Closing supply gaps in rural regions

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

With figures like these, one might think everything is fine. But as the headline already suggests, it isn't. Conversely, this doesn't mean that city life is the solution. Urbanization also presents significant challenges that need to be addressed.

While rural areas feel left behind by current developments, growing cities are grappling with the need to reclaim and secure urban open spaces. In major cities, a migration from urban to suburban areas (from the outskirts to the surrounding region) is evident, driven by factors such as rising living costs or displacement by businesses and corporations.

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 areas has a gap, it can be assumed that gaps also exist in the other areas. However, if we apply this to rural regions in industrialized countries, it doesn't necessarily mean that life is worse there. Compared to the exorbitant cost of living in city centers, rural life is certainly an alternative. However, the range of services in these three areas is relatively limited, and the effort required to fill any of the gaps is significantly greater.

The question of when we speak of an individual's exodus from rural or urban areas varies from case to case. However, the trend is clearly towards rural exodus.

Problems with land cultivation

It can also be observed that the closer a rural region is to a major city (city center, suburbs, or catchment area), the lower the rate of rural exodus from the surrounding area. With good highway connections (infrastructure), many are willing to drive up to 100 km from rural areas to the urban environment for work. The costs are still lower than the overall cost of living in urban areas. The aspect of travel time is also relative. During rush hour, it can even be faster to get to work from the surrounding area than from the city center itself, because traffic and congestion completely overload the roads.

Some also hoped that the internet would promote suburbanization and thus ease problems, especially those related to road traffic or the choice of business location.

In reality, however, everything has become more complicated. Broadband expansion in rural areas is progressing slowly. With the professionalization of e-commerce, gaps in last-mile delivery are also becoming apparent. Logistics can barely keep up with the growth. Parcel services are short of drivers, and the workload is high. The problems multiply, especially when the first delivery attempt fails. It's important to understand that 50% of the costs are incurred on the last mile, according to logistics professor Kai-Oliver Schocke from Frankfurt University of Applied Sciences. "A parcel service provider can make a lot of mistakes there. This is where their success or failure is determined." With three delivery attempts, the costs triple.

Further trouble looms with the shortage of doctors in rural areas. Almost unnoticed, but also interdependent, the availability of pharmacies is deteriorating. Because of the shortage of doctors and the lack of prescription medications, the lack of minimum sales volume further exacerbates the closure of pharmacies. While urban areas are medically oversupplied, rural areas are threatened with undersupply. A visit to the nearest general practitioner can take several hours using public transportation. This is not only a problem for the elderly; it also reveals a gap in care for diabetics and other patients who rely on regular medical attention.

The last mile

Several other points could be mentioned. In short, the economic geography of Germany is characterized by pronounced differences in regional developments and economic structures.

The many challenges cannot be solved with isolated measures. Broadband expansion is not a panacea. And those who want to go to sea won't find their fortune in Munich either. Career prospects, even in large cities, are tied to economic conditions.

Interestingly, you can find a pizza delivery service somewhere in almost every remote area. Similarly, despite declining numbers, the network of gas stations remains extensive. So it's not hopeless; it just needs better organization.

A closer look reveals that the supply gaps in rural regions exist primarily on the last mile .

Large suppliers deliver goods from their central warehouse to their regional warehouses in the various federal states. From there, they supply their own retail outlets, such as markets, shops, and shopping centers.
The locations of the individual retail outlets are determined by population size, income, infrastructure, and their catchment areas.

To close the supply gaps in rural regions, there is a lack of regional small warehouses (RCWs) that are not based on the number of inhabitants, but on the various small shops, village shops, corner shops or other sales areas, e.g. in tourist areas.

Accelerating integration services in logistics

Integration services take on particular importance here: the pooling of the mobility of goods.

What is unnecessary in urban areas due to short distances is the turbocharger in rural areas.

A logistics hub for all packages and goods from parcel service providers and grocery retailers to dealers of various other goods. Regional retail outlets are served and supplied from this distribution center.

By not having everyone try to deliver their goods successfully on the last mile like a lone wolf, pooling resources leads to a higher and more economical utilization of service providers.

Whether it's e-commerce or the grocery retailer, everyone benefits from the success of each other's goods mobility.

Regional small parts warehouses (RKL)

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

• automation
• autonomy

You can find more information in our article “ CO2 Neutrality – Learning from Amazon ”.

As a brief outlook, the connection of further mobile goods to a RKL (Rapid Control Center) would be the next step:

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

In contrast to urbanization, country cultivating is the answer for the future of rural regions.

And it already exists: From theory to practice!

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

We find such a system of local, decentralized hubs in Japan. The Japanese government is already several steps ahead. Among other things, it plans to automate all 50,000 konbinis (small convenience stores) distributed throughout the country by 2050. RFID technology will be used for this purpose. 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