The changing structure of the logistics sector will suck in new types of companies, providing unexpected competitors for incumbent service providers. It is hard to predict who these new entrants will be and where they will come from, but a clue emerged this week.
Alphabet, the holding company for Google, and Ontario Teachers’ Pension Plan, a large investor in ports, airports and toll roads, announced their intention to combine and invest in new types of transport infrastructure which they describe as “next generation infrastructure projects and the technologies that enable them”. They intend to do this this through a company called Sidewalk Infrastructure Partners. Originally part of Alphabet’s “urban innovation” research activities, it is a project attempting to apply information technologies to improving the functioning of cities.
Sidewalk Infrastructure Partners is focussing its efforts in a number of areas, including water and energy, however transport is clearly a priority. They describe their objective as the “Automation and electrification [to] reshape the journey of every person and package.”
This might seem a somewhat vague statement typical of Silicon Valley, however it should not be dismissed too lightly. There are already specific projects in the pipeline such as one in Toronto to create a network of sensors that will capture data about traffic movements and use this to optimise the flow of goods and people in parts of the city. For couriers and express operators alone, this would have significant implications. They could face the prospect that their schedules would be effectively controlled by this new infrastructure organisation. Widening out the network of data would have a similar effect for road freight operators or warehouse managers, as their planning would become dependent on the infrastructure optimisation activities. Such companies would become providers of physical assets with a reduced management function.
Companies such as Alphabet and Ontario Teachers have vast resources of capital and technology. It is feasible that they and others like them could help re-engineer parts of the transport infrastructure. Naturally this would be driven by a desire to access revenues derived from both building but also operating such infrastructure. It is likely that they would become amongst the most powerful transport managers in any location where they control roads and other assets. Much of the logistics sector would have to be redefined with even the largest logistics service provider becoming second tier suppliers of basic services.
Source: Transport Intelligence, September 3, 2019
Author: Thomas Cullen
