Closing supply gaps in rural regions

Published on: September 15, 2020 / Update from: October 6, 2020 - Author: Konrad Wolfenstein

90% of the area in Germany is rural. Around 47 million people live in rural areas, i.e. more than half of the population. Over 80 percent of Germany's area is used for agriculture and forestry for food and raw materials.

With numbers like that, you would like to believe that everything is fine here. But it isn't, as the title suggests. Conversely, that doesn't mean that city life is the solution. Urbanization also has major challenges that need to be overcome.

While the rural region feels left behind by current developments, the growing cities are struggling to reclaim and secure urban open spaces. In large cities, an exodus from the city (suburbanization) into the urban surroundings (suburbs to catchment areas) can be observed. Be it due to the rising cost of living or crowding out by shops and companies.

It is therefore difficult to define exactly where the rural and urban regions begin.

Urban living space

Three points characterize an urban living space:

• Concentrated labor market situation
• Mobility of people and goods
• Infrastructure, organizational and economic foundation

If one of these points has a gap, it can be assumed that there are also gaps in the other areas. If we transfer this to rural regions in industrialized countries, that doesn't necessarily mean that life is worse here. Compared to the overpriced cost of living in the inner cities, rural life is definitely an alternative. However, the offer in the three areas is relatively manageable and the effort required to fill one of the gaps is immensely higher.

It always varies from case to case when we speak of an individual rural or urban escape. But the trend is clearly towards rural exodus.

Problems in land cultivation

It can also be seen that the closer the rural region is to a large city (city center, suburb to catchment area), the lower the rural exodus from the surrounding area. If there are good motorway connections (infrastructure), many people are willing to drive 100 km from the rural region to the urban world to work. The costs are still lower than the overall urban cost of living. The aspect regarding travel time is also relative. At peak times, it can even be that you can get to work faster from the surrounding area than from the city center itself because traffic and traffic jams completely overload the streets.

Some people also hoped that the Internet would promote suburbanization and thus ease the problems of road traffic or the choice of where companies should set up shop.

In fact, everything has become more complicated. Broadband expansion in rural areas is progressing slowly. With the professionalization of e-commerce, the supply gaps on the “last mile” are also becoming apparent. Logistics can hardly keep up with the growth. The parcel services lack drivers and the workload is high. The problems increase, especially if the first delivery attempt fails. You have to know that 50% of the delivery costs lie in the last mile, according to logistics professor Kai-Oliver Schocke from the Frankfurt University of Applied Sciences. “A parcel service provider can do a lot of things wrong. This is where it is decided whether he is successful or not.” With three delivery attempts, the cost triples.

The shortage of doctors in rural regions threatens further hardship. Hardly noticed, but depending on the situation, the supply of pharmacies is also deteriorating. Because of the lack of doctors and the lack of prescription drugs, the lack of minimum sales also increases the number of pharmacies dying. While urban regions are oversupplied with medical care, rural regions are threatened with undersupply. Visiting the nearest family doctor can take several hours using public transport. This is not only a problem for seniors, it also turns out to be a gap in care for diabetics and other patients who rely on regular medical help.

The last mile

A few other points can be listed. In short, the economic geography in Germany is characterized by pronounced differences in regional developments and economic structural conditions.

The many challenges cannot be solved with individual measures. Broadband expansion is not the savior. And anyone who wants to go to sea will not find happiness in Munich. Even in large cities, career prospects are tied to economic conditions.

Interestingly, there is a pizza delivery service somewhere in almost every remote area. Likewise, despite declining numbers, the gas station network is still widely branched out. So it's not hopeless, it just needs to be better organized.

If you take a closer look, the supply gaps in rural regions mainly exist in the last mile .

Large suppliers supply their regional warehouses in the various federal states from their central warehouse.
The company's own sales areas such as markets, shops and shopping centers are served from here. The locations of the individual sales areas are based on population, income, infrastructure and their catchment areas.

In order to close the supply gaps in rural regions, there is a lack of regional small warehouses (RKL), which are not based on the number of inhabitants, but on the various small shops, village shops, corner shops or other sales areas, for example in tourist areas.

Promote integration services in logistics

The integration services take on particular importance here: the bundling of the mobility of goods.

What is not necessary in urban areas due to the short distances is the turbo in rural areas.

A logistics hub for all parcels and goods from parcel service providers, food retailers to dealers of a wide range of goods. The regional sales areas are served and supplied from this distribution center.

Since not everyone tries to successfully deliver their goods on the last mile like a lone fighter, bundling leads to higher and more economical utilization of the service providers.

Whether e-commerce or food retailers, everyone participates in the success of the mobility of each other's goods.

Regional small parts warehouse (RKL)

The success of such an RKL also depends on two important factors:

• automation
• autonomy

You can find out more about this in our specialist article “ CO2 Neutrality – Learn from Amazon ”.

As a small outlook, the connection of further mobile goods to an RKL would be the result:

• Freight forwarding companies
• Pizza delivery service
• Petrol/diesel, electric charging station
• Other delivery and emergency services

Compared to urbanization, country cultivation is the answer for the future of rural areas.

And that already exists: from theory to practice!

After all the theoretical considerations, it actually already exists! Not in Germany and not in Europe.

We can find such a system of local decentralized hubs in Japan. The Japanese government is already a few steps further. Among other things, it plans to automate all 50,000 konbinis, so-called small general stores, distributed throughout the country by 2050. RFID technology should be used for this. This is essential for full automation.

More on this:

• Japan is already working on the future of tomorrow
• Urban growth – How Japan is setting the course for the future