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Will car sharing kill crowd-sourced delivery?

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Will car sharing kill crowd-sourced delivery?

Ian Kerr

The sharing economy is dependent on people sharing something that they own. Rent your spare room on AirBnB. Drive for Uber. Deliver for Amazon.

But what happens to crowd-sourced delivery when no-one owns a car?

Car ownership

There's growing speculation that new car sales may have peaked. US car sales were down 4.7% in April.

"This drop could reduce the chances of a third consecutive record year for the auto industry," says Cathy Morrow Roberson, lead analyst at Logistics Trends and Insights. "But it's still too early to tell."

Car leasing in the USA continues to grow, with 4.3 million vehicles leased in 2016, a 91% growth since 2009. Millennials make up the largest portion of lessees at 12%.

Meanwhile China recorded a 2.2% decline in car sales in April, its biggest decline in two years. After a few years of record sales, has the global automotive market reached a saturation point? Or is there something else behind the slowdown?

"Car sharing appears to be on the rise in many cities as big name companies such as BMW introduce car sharing or rental services," says Cathy Morrow Roberson.

BMW’s Reachnow had 40,000 members as of January 2017, with operations in hipster-infested Seattle, Portland and Brooklyn.

Meanwhile, Mercedes is testing its Croove service in Munich. This peer-to-peer solution allows people to rent out their cars on-demand for short periods - even if their car isn't a Mercedes.

Daimler Benz just announced the number of cross-border rentals for its car sharing service car2go has increased in the first quarter of 2017 by 80 percent to 33,000 journeys. This includes business travel and private use.

The segment of transnational rentals is growing dynamically and getting a bigger part of the total number of car2go journeys.

In 2016, car2go increased its rentals by 40 percent to 22 million - that's one rental every 1.2 seconds - while its customer base grew by 43% to 2.2 million. Chongqing with 195,000 customers and Berlin with 187,000 members remain the largest car2go cities.

Who drives in big cities anyway?

As we can see from car2go's statistics, car sharing is popular in big, densely populated cities.

"For folks living in larger cities such as Munich, New York, or Tokyo, the cost of owning a car can be high – insurance, parking, maintenance, fuel, and so on, and all for the privilege of being stuck in traffic!" says Cathy Morrow Roberson.

Residents in big cities are turning to public transport, bicycles or renting a car when needed.

"Outside of large cities, there will be a need for car ownership however, more people are moving into cities to take advantage of job opportunities and so the demand will likely fall," says caffeine addict and logistics expert Cathy Morrow Roberson.

In Australia, the suburbs continue to sprawl and the car reigns supreme.

"It's impossible to have a family and not have two cars. Public transport is inadequate," says Marshall Hughes, founder of crowd-sourced delivery start-up Passel. "But it seems that everyone needs their cars at the same time, whether it's school drop off and pickups, commuting to work or the train station, or sport on the weekend."

Who will drive the cars of the future?

About 60% of today’s US 18-year-olds have a driver’s licence, compared with 80% in the 1980s, according to a study from the University of Michigan.

According to one study, Millennials are delaying buying cars. Leasing a vehicle can sometimes be more affordable than borrowing to buy a car with a five-year repayment plan. Another study shows strong interest from this age group to purchase a vehicle in order to take advantage of the sharing economy, perhaps driving for Uber or Lyft, in order to earn money.

We'll all be ferried about in autonomous drones soon enough, so why worry about the stress of studying for a driver's licence anyway?

A leased delivery fleet

It's not just consumers who are curious about leasing or car-sharing schemes.

"Wall Street loves asset-light transportation service providers so the vehicle leasing option should grow," says transport and shipping expert Dean Maciuba from 4Front Consulting.

The future of crowd-sourced delivery

It may be too early to predict the death of crowd-sourced delivery. Car sharing isn't for everyone. Car ownership may be replaced by leases, but some lessees will still want to offset the costs of keeping a vehicle on the road by taking on delivery jobs or passengers.

And, as seems to be the way these days, Amazon could influence the future of crowdsourced delivery, according to Dean Maciuba:

"Last mile solution providers like Amazon, will continue to reduce the cost of the residential delivery by offering low-cost, hybrid, crowd sourced solutions for the last-mile delivery.

"The legacy parcel carriers will resist this type of solution for as long as possible. But at some point they will have to embrace this type of low-cost, last mile, delivery alternative if they want to remain competitive in last mile delivery," he says.

One postal operator that has ventured into alternative delivery is Belgium's bost, which has set up a crowd-sourced delivery platform called bringr. Earlier this year major supermarket Carrefour Belgium announced it was trialling a partnership with bringr for next-day deliveries. (This is in addition to bpost's existing home delivery service for Carrefour.) Online orders are fulfilled at the local supermarket, then handed over to the courier who accepted the job via the bringr app.

Crowdsourced delivery doesn't seem to have caught on with other postal and parcel operators.

Environmental concerns that affect delivery in general also apply to crowdsourced delivery. Already governments around the world are investigating strategies to limit the number of vehicles in CBDs to reduce congestion and vehicle emissions.

Is crowdsourced delivery part of the solution? Those in the industry seem to think so.

"Failure to adopt crowd-sourced delivery as part of the solution is going to put more and more white vans on the streets," says Marshall Hughes from Passel.

Ari Kestin, CEO of crowd-sourced delivery company Nimber, sees crowdsourced delivery as a solution to congestion:

"In major metropolitan cities in the future, I think two-wheeled transport and public transport will dominate. There won’t be the space for trucks and other large vehicles. They just won’t make economic sense," he says.

"The quest will be for efficiencies."

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