If Time was the Only Real Asset, What Would be its Value?

Has innovation in the last mile logistics has likely created more shareholder value in the past two decades than any innovation in any era?

February 21, 2022

By Dragana Marina


Scott Galloway, professor of marketing at the New York University Stern School of Business recently argued that innovation in the last mile logistics has likely created more shareholder value in the past two decades than any innovation in any era. You might wonder why? Because last-mile innovations help each and every one of us make the most of our time.

How to define Last-Mile

Last mile logistics, also sometimes referred to as ‘last touch’ or ‘last leg’ logistics, is a process and not strictly a real estate term. It is the delivery of goods to consumers, or ‘chimney pots’ as known in the industry. Retailers and/or third-party logistics company (3PL) will promise to deliver goods within a certain time frame and require a suitably located / specified building to facilitate this process1. To achieve this, logistics industry has gone a long way in changing its business models and embracing technology to automate processes, drive efficiencies and improve the customer experience. Venture Capital (VC) is recognising the opportunity, with big money pumping up valuations of digital-focused ventures across freight, delivery, and warehousing. There is a backflip though, as this translates into increased risk for investors in case some of the companies attracting a lot of capital fail to deliver on their expectations.

Table 1: Supply chain tech VC ecosystem map

 Enterprise supply chain management   Freight tech Last-mile delivery  Warehousing 
  ERP & inventory  management  Trucking logistics  Delivery services  Warehouse automation
  Procurement & sourcing  Marine, rail & og port logistics   Ultrafast delivery  Warehouse  & fulfilment
 Asset tracking & management  Autonomous trucks & middle mile  Autonomous delivery  Augmented reality 
 Supply chain finance & payments  Electric trucks   Drones & eVTOL logistics  Sustainable packaging 
   Fleet management  Reverse logistics  
Source: PitchBook, 2021

Supply chain-teknologi modner

VC investors funnelled some USD 24.3bn into supply chain technology start-ups in North America and Europe in first nine months of 2021, through 628 deals (PitchBook). Q3 2021 was thus a third straight quarter with over USD 7bn of VC investments. The segment’s growth is increasingly happening on back of strong late-stage activity but nevertheless, a lot of capital has flown to earlier-stage categories like drone logistics, augmented reality tech for warehousing, and ultrafast delivery. Consequently, an influx of capital relative to the number of start-ups is very much driving the rapid rise in valuations.

Figure 1: Supply chain tech VC deal activity (North America and Europe)

Source: * As of September 30, 2021; PitchBook, 2021

According to industry experts, the next big wave of VC funding could be headed to the middle mile. Although there is still slight fuzziness around the very definition of middle mile, Pitchbook pairs it closely with ‘final mile aggregation’. This basically means start-ups that help retailers stick multiple players together – the leg between a package leaving a warehouse and being placed in the vehicle that drives it to a customer’s home.

Looking ahead

This impressive traction brings us to the question - what’s driving growth in supply chain tech and where will innovation be happening going forward?

  1. Our expectations as consumer are growing, as well as our understanding of what ‘free and fast’ delivery means. As last mile delivery represents a large portion of overall logistics costs, businesses will be focused on improving their margins.
  2. Companies will increasingly look into 3PLs in order to turn fixed expenditures into variable costs. The growth of ‘Supply Chain as a Service’ (SCaaS) will give businesses muscles to scale in an affordable way.
  3. The ESG agenda, regional and national legislation, as well as pressure from consumers will pave the way for companies to invest in supply chain visibility. Blockchain technology is predicted to allow for changes in dynamics within this space.

The VC inflows will allow start-ups to gain some muscles and expand. The number of corporate investments into start-ups is also poised for growth, with M&A activity being particularly in focus.

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