Why you should care
Because it’s easier than ever to make money from traveling.
The inspirational thunderclap was … a diaper change. After adopting his son in South Africa, entrepreneur David Vuylsteke brought a tube of cream home with him from the orphanage. It worked so well at soothing his son that Vuylsteke wanted a steady supply, but the cream was nowhere to be found in Brussels, forcing him to rely on family members making the trip to South Africa. “This is stupid!” Vuylsteke thought. “Planes are taking off from Johannesburg every night for Europe. How can I get in touch with somebody?” So he built the infrastructure himself, launching PiggyBee in 2012 to connect travelers with far-flung people in search of foreign goods.
PiggyBee is one of a slew of sharing economy companies that could disrupt logistics, not unlike Airbnb and Uber have done to hospitality and taxi services, respectively. Even Uber is dabbling in delivery, as is e-commerce giant Amazon, and traditional shipping firms are taking notice, testing new programs and making strategic investments in a bid to stay ahead of the curve in a rapidly changing industry that analysts say is overdue for a shift. The last major disruption came with standardized container shipping in the 1960s, says Jonathan Wichmann, a consultant and former head of social media for shipping giant Maersk Line. With huge investments in trucks, planes and ships, the legacy players have a built-in advantage, but technology is starting to close the gap.
For consumers, it means faster service, a one-on-one relationship with couriers, and flexible delivery schedules — all at a lower cost.
Like their sharing economy cousins, a gaggle of logistics-style startups has cropped up around the world in recent years, and early successes can be seen in companies’ internal numbers, and in the faith of investors. PiggyBee is on track to double its users this year, to 7,000, while Atlanta-based peer-to-peer shipper Roadie has raised $25 million in venture capital. These startups save on labor, whether they specialize in cross-town or globe-hopping deliveries, because their couriers are contractors — often connected by cellphone app — who typically don’t do this for a living. “Our mission is to enable anyone to travel the world for free,” says Rory Felton, co-founder of Airmule, a Los Angeles–based company that launched last year. “We do that by enabling travelers to sell their luggage space to shippers.” For consumers, it means faster service, a one-on-one relationship with couriers, and flexible delivery schedules — all at a lower cost than traditional services.
A major hurdle is that of scaling up enough to efficiently serve a market. Felton acknowledges that his young company can’t fund a global vagabond life yet. It specializes in U.S.-China trips because, for now, that’s where the customers are. Vuylsteke has tried to partner with airlines but has been rebuffed, in part because of security concerns. Some of his best users, though, are cabin crew members who pack light and have time to go shopping. At the other end of the spectrum, delivery service Nimber rarely crosses international borders outside of its home markets in the United Kingdom and Norway, aiming instead to exploit the delivery industry’s nagging “last mile” inefficiency.
Another impediment is trust. The startups argue that your delivery person is not a scary stranger, and through identity verification and other methods they create a paper trail that is anathema to drug dealers. A major plus has been the emergence of blockchain technology, an innovation from e-currency bitcoin that records and certifies every transaction. Andy Schmahl, a transportation expert at PricewaterhouseCoopers, says he expects blockchain to fuel growth in companies teaming up for different parts of a package’s journey, and for it to boost trust in nontraditional carriers. There’s also been a cultural shift in favor of trusting online connections, ranging from Uber to Tinder. “Twenty years ago, people would say, ‘Don’t talk to strangers. Don’t get into a stranger’s car,’ ” says Felton. “Here, we’re like, ‘Summon a stranger and their car to your door and get in.’ ”
Entrenched companies are also starting to recognize the shift. In recent years, DHL has launched peer delivery pilot programs in Stockholm and Berlin. (DHL, in fact, was ahead of the curve by a few decades: Shortly after its 1969 launch, it gave people free plane tickets from Hawaii if they agreed to transport important documents, according to a founder’s biography.) UPS is among Roadie’s investors, and it also bought Coyote Logistics, a company that uses technology to efficiently manage truck freight loads, for $1.8 billion.
UPS strategic communications manager Thomas Madrecki says the logistics stalwart reinvented itself in the 1990s to take advantage of the consumer shipping market after long specializing in business-to-business and is prepared to shift again — without abandoning its identity. The signature brown trucks and uniformed drivers are not going away anytime soon in favor of Steve down the street. “As a company, I don’t know if there’s a huge concern about being disrupted,” Madrecki says. “But there’s an awareness that there are changing market dynamics, and therefore we have to make investments to keep pace with the world.”
But the newcomers are not necessarily looking to drive a stake into UPS’ heart. “We’re not a logistics company hater,” says Nimber CEO Ari Kestin, who has been in talks with big companies about partnerships. “We’re a destructor of the form, but not necessarily the industry.” The wide variety and global spread of startups means it’s hard to predict which ones, if any, will emerge. Schmahl, of PricewaterhouseCoopers, says, “The company that’s really going to dominate, we haven’t really seen yet,” because the idea is still twinkling in the eye of a junior executive or, perhaps, a high school sophomore.
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