The Future of Last-mile Logistics (LML) Takes Shape

The Future of Last-mile Logistics (LML) Takes Shape

Remember that friendly delivery person who handed over your package last night? A few years from now you may never see his tribe again. Instead, drones will be landing on your porch to deliver your packages.

Last-mile delivery as we know it is at a tipping point. As eCommerce continues to grow with geometric progression, the demand for last-mile logistics (LML) is also surging north with it. Although the distance covered by last-mile deliveries are less compared to the long-haul freight flights, it is the most challenging phase of the entire supply chain.

The notable challenges of last-mile logistics include limited public space, traffic congestion, the short span of delivery and road safety challenges.

If there are challenges, technology developments cannot be far behind. Some of these developments might seem like a scene envisioned by some Hollywood sci-fi director. But, they are pieces of reality that are shaping up the future of last-mile logistics.

Autonomous vehicles (aka drones) on your porch

Imagine this. You receive a mobile notification stating your order placed an hour ago has been dispatched. In less than an hour, you have an unmanned flying object (aka modern drone) landing on your porch with the package. And, as with anything else related to eCommerce, Amazon is leading the pack(et deliveries)!

Amazon has created “Amazon Prime Air” — a special program which has octocopters, or drones, as last-mile carriers for the eCommerce behemoth. According to Jeff Bezos himself, 86% of Amazon’s packages weigh less than 5 pounds. These drones can carry these light-weight packages up to 10 miles from Amazon’s fulfillment centers (The Verge).

To prove that Amazon’s march towards drone deliveries is in the right direction, McKinsey’s study found that, in the future, 80 percent of parcels could be delivered by autonomous vehicles. We are inching closer to a future when an autonomous vehicle will land on your porch with an order that was placed barely an hour ago.

Same-day deliveries are the norm

Same-day or on-demand delivery took the world by storm. It is now seen as an experience that blurs the lines of difference between eCommerce and brick-and-mortar shopping. In fact, customers most often equate fast delivery with same-day or on-demand delivery. The good news is that this experience is striking a chord with customers.

Quick delivery or rather same-day delivery forms part of the long list of factors that delight customers. PwC’s Experience is everything study found that, across multiple industries ranging from hospitality to travel, customers are willing to pay a premium price for superior experiences. In eCommerce, this translates into more purchases. 49% of shoppers say that same-day delivery makes them more likely to shop online (Source).

Scheduled deliveries where customers can receive the packages when it is convenient to receive them is also shaping up last-mile delivery networks.

Fulfillment spaces are becoming smaller

There is a butterfly effect that same day deliveries have on tangible resources like real estate. When the delivery span is reduced to a couple of hours or even a day, the need for warehouse space also reduces considerably.

Studies by CBRE suggest that smaller properties located in prime locations outpace larger warehouses in far-flung locations. Thanks to the agility of last-mile delivery, these smaller properties enable eCommerce players to have more proximity to their customer locations. Closer proximity helps reduce the fuel and overhead expenses required to orchestrate a supply chain across long distances.

Also, these smaller fulfillment centers solve one pressing problem for eCommerce businesses — the difficulty in finding spacious storage locations in prime locations. The credit for this can solely be attributed to LML’s agility.

FAD to improve LML competitiveness

DHL, a leader in global logistics, along with Euromonitor, a market research company, has identified three main focus areas that will help improve the competitiveness of LML. The three focus areas of FAD are:

  • Flexible networks
  • Automation
  • Data prediction/management

Flexible networks

The rise for on-demand deliveries means one thing for eCommerce players — the need to have flexibility in their distribution networks. Fixed delivery routes may not be optimal when orders pour in from multiple locations.

Automation

Short distances offer a greater chance of automating the delivery process. Driverless trucks that can carry small consignments of packages can complete door-to-door deliveries. Enabled with smart lockers and GPS navigation, these driverless trucks could soon make your friendly delivery person jobless.

Data prediction/management

From the order ID to real-time location, there are hundreds of data points that a single online shopping order can create. Combined together, even for a small region, they can predict the traffic density, order volume and frequency of deliveries as well. Modern-age data prediction and management technologies aid in mining insights that can help improve last-mile logistics. A simple example is route optimization where the shortest and cost-effective route from Point A to Point B is quickly determined by a computer program.

The last-mile point

From a customer’s perspective, ordering a product for home delivery is as simple as a few taps on the mobile screen. As soon as the last tap is done, an entire machinery consisting of hundreds of people, thousands of algorithms and countless other resources kick into action.

Most of the action happens during the last-mile when the package is picked from the fulfillment store and is transported to the customer's doorstep. Last-mile Logistics is a crucial phase during which many things can go wrong, the worst thing is losing the package or damaging it. Lost and damaged deliveries have remained a difficult challenge for eCommerce until now.

The future of last-mile logistics would be devoid of all such challenges. It will harness the full power of automation to make last-mile logistics an efficient, safe and productive process.

Read More:How to Improve Last Mile Delivery

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