Damiano Frosi is the Director of the Contract Logistics “Gino Marchet” Observatory at MIP, the School of Management of Politecnico di Milano (contractlogistics.it). Damiano is also the Relationship Manager of the Digital Innovation Observatories at MIP, managing relationships with more than 500 research partners and sponsors, which support the 44 Observatories of the School of Management (list of observatories).
Damiano graduated in Industrial Engineering at Politecnico di Milano, and received the PEGASO Master in Local Distribution at MIP.
Q: The Contract Logistics “Gino Marchet” Observatory is a reference point for the logistics industry in Italy. The Observatory collaborates with the leading national and global logistic players. When was the Observatory created? And what activities does it carry out?
Damiano: In 2010, we noticed that a research centre on the third party logistics sector was missing in Italy. Consequently, Prof. Gino Marchet, Prof. Perego, Prof. Melacini and Andrea Fossa founded the Contract Logistics Observatory, with the support of a highly specialised community, and the collaboration of Assologistica, the national association in the logistics sector.
The Observatory studies the evolution of the Italian logistics outsourcing market: it quantitatively measures the phenomenon, and, through various research methods, it examines the leading evolution and innovation trends.
Q: Recently, the logistics industry has gained importance, mainly thanks to the growth of the e-commerce and the adoption of new online business models. What changes have you observed in Italy in the last few years?
Damiano: In Italy, the e-commerce – and therefore the B2C distribution channel – grows more than 20% per year. The growth is not associated to an increase of internal demand, but it is connected to the way products are delivered to the final customers.
The growth of the B2C distribution channel influences also the way B2B logistics operations are carried out: traditional retailers has started to act as final customers, ordering few pieces several times per day.
New distribution models are also adopted: for example, some players are transforming underground warehouses of some city-centre stores into logistics hubs for urban distribution.
In addition, we see changes on the labour side. The logistics labour expenditure increases by 6% per year, and Italy is suffering from a lack of drivers. Therefore, new solutions that improve processes and increase operating efficiency are certainly needed.
Q. In your opinion, are traditional logistics players more inclined to invest in innovation?
Damiano: I think that, in last 3 years, logistics companies have change the way they approach innovation: now their approach is more “natural”.
New trends and solutions – such as logistics 4.0, automation, and software applications – are renovating the old paradigms: companies are more collaborative, they close long-term contracts (up to 10 years against the conventional 2/3 years typical of the logistics industry), and they even co-invest with other players for the development of new solutions.
I believe that this is due to the fact that now technologies are more affordable, and that competition is moving from costs to innovation.
Q: At the end of last year, the Contract Logistics Observatory presented a research on the start-ups in the logistics sector. What are the main outcomes of the research? And what are the main types of innovations pursued by start-ups?
Damiano: The Observatory identified 363 venture-backed start-ups in the logistics field at global level. We studied companies providing B2B services (such as carriers and shippers), but also B2C services (e.g. last-mile providers).
We then focused on 319 “pure logistics” start-ups, as we excluded logistics companies that also sell products (such as food delivery).
Therefore, we classified start-ups according to four criteria:
- new logistics players, with innovative logistics models compared to traditional players;
- new platform for matching demand and supply of logistics services;
- new software solutions for the management of logistics services;
- new hardware solutions, such as new generation forklifts, picking gloves, etc;
In Italy, we identified just 16 start-ups. Some examples are Milkman (milkman.it), an urban delivery provider that connects logistics providers, drivers and final customers; and Siwego (siwego.com), a crowdsourced transport platform for drivers.
The most attractive start-ups for investors turn out to be new logistics players (both B2B and B2C), which base their business model on software innovation, but also new platforms for matching demand and supply of logistics services.
Q: Are traditional players willing to partner with and support start-ups?
Damiano: Traditional logistics players look positively at start-ups, as they bring innovation to the industry.
Some players have started new projects inspired by a start-up, others are willing to partner, few of them are considering start-ups’ acquisitions. An example is Poste Italiane that recently acquired IndaBox, an urban network of collection points (indabox.it).
Q: What would you suggest to a non-Italian investor willing to approach the Italian logistics market? Are there any particular business dynamics that it is worth knowing?
Damiano: I think that transport is the most interesting area for an investor: it is growing, there are some issues to resolve – such as capillarity, and the lack of trucks and drivers – but there are opportunities.
I reckon that there is space for new business models that enable drivers and carriers to collaborate.
I also believe that new more sustainable delivery models, such as those adopting urban lockers and electric vehicles, will arrive soon. Sustainability and proximity are now very important to Italian customers, but also to multinational companies.
Visit the Contract Logistics “Gino Marchet” Observatory’s website: contractlogistics.it