Last Mile Delivery: Your Fast Track to Delivery Efficiency
The importance of last-mile logistics has increased significantly in recent years due to the rapid growth of e-commerce, evolving consumer demands, and the necessity for efficient and timely deliveries. Covid-19 has also played a part in hastening the rise of last-mile deliveries. In logistics, ‘first-mile’ and ‘last-mile’ delivery are terms used to describe the movement of goods within the supply chain. The first leg of the supply chain journey commences when a customer places an online order, and the retailer takes, packs, and hands the item to the courier. This stage is known as first-mile delivery. Last-mile delivery occurs when the item is transported from the shipping warehouse to the customer's doorstep. Last-mile delivery is crucial within the supply chain as it significantly influences the customer experience. E-commerce giants such as Amazon, Flipkart, and others are influencing customer expectations by providing rapid and cost-effective delivery options.
Market Overview and Drivers
Last mile delivery market will grow at an average CAGR of 8.5% by 2030. The market growth is attributed to the rise of the e-commerce industry, an increase in trade activities brought on by globalization, technical developments in delivery vehicles, and an increase in demand for quick package delivery. The top priority in last-mile delivery, in the past was cost and satisfaction, which has now shifted to cost and speed.
The major players in the last-mile delivery market are Yamato Holdings, Royal Mail, TFI International, Poste Italiane, ZTO Express, SF Express, Japan Post Holdings, DHL Group, FedEx, and UPS. Mergers, collaborations, and product launches are some of the strategies followed by industry players. For instance, in June 2023, Amazon unveiled its strategy to incorporate small businesses into its efforts to improve last-mile delivery operations. This initiative, extending across 23 states in the US, will engage a variety of small businesses, including clothing stores, florists, and local convenience stores. Additionally, in October 2022, GEODIS acquired Need It Now Delivers. The acquisition aims at expanding the acquiring company’s presence in the US, in final mile delivery and contract logistics.
Data analytics is a key enabler of last-mile delivery innovation. It helps logistics providers collect, process, and leverage large amounts of data from various sources, such as GPS, sensors, cameras, or customer feedback. Data analytics can help to improve operational efficiency, customer satisfaction, and competitive advantage in last-mile delivery, by enabling capabilities such as real-time tracking, dynamic routing, demand forecasting, personalized offers, and proactive communication.
Data analytics can also support the adoption and integration of other technologies, such as autonomous vehicles. These can potentially reduce labor costs, fuel consumption, and emissions. Autonomous vehicles can also collaborate with human agents, creating a hybrid delivery network that can optimize routes, speed, and safety. Autonomous vehicles can range from self-driving cars and vans to drones and robots, depending on the size, weight, and distance of the delivery.
Companies are adopting drones that can deliver packages to remote or hard-to-reach areas. Advances in technology are making drone delivery systems more feasible, promising faster and more cost-effective deliveries. This is particularly noticeable in remote areas, where delivering critical goods, such as medicine, is a key application.
Additionally, fostering diversity in the industry is not only a social imperative but also a strategic move. It allows access to a wider talent pool, thereby enhancing overall efficiency and inclusivity in last-mile logistics. This is believed to play a crucial role in facilitating the expansion of supply chain capacity.
The big promise of autonomous vehicles incorporate robots with complete deliveries at a lower cost than human workers. While others are experimenting with robots that can navigate sidewalks and deliver food or groceries. For instance, the autonomous sidewalk robots started delivering to Postmates customers in multiple Los Angeles neighborhoods in 2018.
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Another trend that is gaining popularity in last-mile delivery is smart lockers, which are secure and convenient storage units that customers can use to receive or return their online orders. Smart lockers can be installed in various locations, such as apartment buildings, office complexes, shopping malls, or transit stations, and customers can access them with a code, a QR scan, or biometric verification. Smart lockers can offer several benefits for both logistics providers and customers, such as reducing failed deliveries, enhancing security and privacy, enabling 24/7 access, and allowing flexibility and choice.
Customer empowerment reflects the increasing expectations and preferences of customers in terms of last-mile delivery. Customers want to have more control and convenience over their delivery options, such as choosing the time, location, mode, or frequency of delivery, or changing or canceling their orders at any stage. Customers also want to have more transparency and communication over their delivery status. Customer empowerment can help logistics providers increase customer loyalty, retention, and satisfaction.
Real-time tracking through smart technology is crucial in enabling a faster and more transparent last-mile delivery process, linking the planned delivery time to the current location. IoT-enabled sensors and GPS (Global Positioning System) devices allow for the tracking of every movement of a shipment. Such tools enable consumers to manage and modify retail deliveries with the help of online assessable tools. It brings transparency to its customers and has complete control over deliveries.
The dependable last-mile delivery solutions are particularly benefiting e-commerce enterprises and their clients through enhanced delivery processes. For instance, in April 2024, PIESHIP, a logistics firm based in Saudi Arabia, integrated AI and crowdsourcing techniques to streamline last-mile delivery routes and schedules, aiming to lower expenses and elevate customer satisfaction.
Furthermore, companies are leveraging smart technological solutions and integrating technology to optimize last-mile delivery operations, making them more transparent and reliable. For instance, in March 2024, ClickPost and Porter introduced a transformative logistics alliance geared toward modernizing last-mile delivery services. While, prioritizing swifter deliveries, enhanced post-purchase experiences, and streamlined omni-channel operations, the collaboration aims to optimize hyperlocal delivery services.
However, the global last-mile delivery market transportation faces challenges in the form of government regulations and authorities to control greenhouse gas emissions. The government worldwide has taken some measures to maintain environmental sustainability and reduce the impact of transportation on the environment. Additionally, the last-mile delivery market relies on conventional fuel-powered vehicles to encounter the challenge of reducing the emission standard. While securing the logistics landscape in the last mile delivery services with several factors. The first one is an increase in e-commerce activities as well as growing the base of online shopping due to the convenience of diverse product range. For instance, in October 2023 the government's Green Credit Programme (GCP) will also receive carbon credits under the Carbon Credit Trading Scheme if it leads to the reduction or removal of carbon emissions.
In a nutshell, the rapid growth of e-commerce and consumer demands leads to an increase in the last-mile delivery market. Innovations such as drone delivery, and AI are shaping the future of this sector and the demand for e-commerce. The key players including Amazon, Royal Mail, and others are adopting strategies such as mergers, collaborations, and new product launch strategies to get a competitive edge, thus contributing towards market growth.