomer centric:Customer has more choice Ease of use one click to open the locker Fast and easy remote access&reducing queuesCustomer centric:Customer has more choice Extended time to pick up vs.APMs(usually a few more days)Easier for(older)non-tech savvy customers,who prefer non-standardised“human interfaceCustomer Centric:Ease of delivery I dont have to leave my home!Low/attractive delivery price for fast delivery(typically next day)No more missed deliveries delivery attempt Low/attractive delivery price for 2-to 3-day delivery No more missed deliveries delivery attempt Operationally the least Fast delivery(typically next day)Delivery to the doorstep but at a higher price *In the vast majority of cases OOH PUDOs&APMs54MERCHANT VIEWCARRIER VIEWdelivery channelHome delivery is the legacyoption,but labour and fuel costsfavour OOHPARCEL LOCKERSPUDO/STORE PICK-UPCARRIER HOME DELIVERYDelivery Safe place for parcels reduces the level of damages delivery vs.D2D Good CXDelivery Safe place for parcels Intermediate level of damages delivery vs.D2D Generally good CXDelivery Highest level of damages delivery success rate High chance of service failure if Customer experience:Simple returns available at no/low costCustomer experience:Consumer returns generally easy and available Less standardised experience than from a machineCustomer experience:Few players can achieve good CX Consumer returns are costly and challengingVolume/capacity management Flexible to sudden volume changes,until capacity is reachedVolume/capacity management Flexible to sudden volume changes,up to a point plus the option of pop up pointsVolume/capacity management Intermediate sensitivity to sudden volume changes*LOCKER NETWORKPUDO NETWORKCARRIER HOME DELIVERYLocation Urban areas,ideally located in bedroom districts close to home APM access is generally 24/7 Need accessible and dense network(can be supported by PUDOs)Location Urban areas(or rural centres)Indoor access with limited opening hours/daysLocationMainly residential,with some businessUnlimited geographical coverageDelivery service highest number of parcels per stop*Automated process attemptDelivery service Better than D2D,with several parcels per stop Manual process attemptDelivery serviceMost expensive and least per stop)Relatively low FTD success(especially without IDM)Leave safe optionsCustomer experienceNo direct contact with consumerHigh possibility to manage on-time delivery to meet SLA,and generally best CXCustomer experience No direct contact with consumer(unless PUDO points are owned by carrier)High possibility to manage on-time delivery to meet SLA,and generally good CXCustomer experience Full personal contact with each consumer but can be damaged by poor courier behaviour Moderate possibility to manage on-time delivery to meet SLA,and variable CX*Except for large PUDO/micro depot alternatives*Especially where last-mile delivery is outsourced/subcontracted by the carrier.OOH PUDOs&APMs55OOH SOFTWARE THE SECRET SAUCE IN THE OOH LAST MILEA great customer experience is ever more important for OOH deliveries.With OOH growing rapidly within the last-mile delivery space,its important to ensure that customers have a great experience when using these options.OOH has proved itself to be a better model for last-mile delivery,and good customer experience is a keyway of increasing the adoption of OOH options instead of traditional home deliveries.Good software is the key to customer experience.Software effectively dictates the user experience because,ultimately,it is software.which defines how intuitive and easy the OOH process will be.What the final customer interacts with typically depends on the software used by the company making the deliveries.If the software on the user interface or operational processes are unreliable or unintuitive/difficult to use,the customer experience will suffer.In contrast,if the software is operationally strong,simple to use and functional,the customer will have a good experience.OOH PUDOs&APMs56Better software in PUDOsPUDOs will be a key part of OOH for the foreseeable future and are important complement to APMs.A good PUDO experience will likely be more dependent on in-store operational software than on human to customer interfaces.The process should be extremely simple for the final consignee.It should be as easy as presenting some form of valid authentication(such as a QR code or a PIN code)or confirming a notification in an app,following a geocode check.However,the tools to manage the PUDO shop or the operator should be reliable,allowing them to easily communicate statuses or service issues to the delivery company,and authenticate the customer who is trying to collect a package.PUDO software which will make the user experience much closer to that in lockers is an area that requires investment and continues to be a key focus for LME.In fact,the PUDOperfect project is all about this very topic.PUDO Perfect is an innovative and efficient solution developed by a uniquely experienced team of experts from Last Mile Experts,who were involved in the roll out and maintenance of systems for leading carriers in the UK,Belgium,The Netherlands,Spain,Romania,Turkey and Poland.It is designed for seamless integration while providing robust security and technological excellence tailored to your specific needs.Better software in smart lockersIn contrast,when the final consignee chooses an APM as an OOH option,they have to interact with a machine-based customer interface at the APM itself.As a result,it is imperative that the APM is simple to interact with and allows for an easy pick-up or drop-off process.Increasingly,APMs also make use of external interfaces,such as mobile or web apps.Besides the customer experience aspect of APMs,an even more important element is how they are able to communicate with all the other operational components in the process.Good APM software enables efficient operations,simple and integrated flows,data collection for continuous improvement and avoids a lot of the problems typically associated with APMs(such as overbooking).Since APMs are autonomous machines,it is also important to ensure that they are cost efficient to maintain here software can play a crucial role through preventive maintenance,remote monitoring and troubleshooting.OOH PUDOs&APMs57Software as a tool to close OOH gapsOOH can involve multiple elements,from PUDO points and APMs to newer solutions such as PUDO locations equipped with smart locks(both personal and communal).Also,applications can serve different flows such as first-mile,last-mile and,increasingly,C2C operations.These systems should ideally be interconnected,to ensure that customers have a similar and uniform experience when interacting with each of them.Moreover,operationally,it is important for the delivery company to have different systems and operation types aligned and communicating with each other inside the same system,in order to avoid extra flows and disconnected solutions that will increase the operational complexity and risk of error.Details of how to optimise your software selection can be found in our white paper here:Last Mile ExpertsIDM as a tool to improve the user experience and drive OOH adoption.IDM is one of the key drivers in optimising the last-mile user experience,for both home and OOH deliveries.Almost like Uber for parcels,it not only gives the customer a sense of control,by allowing them to track the progress of an order,but also enables them to change delivery option after the purchase has been made.As twell as being convenient for the final customer,this is also operationally efficient for the delivery company.It allows the consignee to warn the delivery company in advance about a potential missed delivery and give them an alternative delivery option in time.IDM as a catalyst for OOH adoption.IDM can convert customers into OOH delivery users.For example,if a consumer requests home delivery when they make a purchase,but then realises they wont be available to receive it,if they have access to a customer-centric IDM tool they could easily use this to switch to an OOH option instead.If that change leads to a successful delivery,the customer will be more likely to select OOH delivery in the future.Concluding thoughtsAlthough hardware and other physical infrastructure are important in the last mile,software is the“secret sauce”that makes everything work and offers the final touch in CX.For this reason,companies like ours are increasingly focused on supporting clients in creating software tools that will help to develop the new last mile.OOH PUDOs&APMs58EVERYONE IS A WINNERWhile each user group(consumers,are key to each of them and can be expected to become more important over time.OOH is a must have if e-commerce is to achieve the capacity that it needs today and that we predict for tomorrow.OOH PUDOs&APMs59LOCAL BROKERS FOR OOHParcel brokers or consolidators provide access to large players and“local heroes”with one interface but are mainly geared towards SMEs or even private individuals.A few examples include“Apaczka”,which is integrated with Poczta Polska,InPost,RUCH,DPD,UPS and FedEx OOH points.Brokers exist in most EU countries and some leading examples include:Source:Alsendo.PL -A,Furgonetka.pl,GlobKurier.pl,Sendit.pl,IT -spedire.it,sendabox.itES -packlink.esUK -,parcelmonkey.co.uk,DE -EU-wide -Out of home deliveries are simple for the customers.But are they equally simple for businesses?The simplicity and intuitiveness of out-of-home deliveries and returns are enabled by the use of latest technologies which ensure that the entire process is as smooth and fast as possible for the sellers.However,while the customers tend to enjoy the convenience of the OOH deliveries,many have no idea of how much is going on behind the scenes in order to maintain the services high quality.Lets explore modern IT solutions that integrate couriers and e-commerce stores,enabling communication between all parties and making logistics processes both faster and more cost-effective.In 2023,nearly half of consumers wanted delivery to be faster and an additional 43%wanted it to be cost less,according to insights gathered by eCommerceDB1.Furthermore,free delivery was the top conversion incentive in an average e-commerce store.According to Dash,half of shoppers admitted that not paying for shipping would entice them to complete their purchase2.This clearly paints a picture of customer who wants to have their goods shipped quickly and in the cheapest possible way.On the other hand,we have retailers,who are trying to figure out how to balance these expectations while still making a profit.After all,the average cost of fulfilling an online order is an incredible 70%of its value3,with last-mile delivery accounting for over half of total shipping costs in 20234.And we are discussing e-commerce delivery,which adds another layer of complexity,as sellers need to deal with many parcels of various sizes sent to different addresses across the country and abroad.OOH PUDOs&APMsTHE INVISIBLE SIDE OF OOH DELIVERIESFigure 1:How expensive it is to fulfill an e-commerce order?Source:eCommerceDB,Dash App,eCommerce Platforms,Statista,BrightPearl.1 Source 1:ECDB2 Source 2:DASH3 Source 3:ECOMMERCE PLATFORMS4 Source 4:STATISTA60Obviously,out-of-home deliveries can come to the rescue here but they are best paired with modern IT solutions that enable integration between couriers and e-commerce stores.Lets take a look at some of the IT processes that make it easier for sellers to manage all logistics processes while meeting customer expectations.Automating processes between e-store,couriers and e-commerce platforms.Many merchants have adopted a multi-channel sales strategy,at the same time leveraging marketplaces or open source selling platforms,their own websites,and social media.Theyre constantly on the lookout for new sales avenues to ensure theyre present wherever their customers are.This strategys effectiveness is backed by data,with stores operating across multiple channels reporting higher growth rates compared to those relying on a single channel.However,managing an increasing number of channels can become challenging from customer communication and parcel packing to agreeing on pick-up time,ensuring proper delivery,and resolving issues at every stage of the supply chain.This is where integration of processes between each channel proves invaluable,as it allows to automate and manage everything in one place.Modern IT solutions facilitate the integration of e-stores on major marketplaces or open-source selling platforms with logistical platforms.These platforms offer access to a range of tools that support delivery(multiple courier partners),customer communication(through automated notifications),and statistics analysis(allowing sellers to monitor delivery status with every logistics provider,regardless of the parcel type or delivery address).Which courier to pick?As mentioned earlier,e-tailers frequently handle deliveries of diverse sizes and types to various addresses,making the selection of the optimal courier for each delivery a time-consuming task.However,if the store operates on a popular selling platform or has its own multi-carrier capability,the seller can streamline this process by integrating plugins from logistical platforms that allow customers to choose their preferred courier and delivery method,as well as select an out-of-home pickup point directly from a map.Moreover,integration with logistic platforms enables automating the generation of shipping documents and updating customers on their delivery status.Figure 2:Comparison of growth levels between merchants who use an omni-channel strategy and those who dont.Source:Alsendo.OOH PUDOs&APMs61When a customer selects out-of-home delivery to a specific Automated Parcel Machine with a chosen courier,the integration plugin springs into action.As soon as the purchase is finalised,it automatically sends notifications to both the store and the customer,as well as generates the waybill.If the store is ready for the courier to pick up the order,a few extra clicks are all it takes to initiate the process theres no need to call the company.If the store lacks its own website,because,for example,it operates primarily through social media or is simply a small,one-person enterprise,manually comparing courier options for each shipment can be impractical.Fortunately,theres a solution for this too.Modern logistics platforms provide access to major couriers,simplifying the process.All the seller needs to do is enter details about their parcel,including pickup and delivery addresses,as well as its size,and the platform will present the best offers for that specific package and route.Additionally,extra services like insurance or weekend delivery can be selected,tailoring the shipping to the stores needs.A missing number?Automation will help with that.Human mistakes happen.And theres a lot of manual work required in order to ship off an order.With modern IT solutions,stores can automate the creation of shipping documents for both domestic and international shipments.The waybill can be automatically filled out by a system using the provided information about the parcels contents al
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2024 Third-Party Logistics Warehouse Benchmark Report4Key Findings3Foreword5The 3PL Landscape10Warehouse Operations19Billing&Invoicing3124Technology Adoption36Conclusion37Methodology38About ExtensivTable of ContentsLooking Ahead to 2025In August 2024,Extensiv conducted an online survey targeting logistics professionals who own or operate third-party logistics(3PL)warehouses.The aggregated responses from this survey form the basis of the following report.As the first and only report exclusively focused on the 3PL warehouse industry,Extensivs Benchmark Report compiles data from over 200 third-party logistics warehouses and provides insights on more than 30 industry-specific topics.This report builds on data collected from 2020 to 2023,offering year-over-year changes and trends where applicable.The Benchmark Report explores best practices,trends,current issues,and opportunities facing 3PL warehouses.Foreword1ADAPTING TO CHALLENGESThe 3PL industry is navigating through tough times with slowing growth in order volumes and profitability,but businesses are showing resilience and adaptability.3PLs operating at larger scales seem to be best suited for navigating todays market volatility.2AIEXPLORATIONArtificial intelligence(AI)is gaining traction with significant interest in its applications for optimizing various aspects of warehouse operations,though the industry is still exploring the best use cases.3FULFILLMENT STRATEGIESThere is a clear trend towards adding warehouses to obtain geographic disbursementincluding a growing interest in fourth-party logistics(4PL)networksas a means to drive efficiency,reduce risk,and strategically position inventory to better serve customers.4LABOR MANAGEMENTWhile hiring remains cautious,there is a focus on optimizing labor productivity through management tools and efficiency measures rather than solely relying on automation or robotics.5BILLING AUTOMATIONAutomating billing processes is crucial for maintaining cash flow and financial stability.Efficient billing systems help reduce errors,speed up invoicing,and improve profitability.Key Findings2024 Third-Party Logistics Warehouse Benchmark Report4The 3PL LandscapeFrom a profitability perspective,3PLs that serviced retail,dry storage,and“other”industries reported being some of the most profitable businesses with over 20%of all 3PLs in each of these verticals achieving high profitability growth(greater than 25%).At the top of this list,23%of all businesses serving“other”verticals were highly profitable,with the top response being“electronics.”Despite thin margins,nutraceuticals/pharmaceuticals was the vertical most likely to be profitable,with 95%of these 3PLs reporting non-negative profitability change in 2024.Based on the 2024 data,3PLs served 3.9 industries on average,with retail,bulk goods,and dry storage remaining the most common sectors.Overall,most categories showed an increase from 2023 to 2024,indicating recovery or growth in nearly all sectors.The only categories with a decrease were commodities/raw materials,hazardous materials,and“other.”Consumer-driven categories such as cosmetics and bottled goods/wine&spirits continued their upward trajectory,while apparel,one of the fastest-growing industries in 2023,remained relatively flat in 2024.The 3PL Landscape6Industries Served59%*Multiple selections were allowed13H3(!QR%RetailDry StorageBulk GoodsApparelCosmetics or Beauty SuppliesCommodities/Raw MaterialsMedical Supplies/DevicesBottles Goods/Wine and SpiritsOther Pharmaceuticals/NutraceuticalsHazmatCold StorageFurthermore,3PLs continued to diversify their services with more organizations offering B2C and ecommerce fulfillment,the latter rebounding after a post-pandemic contraction.Approximately 22%of respondents performing ecommerce fulfillment and Fulfillment by Amazon(FBA)Prep experienced high profitability growth in 2024 compared to an average of 17ross all other fulfillment types.78pfDB0BECOMMERCEB2CDROPSHIPPINGFULFILLMENT BY AMAZON PREPOMNICHANNELFULFILLMENT TYPEThe 3PL Landscape7*Multiple selections were allowedIn addition to expanding service offerings,there is also a trend in expanding warehouse footprints and facility counts.From 2020 to 2023,the percentage of organizations operating only one warehouse hovered in the mid-thirties,but this decreased noticeably this year to 31%.Meanwhile,the percentage of organizations with 2 to 5 warehouses has continued its upward trajectory,increasing an average of 2ch year through 2024,now up to 51%.This suggests that businesses are expanding their logistics networks to improve efficiency and reduce risks while many single warehouse operations are either closing their doors permanently or selling their businesses to larger entities expanding into corporate networks.Staying competitive as a 3PL is proving to require geographic diversification through warehouse expansion or growing a diversified network through strong partnerships.Warehouse Ownership12 to 56 to 10MORE THAN 1010 0P%NUMBER OF WAREHOUSES2020202120222023202431Q%7%The 3PL Landscape8High-performing warehouses continued to see a rebound effect on their total customer counts.During the early pandemic years,many 3PLs tried to maintain a sweet spot of 26-50 customers,consistently ranking as the most reported tier through 2022.The economic turmoil beginning in 2023 saw this segment drop 9%year-over-year to 19%with most 3PLs reporting lower customer counts across the board,signaling difficult times for brands and online sellers.As of 2024,26%of 3PLs reported servicing 26-50 customers,making this once again the largest cohort.It is worth noting that 3PLs who reported less than 26 customers were a staggering 2.1 times more likely to report low to no profitability growth.These numbers highlight the importance of a manageable but well-diversified customer base and the widening gap between high-and low-performing warehouses coupled with new customer acquisition strategies.The 3PL Landscape93PL CustomersWe asked a new question in this years survey to understand the minimum order volume required for new business accounts within the warehouse,which serves as a surrogate for size and scale requirements for new clients to be considered.The data on minimum monthly order volume for 2024 shows a diverse range of order sizes among organizations.Interestingly,respondents experiencing high profitability growth were 1.8 times more likely to have minimum order volumes below 250,yet those that experienced flat or positive year-over-year order volume growth were 1.9 times more likely to have minimum order volumes between 1,000-4,999.NUMBER OF CUSTOMERS2020202120222023202415%&$%9%(%70%8%&%8%LESS THAN 1010-2526-5051-100101-200MONTHLY MINIMUM ORDER VOLUME0-249250-499500-9991,000-4,9995,000-9,99910,000 18$%8#%9%9%MORE THAN 200 13%Warehouse OperationsOrder VolumesWhen reviewing respondent data regarding business performance,it becomes clear that the 3PL industry continues to experience difficult times with both order volume growth and profitability extending their downward trend in recent years.This year represented the worst year for order volume growth since we started the benchmark survey.While 70%of respondents grew order volume year over yearwith 57%growing it 10%or fasterthese numbers are down considerably compared to 2023(76%and 60%,respectively)and are far from the highs of 2022 where 90%of respondents grew volume and an impressive 80%grew volume by more than 10%.One of the most telling statistics regarding order volume is that over 1.6 times as many(18%vs.11%)companies saw order volume decline from the previous year.Warehouse Operations1130%WAREHOUSE ORDER VOLUME CHANGE25 %5%0%Grew,more than 50%Grew,25-49%Grew,10-24%Grew,0-9%Our volume is flatDeclined up to 10clined by to 10% 19%9%9 202021202220232024For 3PLs reporting overall order volume declines,uncertain economic fluctuations were the leading cause(57%),followed closely by customer order volume declines(48%)and lost customers(43%).While the economy has been resilient in many sectors,loss of consumer wallet share to experiences,services,and other household necessities has taken a toll on retail order volumes,which is directly impacting the hardest hit 3PLs.Businesses that experienced negative profitability growth were 20%more likely to attribute their order volume decline to economic fluctuations than those with medium to no profitability growth.Though many aspects of the ongoing economic conditions may be out of 3PLs control,the loss of customers is an area that warehouses should be focused on most.Customer acquisition costs are increasing,and premium customers are a hot commodity in the industryincreasingly being courted away from traditional 3PLs by larger,more corporatized fulfillment networks for ease of onboarding and cost savings.3PLs with existing customers should be working hard on retention and looking to provide more value-added services,brand-focused software within a unified fulfillment platform,and providing sophisticated fulfillment strategies such as 4PL networks to help place products closer to the point of consumption and reduce the cost to serve customers.Warehouse Operations12REASON FOR ORDER VOLUME DECLINEEconomicfluctuations57%Customer order volumes declinedLost cusomersInflationOtherNot sure48C3%7%*Multiple selections were allowedThe decreased performance in order volume has translated into poorer financial performance as well.Whereas 81%of respondents improved their profitability in 2022 and 73%did last year,only 69%reported progress on profitability in 2024.While those numbers are telling,when you look at the number of businesses that boosted profitability significantly,the decline in performance is even more evident.This year,only 47%of 3PLs improved profitability by more than 10%.While this is down only slightly from 49%last year,this represents a 22crease since the happier times in 2022.Warehouse Operations1330%5%WAREHOUSE PROFITABILITY CHANGE20%0%Grew,more than 50%Grew,25-49%Grew,10-24%Grew,0-9%Our volume is flatDeclined up to 10clined more to 10(%3 21202220232024ProfitabilityWarehouse Operations14Warehouse CapacityNot surprisingly,the data showed that warehouses running at extremely high capacity(north of 100%)are 2.8 times more likely to experience high profitability growth.While it is prudent to be cautious about taking on more warehouse space in this uncertain environment,astute 3PL operators realize that running a warehouse over capacity is not a sustainable strategy in the long run.Businesses that had moderate order volume growth(between 10-24%)were 69%more likely to keep their warehouses between 80-89pacity.This was also the most common capacity level sustained by 3PLs overall as well as broken down by fulfillment type;the percentage of warehouses operating between 80-89pacity was essentially level across fulfillment types,ranging from 38-40%in each fulfillment category.38%90% 90%-99%-89p%-79%-69low 60%Fulfillment&ShippingCHART 10 YOY One of the most revealing trends in the data was the need for speed as it relates to fulfillment times.Continuing a trend that has been happening since we began the survey,this year marked the fastest shipping times of any survey.This year,only about 30%of warehouses reported taking more than 90 minutes to fulfill and ship orders.While this metric has improved every yeargoing from 48%in 2021 to 41%in 2022 to 37%in 2023the 2024 data marks the largest year-over-year percentage improvement,showing that customers are demanding faster and faster turnaround times on orders.SAME CHART AS ABOVE This foretells an interesting dilemma for warehouse operators.While it will always be critical to ship orders quickly,considering fulfillment time is not usually less than 1 hour,optimizing warehouse efficiency will become increasingly less important and impactful for delivery times than warehouse location.This includes fulfilling and shipping orders from multiple geographically distributed warehouses.Warehouse Operations15One of the most revealing trends in the data was the need for speed as it relates to fulfillment times.Continuing a trend that has been happening since we began the survey,this year marked the fastest shipping times of any survey.This year,only about 30%of warehouses reported taking more than 90 minutes to fulfill and ship orders.While this metric has improved every yeargoing from 48%in 2021 to 41%in 2022 to 37%in 2023the 2024 data marks the largest year-over-year percentage improvement,showing that customers are demanding faster and faster turnaround times on orders.This foretells an interesting dilemma for warehouse operators.While it will always be critical to ship orders quickly,considering fulfillment time is not usually less than 1 hour,optimizing warehouse efficiency will become increasingly less important and impactful for delivery times than warehouse location.This includes fulfilling and shipping orders from multiple geographically distributed warehouses.Fulfillment&ShippingLess than 30 minutes30-60 minutes60-90 minutes90 minutes-3 hours3 hours-1 day1 or more days2020202120222023202424%9#%5#%9)$%7%9)%9%7)%4%9%0%Pu0%AVERAGE TIME TO FULFILL AN ORDERWarehouse Operations16Labor MarketIn a sign of cautious optimism,most businesses expect they will be adding workers over the next year.However,the percentage that expect to add workers is the lowest in the past four years,dropping to 57%in 2024.It is worth noting that while 64%of respondents expected to increase their workforce in the time since last years survey,the Bureau of Labor Statistics reports that the overall number of people employed in the warehousing industry decreased from 1,798,000 in August 2023 to 1,782,800 in July 2024,indicating how difficult the warehousing industry has been recently.0.00.20.40.60.8EXPECTED STAFFING CHANGE NEXT YEAR57%IncreaseStay the sameDecrease36%7 202021202220232024This sluggish hiring environment has unsurprisingly translated into fewer companies seeing their labor costs increase year over year.Only 60%of companies reported labor costs increasing this year,marking the first time this metric has been under 70%.However,despite this shift,the data for labor as a percentage of total business costs is consistent with previous years.Warehouse Operations17LABOR COSTS CHANGEIncreasedStayed the sameDecreased2020202120222023202458)sy%6p $%The responses also indicate that it is getting meaningfully easier to find qualified workers.This year,only 31%cited finding qualified workers as their biggest challenge related to staffing,continuing the decline from its peak in 2021 at 48%.However,businesses at both ends of the profitability spectrumthose with the highest profitability growth and those with declining profitabilityshare this struggle and are 1.4 times more likely than 3PLs in other profitability tiers to name this as their largest staffing challenge.Additionally,although the change has not been as dramatic,employee turnover is cited less frequently as a leading problemexcept for warehouses performing omnichannel fulfillment,which were 1.7 times more likely to name this as their biggest warehouse staffing challengewhich is expected in an environment where warehouse jobs are harder to come by.Warehouse Operations180 0%BIGGEST WAREHOUSE STAFFING CHALLENGE31%Finding qualified workers2020202120222023202450)%6%3%3%3%Worker efficiency and productivityCost of qualified workersTurnoverFinding temporary workers for peak seasonCompleting with Amazon warehouses for workersAbsenteeismTime to productivity for new employeesBilling&InvoicingBilling&Invoicing20Billing AutomationCash flow is king for 3PLs in 2024,and more and more warehouses are looking to automate their billing processes to ensure they are billing quickly and accurately.This year,just over a quarter(26%)of respondents utilized their warehouse management system for this task.The data indicates that 3PLs leveraging invoicing functions in their WMS were 2.2 times more likely to see medium or better profitability growth.Clearly,these businesseswho can take advantage of a unified technology stack that enables them to automate their accounting functionsare better able to bill their higher volume customers quickly.Interestingly,manual invoicing was used by 20%of respondents and would be an area of opportunity for any business not automating their financials today.With the proportion of 3PLs using billing automation increasing at the profitable end of the spectrum,the data suggests that using accounting solutions integrated within a fulfillment technology stack or native billing tools within a WMS for invoicing can lead to better profitability,likely due to increased efficiency,fewer errors,and faster billing cycles.CUSTOMER INVOICE PROCESSThrough accounting softwareThrough our WMSManuallyWMS integrates and feeds into accounting(e.g.,QuickBooks)or ERP systemOther29%7 &%Time CommitmentsUnexpectedly,the time spent billing customers increased in 2024 with 24%of 3PLs reporting they spent less than 8 hours per month on billing,down from 27%in 2023.On the other end of the spectrum,a smaller group(6%)spent over 80 hours per month on billing and invoicing,which is consistent with previous years.Those who spent less than 16 hours on billing and invoicing were 2.8 times more likely to see high profitability growth.When jumping up to 24-40 hours spent on billing and invoicing,respondents were 1.9 times more likely to experience medium order volume growth.What is perhaps more compelling is that none of the 3PLs that spent more than 80 hours per month on billing achieved high profitability.Efficient billing processes seem crucial for profitability,as less time spent on billing correlates with higher profitability.Automated systems can help streamline these processes,allowing businesses to focus on growth and customer service.23%7%9%7$%6 22TIME SPENT ON BILLING AND INVOICING MONTHLY20232024100uP%0 hours40-80 hours24-40 hours16-24 hours8-16 hoursLess than 8 hoursBilling&Invoicing21Billing&Invoicing22Billing can be complex,and 3PLs face several significant and distinctive challenges.Uncaptured charges were the biggest issue related to customer billing for 56%of respondents,and those involved in B2B fulfillment were 1.5 times more likely to cite this as their biggest challenge.3PLs using manual methods for capturing chargesespecially those still reliant on pen and paperare no doubt missing billable events because of unreliable recording or lost documents,making a strong case for digital charge capture and automation.Billing ChallengesComplex customer setups were the second most common response,but those with high order volume growth were 74%more likely to choose this as their biggest challenge,likely driven by demanding customers,special projects,and sheer volume of chargeable events.Interestingly,respondents on either end of the profitability spectrummeaning experiencing either high or negative profitability changewere 25%more likely to cite complex customer setup as their top billing challenge.These challenges highlight the need for robust and flexible billing systems to handle diverse customer requirements and ensure accuracy.Automated systems can help mitigate these issues by ensuring all charges are accurately captured and billed,reducing revenue leakage and improving cash flow.16%3%6%9&GV%Uncaptured chargesComplex per customer setupLack of automationLack of billing system flexibilty (if applicable)Reconciliation of carrier invoices/changesProblems with invoice accuracyDifficulty tracking invoice statusBilling 4PL customers(accurate capture of charges from partner)Lack of payment optionsNot applicableBIGGEST BILLING CHALLENGES*Multiple selections were allowedFulfillment&ShippingCHART 10 YOY One of the most revealing trends in the data was the need for speed as it relates to fulfillment times.Continuing a trend that has been happening since we began the survey,this year marked the fastest shipping times of any survey.This year,only about 30%of warehouses reported taking more than 90 minutes to fulfill and ship orders.While this metric has improved every yeargoing from 48%in 2021 to 41%in 2022 to 37%in 2023the 2024 data marks the largest year-over-year percentage improvement,showing that customers are demanding faster and faster turnaround times on orders.SAME CHART AS ABOVE This foretells an interesting dilemma for warehouse operators.While it will always be critical to ship orders quickly,considering fulfillment time is not usually less than 1 hour,optimizing warehouse efficiency will become increasingly less important and impactful for delivery times than warehouse location.This includes fulfilling and shipping orders from multiple geographically distributed warehouses.Billing&Invoicing23Its taking longer to get paid in 2024.Payment times vary,but only 14%of respondents reported receiving payments in less than 15 days,down from 22%in 2023.The largest cohort(39%)received payments within 30-45 days,a slight increase from 36%last year.This is likely a lingering effect of the post-pandemic contraction in ecommerce;as brands sales slow,their ability to pay on time may be compromised,leading us to believe that industry diversification is a great way to normalize cash flow over time.Efficient payment receipt is crucial for maintaining working capital and financial stability.The trend towards longer payment times can strain cash flow,emphasizing the importance of efficient billing processes and clear communication with customers about payment expectations.The data also supports the idea that businesses looking to improve cash flow should invest in automated systems for data collection,invoicing,and payments.These systems enhance operational efficiency and accuracy,support better financial performance and growth,and provide a robust foundation for sustainable business success.Receiving Payments2022TIME FROM INVOICE TO PAYMENT20232024100uP%0%More than 60 days45-60 hours30-45 hours15-30 hoursLess than 15 days2241%36%3)9%25%Technology AdoptionSystems ImplementedRobust warehouse management systems continue to play a crucial role for modern business operations,helping companies manage their inventory,streamline processes,and boost efficiency.An overwhelming majority of respondents(86%)indicated their WMS was a critical component of their technology stack,which has continued to hold steady since the first Third-Party Logistics Warehouse Benchmark Report in 2020.The remaining 3PLs who had yet to adopt a WMS indicated that their top reasons for not investing in this technology include it being too expensive,too time-consuming to implement,or that their current inventory tracking systems work just fine.Mobile barcode scanning was also popular,coming in second with 58%of businesses having implemented it,up from 51%last year.The number of respondents indicating they have implemented an order management system(OMS)saw the most significant year-over-year decline to 35%from 51%in 2023,but respondents that experienced high profitability growth were 57%more likely to have implemented an OMS.Warehouse management system(WMS)Mobile barcode scanningEDIOrder management system(OMS)Labor management/time managementShopping cart/marketplace integrationsERP/accounting integrationsDock schedulingYard managementRoboticsOther86XE52%Transportation management systems(TMS)310#%9%5%4%*Multiple selections were allowedTechnology Adoption2528$!%Technology Adoption26Warehouse Management SystemsAlmost all 3PLs that implemented a WMS(87%)stated the need for real-time inventory tracking and management as their top value proposition,followed by the need for more operational efficiency(75%).Some of the largest categorical changes from last year were the need to automate billing(54%vs.47%),data reporting(67%vs.60%),and cost cutting(28%vs.21%).These numbers indicate that businesses are maturing in their use of WMS technology and are looking to get the most out of what their software can offer.Accurate inventory control and WMS mastery has proven to positively impact order volume.An impressive 70%of businesses saw their order volumes grow after implementing a warehouse management system,with 21%seeing order volume growth above 50%.In total,59%of responding 3PLs experienced order volume growth of greater than 10%in 2024 vs.only 44%experiencing the same growth in 2023.Considering all the data,it is evident that using a WMS to establish an accurate source of truth for warehouse operations is foundational to building a growing business.ORDER VOLUME CHANGE WITH A WMSGrew by more than 50%Grew by 26-50%Grew by 11-25%Grew by 1-10%Stayed the sameDeclined0%Pu0%Real-time inventory tracking and management2020202120222023202487%More operational efficiencyGreater order accuracyWarehouse reporting,dashboards,and analyticsAutomate billingCut costsBoost labor productivity75qgTP(%REASONS FOR WMS ADOPTION*Multiple selections were allowed321$%7%6%Technology Adoption27Digital AutomationA byproduct of many warehouse management systems is access to larger scale warehouse automation,translating to significant time savings.Overall,69%of respondents saved more than 10 labor hours per month after implementing automation technologies with the largest cohort(32%)saving 11-25 hours.Businesses with declining order volumes were 1.4 times more likely to report saving less than 25 hours per month from warehouse automations.This trend shows that while automation often saves substantial time in the warehouse,it doesnt completely eliminate the need for a skilled human workforce.TIME SAVED USING A WMSMore than 100 hours per month51-100 hours per month26-50 hours per month11-25 hours per month0-10 hours per monthTechnology Adoption28Beyond WMS automations,there were a few notable findings about additional system integrations.High order volume growth businesses were 1.8 times more likely to have shopping cart integrations,illustrating the importance of seamless connectivity in driving business success.Correspondingly,56%of respondents that integrated shopping cart connectivity with their WMS or ERP experienced medium to high profitability.It goes without saying that automating the flow of any data across systems inherently reduces costs and errors,but these integrations stand out for how much they streamline B2C and ecommerce fulfillment so that 3PLs can better serve their customers.2024 also marked a year of continued emphasis on data-based decision making as 27%of 3PLs integrating reporting and data analytics with their WMS or ERP experienced high profitability.Combining automation and data reporting can create the perfect opportunity for both real-time decision making and long-term forecasting that can help lower the overall cost to serve in every capacity.Systems Integrations53IShopping cart connectivity(e.g.,Spotify)Label generation platformsOrder management systems(OMS)Financial reporting tools(e.g.,QuickBooks)AccountingMarketplaces(e.g.,Amazon)Transportation management systemsERP system(e.g.,Microsoft Dynamics)Reporting&data analytics(e.g.,Tableau)Dock SchedulingNone of the above5252&!%6%*Multiple selections were allowedSYSTEMS INTEGRATEDTechnology Adoption29Future PlansBusinesses planning to implement AI and/or mobile barcode scanning were 40%more likely to experience high profitability and 70%less likely to see negative profitability change in 2024.AI was the top functionality chosen by respondents experiencing high order volume growth while mobile barcode scanning was the most popular among those experiencing negative order volume growth.Its easy to rationalize this difference given the rapid evolution of warehousing and logistics technologies.High performing businesses are looking to cross into a new horizon of efficiency while lower performing warehouses are looking to stabilize and strengthen their operations with tried-and-true technology.It is important to note that barcode scanning and AI have a strong connection:collecting relevant data in real time is important for training AI and machine learning(ML)models to make informed decisions,which is prohibitively difficult without digital methods like barcode scanning.Thus,it is a fair assumption that those 3PLs planning to invest in AI now implemented barcode scanning in previous years.Looking ahead,businesses are planning to implement new functionalities to further enhance their operations.Though billing and invoicing software tops the list with 35%planning to implement this functionality,it fell slightly in popularity from 39%in 2023.However,the rest of the top five categoriesreporting and analytics,labor management or productivity tools,artificial intelligence(AI),and rate shoppingall increased since last year.Given the easing of some of the labor-related challenges,respondents are less focused on adding robotics to their operations.In the 2024 survey,only 6%of respondents listed robotics as something they plan to implement in the coming year,the lowest percentage recorded for this option since the introduction of this survey.Instead,companies are turning their attention to measuring the efficiency of their workers,with 25%citing implementing labor management and productivity tools as a top priority for the year aheadthe same percentage as those looking to invest in AI.25Pu0%Billing and invoicing2020202120222023202435%Reporting and analyticsLabor managementor productivity toolsArtificial intelligence(AI)Rate shoppingDock schedulingMobile barcode scanningFUNCTIONALITY PLANNING TO IMPLEMENT NEXT YEARWarehouse managementsystem(WMS)ERP or new accounting softwareRoboticsNone of the aboveOther27% %9%6%4 %0%*Multiple selections were allowedTechnology Adoption30Artificial IntelligenceThe rise of artificial intelligence as a priority for technology investment is hardly surprising given the media focus on AI across all industries.Last year was the first year we included AI in the survey,and only 16%of respondents were looking to explore it.This year,that number rose sharply to 25%.However,in an indication that the industry is still looking for solutions with proven value,responses were evenly divided as to where AI will be best applied.Responses were almost equally divided across the top five choices,though 3PLs providing omnichannel fulfillment were 45%more likely to choose demand forecasting as the biggest opportunity for AI.An increasing number of fulfillment providers are interested in artificial intelligence,but they have yet to coalesce around a single use case with the greatest return on investment(ROI).It is prudent for software providers to rapidly mature and evolve their offerings to prove a positive ROI and make clear to warehouse operators how to best utilize this promising new technology.AIs BIGGEST IMPACT AREA FOR 3PLsPick optimizationStorage optimizationBusiness developmentDemand forecasting Labor planningLocation optimizationMarketingWarehouse location Other8%8%8%Looking Ahead to 2025Looking Ahead to 202532Growth DriversThe battle for customers is ubiquitous,and new customer acquisition continues to hold the top spot each year as the primary growth driver for most 3PLs(79%)reporting positive order volume growth in 2024.Speaking of growth,55%of 3PLs reported existing customer volume increases to be part of their growth success story in 2024including 29%who attributed their growth to increased ecommerce ordering,up from 22%in 2023.However,increases in existing customer order volumes appear less impactful for 3PL business growth as respondents that experienced high order volume increases were 22%less likely to name this as a source of growth.This category of growth is still significantly trailing the pandemic-fueled ecommerce boom in 2020 and 2021(both years reached 48%)when nearly all industries were primarily focused on adopting an ecommerce model.Opportunities for additional ecommerce volume monetization is critical from a growth perspective,making transactional volume a key tool in the belt of competitive 3PLs where fulfillment revenue is minimized in lieu of small parcel revenue shares and per order processing fees.80y%ORDER VOLUME GROWTH DRIVERS60%0%New customeracquisitionIncrease in existing customer volumesIncreased ecommerce orderingDiversifying fulfillment typesPartnering with other warehouses or 3PLsOther55)%3 202021202220232024 20%*Up to 3 selections were allowedLooking Ahead to 2025333PLs are continuing to add formal sales strategies and capabilities to their businesses beyond the traditional owner-led growth model.This shiftlikely spurred by the introduction and proliferation of digital marketing techniques for optimizing online presenceelevated corporate websites as the top customer acquisition channel in 2024 for the first time in the surveys history.4PL partner networks also proved to be a massively growing trend in customer acquisition with 18%of 3PLs reporting network participation to be part of their successful growth strategy this past year,jumping from a nominal 2%in 2022.With billions of dollars being invested in the 4PL space,early adopters are finding success with customer acquisition,retention,and growth that is outpacing traditional partner referral growth.Having dedicated,formal 4PL network partners is proving to be a winning combination for quickly enhancing services while maintaining customer control.Customer AcquisitionPRIMARY CUSTOMER ACQUISITION CHANNELSCompany website73%ReferralsInbound calls or emailsOutbound callingPaid advertismentsThrough a 4PL network703$%Events27%*Multiple selections were allowedLooking Ahead to 202534When looking at business challenges,3PLs that are secure enough to focus on expanding their businesses were more optimistic about the future,gravitating toward more growth-oriented challenges.While managing costs was the most selected business challenge overall at 49%,high and medium growth 3PLs accounted for approximately two-thirds(66%)of these responses.Business ChallengesConversely,finding new customers was the most common challenge for 3PLs experiencing a negative profitability trajectory,accounting for 22%of the votes cast by this cohort.While this is an understandable instinct,warehouses in this scenario should investigate how they can make changes within the business to repair profitability before increasing marketing spend to attract new customers.There continues to be a bifurcation of performance where well-running warehouses continue to grow at the expense of othersa noticeable shift from the height of the pandemic when we saw explosive growth across the industry.7%Managing costsFinding new customersOperational efficiencyGrowing revenueFinding and retaining workersTechnology implementation and integrationInflationDeclining customer order volumesCustomer retentionCustomer communications&requestFinding and acquiring warehouse space7I87)&#%TOP BUSINESS CHALLENGES*Respondents selected top 3 choicesLooking Ahead to 202535With a slowing growth curve year over year,3PLs are considering a wide array of options to add revenue to their businesses.While adding warehouses in new locations has decreased in popularity every year since 2021,respondents selecting this as a top opportunity for 2025 were 2.2 times more likely to have experienced high year-over-year order volume growth.Learning from the past few turbulent years and avoiding taking on excess space could be leading the businesses operating at high capacity to consider alternative ways to grow,including building 4PL networks.Although interest is still lower than for some of the other approaches to growth,interest in fourth-party logistics has doubled since 2022.With more widespread 4PL network participation and growing recognition of this trend,it is unsurprising that participating in 4PL partnerships to improve competitiveness is one of the top movers in growth opportunities.Artificial intelligence showed the largest jump in interest,comparably boosted by increased industry attention and public awareness,with 23%of 3PLs reporting that leveraging AI for time savings presents a prime opportunity to improve their business efficiency.Again,rising from nearly nonexistent numbers just a couple of years ago,these two initiatives are quickly taking over the 3PL space.Opportunities0%Pu0quiring new customers20202021202220232024Automating processes in the warehouseGrowth related to ecommerceDiversifying servicesAdding warehouses in new locationsLeveraging AI to save timeCreating a 4PL networkTOP OPPORTUNITIES FOR NEXT YEAROther88SG83$#%3%*Multiple selections were allowedConclusionAs we wrap up another years Third-Party Logistics Warehouse Benchmark Report,its clear that rapid technological innovation,strategic multi-warehouse expansion,and a continuous adaptation to market volatility are the strongest driving forces reshaping the logistics landscape in 2024.While these may seem unrelated at first glance,these are not just isolated trends but are interlinked catalysts fueling the future of the 3PL industry.The accelerating interest in AI stands out as a beacon of progressespecially in an industry that has previously been hesitant to adopt advanced technology.Despite a lack of consensus on the best use case for artificial intelligence,our report shows that 3PLs intentions for it have matured beyond mere inventory tracking to more sophisticated applications like optimization and forecasting.This development highlights a growing trend in logistics of rethinking how things are done rather than sticking with conventional strategies.Likewise,the push towards multi-warehouse fulfillment and 4PL networks highlighted throughout this years report reflects a tactical shift in the industry.This is not merely about increasing warehouse capacity;its a calculated response to supply chain volatility and ongoing economic uncertainties.By diversifying their geographic presence,3PLs can offer more robust solutions to their clients,mitigate risks associated with regional disruptions,and enhance their competitive edge.This strategy,coupled with advancements in technology,enables 3PLs to offer more tailored and responsive services,aligning with the growing expectation for faster,more flexible delivery options among consumers.Looking ahead to 2025,the convergence of AI advancement and networked fulfillment points to the start of a transformation in logistics,driven by the need to not just cope with disruptions and fluctuations but to actively forecast and shape market realities.Adopting these tools and strategies empowers 3PLs to rise above the challenges of an increasingly complex supply chainpaving the way for sustainable growth and resilience while solidifying them as indispensable partners in their clients success.MethodologyThe survey was conducted between August 7,2024,and August 31,2024.There were 297 respondents who identified as 3PL warehouses from across the United States,Canada,United Kingdom,Australia,and New Zealand.Of the respondent companies,88%were traditional 3PL warehouses,and 12%were hybrid public and private warehouses(who also sell and ship their own goods).Note that this year saw a small decrease in hybrid warehouse respondents compared to 2023.Of the respondents,32%identified as executives or owners,followed by 26%who held roles in warehouse or logistics management and 18%in operations.The remainder spanned other parts of the business.RESPONDENTSFORMATThe survey questions included multiple-choice,multiple-selection,and open text.Due to rounding or multiple-selection questions,the figures may not add up to 100 percent.About ExtensivAbout ExtensivExtensiv is a visionary technology leader focused on creating the future of omnichannel fulfillment.We partner with warehouse professionals and entrepreneurial brands to transform their fulfillment operations in the radically changing world of commerce and consumer expectations.Through our unrivaled network of more than 1,500 connected 3PLs and a suite of integrated,cloud-native warehouse management(WMS),order management(OMS),and inventory management(IMS)software,we enable modern merchants and brands to fulfill demand anywhere with superior flexibility and scale without painful platform migrations as they grow.More than 25,000 logistics professionals and thousands of brands trust Extensiv every day to drive commerce at the pace that modern consumers expect.
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