What should DP World investigate to determine whether Amazon’s flying warehouse will propose a threat to DP World’s port operations? And if it should be leveraged as a future solution for DP World’s global supply chain ambitions?
To find out whether Amazon’s flying warehouse represents a threat to DP World’s port operations, it is necessary to investigate in more detail whether the flying warehouse will be able to serve as an inexpensive substitute or alternative to the services that DP World provides. From the available information, it seems that DP World mainly deals with container handling, whereas the blimp will apparently perform the function of delivering products in smaller amounts.
Similarly, to understand whether the blimp can be leveraged for future supply chain ambitions, it is necessary to consider what functions DP World plans to perform in the future, whether the flying warehouse will be able to carry out these functions, and whether using it will be viable. If the blimp will serve other functions than those which are currently planned, the viability of its utilization could still be considered.
The land surrounding a port is typically the most expensive and congested in a city. How would you determine if the flying warehouse concept makes sense economically for DP World to use as an alternative solution?
To understand whether utilizing a blimp instead of warehouses near a port makes sense economically, the expenses required for purchasing (or renting) such a blimp, as well as the delivery drones, shuttles for refueling, and so on must be determined. It is also necessary to estimate the costs of its maintenance, the expenses associated with loading and unloading goods from it, the spending on fuel, and so on. Finally, potential risks related to the use of the blimp (e.g., the risk that it will suffer damage during a storm and that goods will be lost), as well as possible spending and time investment for legal reasons (taxes, approval by aviation authorities) must be taken into account. This will allow for estimating the costs of storing one unit of cargo. These costs should be compared to the expenses of using standard warehouses near ports.
The logistics market is changing from being supplier-oriented to shipping liner-oriented because the supply of logistics resources exceeds the demand. Consequently, shipping liners have gained stronger negotiation power over port operators. In some cases, shipping liners demand a higher performance level from terminals as part of the contract conditions, and this can include the throughput rate per berth or the turnaround time of a vessel or road trucks. Is the flying warehouse a solution to shift the market back to a supplier-oriented one resulting in the port operator gaining a competitive advantage in negotiations?
To understand whether a flying warehouse can serve as a solution to transform the market into a supplier-oriented one so that port operators can obtain a competitive advantage over shipping lines, it is necessary to determine whether the blimps will be able to function as shippers. If they will be able to do so, they might serve as such a solution, because the warehouses will be able to function as transportation organizations as well (e.g., deliver goods via drones); however, the scope of the possible transportation services provided by the blimps must be calculated. On the other hand, if the blimps will only substitute for regular warehouses and will not offer additional functions, it is unlikely that they will help port operators gain a competitive advantage.
Given the cost of the land, quay wall, and need for speed in off-loading containers from the ship, should DP World invest in the flying warehouse concept or look to an alternate method of disruption? Why? And if you proposed an alternate method of disruption, what would that be?
To determine whether DP World should invest in flying warehouses, the cost of using the blimps must be calculated, and whether they will allow for the faster unloading of cargo from ships. If the estimates show that using blimps would provide DP World with a significant advantage and that the expenses associated with investing in it will be covered, then an investment should be made. Otherwise, DP World should look for alternative solutions. A possible alternate solution might involve using drones similar to those which are proposed for loading/unloading cargo from the flying warehouse, but without utilizing the blimp itself.
Additional Recommendations
From the description of the flying warehouse, it is apparent that its drones might also execute the function of delivery service. In this case, it might be recommended that DP World considers the possibility of diversifying into delivery, and starting to provide its clients with delivery service using the drones from the blimp. Clearly, the expenses and benefits associated with doing so must first be assessed.