What is Last-Mile Delivery?
Last-mile delivery means delivering products from the nearest distribution hub to the required address, avoiding any time delay.
The term last-mile delivery is usually used for businesses that require instant delivery, such as food delivery businesses, enterprise supply chains, and businesses that promise one-day delivery like post offices.
Last mile delivery refers to the very last step of the delivery process when a parcel is moved from a transportation hub to its final destination—which, usually, is a personal residence or retail store.
This is the most critical step in the delivery process, and the one that businesses want to ensure is as quick and efficient as possible. This is to keep up with the continually increasing consumer demand for speedy shipping, especially in post offices, logistic companies, e-commerce, food, and retail industries. It also happens to be the most expensive leg of the journey that goods take to reach their ultimate destination.
What are the biggest challenges with last-mile deliveries?
You want to solve all your problems with last-mile delivery in one place?
1. Faster fulfillment
There’s an emphasis on logistics and fulfillment due to an increase in on-demand or same-day delivery.
2. Gig economy/crowdsourcing apps
There’s no better way to demonstrate the rise of the gig economy and use of crowdsourcing apps than by looking at venture capital flowing into the last mile delivery and urban logistics sectors.
In 2015, venture capital investments in supply chain and logistics start-ups were more than four times higher than in 2014 ($1,202 million versus $388 million), said Pharand, and venture capital dollars invested in the same space in the first quarter of 2016 alone was $1.75 billion.
3. Focus on visibility
Legacy carriers have improved traceability, with proof of delivery and tracking information. Regional and local last-mile delivery organizations don’t necessarily have the technology bandwidth to provide that data.
4. Postal service evolves
Legacy carriers like the United States Postal Service (USPS) are changing with the times and continuing to grow. Given declines in mail delivery, increases in e-commerce package delivery couldn’t come at a better time.
5. Insourcing deliveries
An increasing number of companies are using their own or shared vehicles for last-mile delivery – and that includes Amazon. “Traditionally, our clients weren’t in the transport business. They didn’t own trucks or vans or vehicles, but now they’re starting to deal with a co-op with competitors or other companies in the regional area, to utilize each others’ transportation assets.”
6. City warehouses
“That is the only way you can reduce speed of deliveries or transit time,” said Pharand. He says Amazon’s two-hour delivery is unheard of. “That’s what’s disrupting everyone. I haven’t heard of any retailer or delivery company that can offer a counter value as big as Amazon’s right now.”
7. Carrier becomes a salesman
Using Big Data, retailers can predict what else a customer might want, even if they didn’t order it. The concept of a mobile warehouse is gaining steam. The fulfiller can load noncommitted inventory into delivery trucks, allowing drivers to upsell during the delivery process.
8. Smart technology and sensors
In addition to wanting visibility at each point in the fulfillment and delivery process, customers want to track temperature sensitive items.
“A lot of our clients are putting different probes and monitoring devices in the packages themselves,” said Armanious. This way the pharmaceutical company, frozen foods, or spirits manufacturer will know the probe temperature and possibly the humidity level at every step. It’s becoming an industry standard, he said.
9. Delivery by self-driving cars, drones and robots
While these futuristic delivery options are being developed and tested, they’re not yet trending. But keep your eyes on them for the future.
If parcels can be delivered by autonomous vehicles or drones, that will change the game considerably, said Pharand. The highest cost in delivery is labor, which accounts for 60% of the cost. Deliveries are currently limited by labor cost, availability and shifts. Robotic delivery could be done 24 hours a day. Drone deliveries, however, may have limited use in highly urbanized areas due to regulatory and operational issues.
Robot delivery is already being tested in San Francisco for Yelp Eat24, using a Marble robot on city sidewalks. One downside? The robot needs human accompaniment in case it has a problem. McKinsey envisions envisions a future where autonomous vehicles and drones will deliver 78% of all items, with traditional delivery accounting for only 20% and another 2% by bike couriers.
Whether or not the future is autonomous, these nine trends show stakeholders throughout the supply chain are actively trying to perfect the last mile in order to keep up with greater consumer demands.
