Transportation – From evolution to revolution

The revolution is around the corner! After over a hundred years of incremental development in transportation solutions we can now see a shift towards more radical development – a transportation revolution. A new era in which digitali-zation, big data and the sharing economy will alter the underlying logic of new services and products within the transportation sector.

Few things are as commonplace and as clearly integrated into our lives as transportation, be it transportation of ourselves to work, our children to school, or transportation of food and goods. Sometimes even transportation just for fun, as when we travel.

The ways in which we transport people and goods today are not essentially different from in the past. The mode of transportation we have all gotten used to over the last 150 years builds upon a simple principle: That machines will move us around. This has since long been under an incremental development – a gradual transportation evolution. We have seen combustion engines becoming ever more efficient, the steam engine trains being replaced by high-speed rail, and new types of environmentally friendly fuel being introduced in older types of vehicles.

But something is changing. New possibilities for transporting goods and moving people around are emerging. It is rapidly becoming easier to transport goods with high levels of certainty and accuracy, and to deliver goods and services in a way that fit seamlessly with our everyday lives, synchronized to our own movements.

So, what exactly is this shift we have dubbed the transportation revolution? It is best understood as a number of shifts and developments related to transportation and people, which are all, in turn, made possible by a number of smaller trends. Taken together, this means that the ways in which we transport people and things changes fundamentally – a development made possible by computers and digitalization.

5 driving forces behind the transportation revolution

  • Owning things is a thing of the past – The sharing economy is gaining more and more traction as the attitudes towards ownership change in parallel with the pursuit of a more streamlined life, involving convienences like not having to look for a free parking space, worrying about getting your new bike stolen or storing clothes that you rarely use.
  • Dormant resources put to work – Connecting already available resources that are not currently in use – that is, dormant resources – with a customer who is prepared to pay for the resource enables the development of services based on entirely new business models. There are already examples like Uber for taxi trips and fast food home delivery with Foodora. Since resources are readily available and do not have to be acquired by the service provider, the service can be made much cheaper while still offering large enough margins to make business viable.    
  • Digitally supported trust The Internet is brutal in its transparency. As a consequence, power has been shifted onto the customer – who has also grown accustomed to understanding the bigger picture through just a few clicks. Consumers ask their friends, their communities and influencers for advice – in short, the people they trust. A sales person is no longer a trustworthy source of advice. The power to make the perfect purchase can only be found online.
  • Mobile through the mobile phone – The availability offered by smartphones is hard to trump. They are always there, always connected, and each device is moreover tied to a certain individual and their location, consumption and habits. This produces valuable data that organizations can use as a basis for various attractive services.
  • Technological development – Last, but not least, the general technological development is a strong driving force underlying the coming transportation revolution. Thanks to advances in information security, we entrust control of the locks to our apartments to our mobile phone and share increasing amounts of information online. The Internet of Things is another trend forming a platform for the transportation revolution, in turn driven by technological development in sensors (price, size, energy efficiency) and in IT infrastructure such as the 5G network.

Services emerging in the wake of the transportation revolution

The transportation revolution has the potential to alter the very logic behind new services and products, through the use of digitalisation, big data and the principles of the sharing economy. In this section are a few examples of services we see emerging.

Mobility as a service

A huge shift in overall transportation logic, caused by digitalisation and dormant resources, is the consumption of mobility as a service instead of as a product (a vehicle or similar mode of transportation). An overarching term for all of these services is MaaS – Mobility as a Service. What could earlier be gathered under the umbrella of public transportation is now a wide array of different services. Why own the mode of mobility when you can instead buy mobility directly as a service? Beside access to carpools of different kinds, one can buy a cheap ride with a “taxi” through the Uber app or access to a bicycle by using Citybikes and similar services in major cities around the world.

One interesting aspect of MaaS is its potential to erase the boundaries between public transportation, commercial transportation, and privately owned solutions. The key to connecting all these is the digital platform. A large organization equipped with a high quality digital platform and good relationships with transportation providers has the chance of becoming a powerful player, since it possesses high-quality data on transportation patterns.

Deliveries when and where you need them

In 2015, Volvo Cars together with a number of partners launched a new service: In-car delivery. One of the partner organizations was Postnord, the Swedish postal service. The key idea of the service is that Postnord drivers, by using a digital key, can unlock the trunk of the customer’s car, wherever it is, and leave deliveries in the trunk. The only thing the receiver of the package needs to do is to specify the approximate location of the parked car and to approve Postnord for access during a specified time slot.

But why stop there? Since Volvo’s in-car delivery was launched, more related services have emerged, such as in-fridge delivery (food ordered at delivered directly to your fridge), Smartbox (a mobile storage space delivered at your home where you pack things you want to store elsewhere), and Clutter (a “digital storage room” where all you have chosen to physically store with them is displayed so that you can easily pick and order the things you need for the season).

Our homes and cities reflect the way we move

Is in-fridge delivery and storage services in your home the starting point for a whole new way of organizing our homes, cities and societies? Where will we draw the line for what we consider home and private space? Property owners are already planning for a delivery invasion by upgrading to the latest smart locks, teaming up with storage services, food deliverers, carpools, and music services. Community planners are making new logistics services an integrated part of new neighbourhoods.

The transportation revolution enables new ways of understanding our homes. In the long run, we can plan our homes differently if it’s made easier to get access to what we need at the moment without much planning. This is true no matter if we are talking about milk for the coffee, a ride to soccer practice for the kids or winter gloves as the temperature creeps below zero.

Evolution, revolution, and paradigm shifts

While the transportation revolution is taking off, driven by digital solutions, the machine-supported paradigm is slowly entering a more moderate evolution. Several new players are entering the market in an attempt to get a piece of the cake. In the bigger picture of the transportation revolution, established transportation providers join this motley group of start-ups. Something all paradigm shifts have in common is that the market becomes turbulent and many organizations find themselves out of business. Meanwhile, the services and products offered to customers reach a fantastic diversity and plurality. It may well be appealing to consider all the cool new products on sale, and all the smooth services you can use, even as the more worrying side of your brains is busy with another question altogether. Namely: Will our organization survive the paradigm shift?

Is your organization future ready?

When the transportation revolution hits the market in full force, there will be turbulence as many organizations strive to find their new role – if indeed any is to be found. This applies most obviously to current service providers, but also to players not currently in the transportation sector, such as food chains and city planners. The organizations that will see success in the new transportation paradigm are those who best manage to use its driving forces to their benefit. Below we present five questions to ask yourself. Is your organization ready for the transportation revolution?

  • Do you own the data about your own and your customers’ movements?
  • How do you convert knowledge (or data) about your transportation flows into attractive services?
  • What relevant resources, currently lying fallow, are available in your business that could change the rules of the game if a new player found a way to put them to use?
  • How would your business change if everything was controlled via the phone, and on the go?
  • Last but not least: How might self-driving vehicles impact your business?