Nov 11, 2020 by Jeff Moss

A Discussion on Urbanization

The current trends and their effect on the supply chain

Dematic.com / Blog Home / A Discussion on Urbanization
Supply Chain Trends Performance
A Discussion on Urbanization

Despite uncertainties, the world continues to spin. And the population continues to grow.

For most of human history, the world’s population has lived in low-density rural settings. But 2007 marked a unique phenomenon: It was the first time more of the world’s population lived in an urban area than a rural area. This shift has resulted in substantial change to urban supply chain operations:

  • How can we best serve so many people living in such a small space?
  • How can we work with the limited space we have?
  • How can we make the last-mile delivery efficient?
  • How can we make online orders cost effective?

Will COVID-19 Halt the Urbanization Trend?

According to the Pew Research Center, 1 in 5 US adults have moved because of COVID-19 or know someone who did. The top reasons for moving include reducing risk of contracting the virus, university campuses closing, job losses, and the desire to be near family. Much of this movement is from urban areas into more rural areas. Will this response to COVID-19 reverse the trend, or is it a short-lived phenomenon?

Europe has seen similar trends. As teleworking becomes far more accessible (or mandatory), everyday workers have more flexibility in choosing their working location, which may or may not include a traditional jobsite office. During the pandemic, many from hard-hit cities in Europe have fled in favor of rural safety. As such, European commercial property investments fell an average of 44% between mid-March and May 2020.

A Discussion of Urbanization

Does This Mean Our Urban Centers Will Become Ghost Towns?

Time will tell. But most likely not. According to apartment search data in the United States, urban apartment search rates are back to where they were pre-COVID-19. And even though people have moved, many of these were temporary. Similar to past events such as the Great Recession and the 9/11 terrorist attacks, people initially moved out of urban areas, but numbers normalized within a year or two.

Looking east, Asia has experienced tremendous urban growth at a faster rate than the rest of the world. In addition to growing mega-cities, many rural areas are quickly being reclassified as urban due to fast-paced migration. These trends have led to incredible opportunity for supply chain infrastructure. China, for example, has the world’s largest e-commerce market, valued at $1.94 trillion USD in 2019. And the fastest growth in e-commerce is expected in India and Indonesia. Asia is booming.

What Do You Think?

While trends vary from country to country, one thing is certain: Urbanization (or lack thereof) has an impact on supply chain. Are we nimble enough to accommodate our end consumer?

Related Posts: