Micro freight sector has outgrown pavements and now needs dedicated hubs

Micro freight is ready for its next disruption. It must provide its decentralised third-party contractors with micro-consolidation hubs.

The mobile app companies are the perfect stakeholders to lead the charge on solving the unexpected negative externalities from their disruption of the freight industry. After all, they possess perfect information.

Micro freight is a relatively new phenomenon across the world, having started a measly 12 years ago in California. Prior to platforms like UberEats, freight companies would complete a delivery’s last mile in larger vans, takeaway orders were collected at restaurants by the customer, or delivery drivers would be dispatched, in a motorcar, by a central cell centre. Mobile app companies changed all of that.

Companies like Uber and MrD envisioned a perfectly efficient system – distribution undertaken by independent third-party contractors with smaller shared vehicles, delivering goods in their extra time between ordinary daily tasks, following a perfectly balanced supply and demand scenario.

This is not what happened. These mobile app companies birthed a new industry – micro freight delivery. The centralised-dispatch-larger-van-delivery model has remained, while smaller scooter deliveries have been added to the last mile delivery ecosystem.

The difference is that these smaller scooters are independent third party contractors who have nowhere to wait between deliveries; so their vehicles clutter pedestrian sidewalks, the drivers are forced to wait in rain or extreme heat, and often have to urinate in public.

Low barrier to market entry

The low barrier to market entry means the scooters are often unroadworthy, driving is unsafe, and licences are illegal. It has been a boon for job creation but disastrous for the public realm.

In a co-authored piece for the World Economic Forum, I and two contributors outlined the challenges faced by the micro freight sector and the attempt by a pilot project to find solutions. Drivers lack hubs that provide essential services – shelter, water, toilets, connectivity, and resting areas. Cities face additional pressure on pavements, increased congestion in commercial nodes, and overall air quality concerns.

The pilot initiative brought together the key stakeholders and clearly demonstrated the need for decentralised micro freight infrastructure that intentionally serves the thousands of individual owner-drivers that dominate the sector. Here we must distinguish between the centralised offerings managed by the supermarket chains, like Checkers Sixty60 or Woolworths Dash. The negative externalities of the digital disruption of freight delivery are better understood because of the pilot by Local South, Langa Bicycle Hub, the University of Cape Town, and their funders.

While the pilot helped all stakeholders to better understand the environment, it made one aspect of the test abundantly clear to me – permanently giving up pedestrian pavement space is not the solution. In turn, this “hard no” births a new business opportunity informed by the perfect information possessed by the mobile app companies.

The micro freight sector has four main stakeholders – the restaurant/supermarket outlet, the delivery driver, the mobile app company, and the end customer. The mobile app company connects the end customer to the outlet via their mobile apps and driver distribution network.

Reams of data

The platforms understand every stakeholder better than any other. They possess reams of data on sales, delivery perimeters and driver working hours; which is only the tip of the mountain of insights at their disposal. Specific to the issue at hand, the app companies know exactly where drivers prefer to wait and the duration a driver spends waiting between deliveries.

Armed with this data, the app companies could approach any landlord for a specific shopfront and negotiate rentals based on perfect information.

A clean, well-organised, suitably located shopfront is the perfect micro consolidation hub. They could also tell city governments exactly how many traditional on-street parking bays need to be converted to freight delivery motorbike bays.

In short, the mobile app companies could solve the public realm problem and provide better dignity to drivers in a matter of months.

In addition to access to perfect information, a variety of funding models exist. The simplest – a service run and offered by the mobile app company; the most sustainable – an additional fee paid by the end customer or the restaurant outlet.

I am confident that all Capetonians would gladly pay an extra R2 to ensure drivers have dignified waiting areas and pavements are once again clear of scooter clutter. Likewise, businesses and property owners across Cape Town have repeatedly demonstrated their willingness to come together because they care about our city and her residents.

It was a joy to collaborate on the Mobility Hub pilot in Rondebosch. I wholeheartedly agree with its founders – “Non-action is also a response, and at the moment it is not working.” Micro freight delivery disruption has created a transport, public space, economic and urban logistics issue. We can no longer afford to not attempt solutions at scale.

Where I differ with the Local South team is the role of public space in the scalable solution. City governments must convert more traditional parking bays to motorcycle bays, but they should never permanently give up pedestrian pavements. DM