Last Mile Delivery

Last mile delivery is the final phase of the delivery process, referring to the movement of a parcel from a transportation hub to its ultimate destination, which is typically a personal residence or retail store.

Despite its name, last mile delivery is not limited to a one-mile radius but encompasses the last leg of any delivery's journey. When packages arrive at a local transportation hub, a last mile carrier, either a third-party or in-house, picks up the delivery and transports it to its final location.

What is the Last Mile Problem?

The last mile problem arises when goods transported through freight rail networks or container ships reach a high-capacity freight station or port and need to be transported to their final destinations. This last leg of the supply chain tends to be less efficient and can account for up to 53% of the total cost of moving goods.

The specific challenges associated with last mile delivery include contributing to congestion and safety issues in central business districts, unattended packages susceptible to weather and theft, and difficulties in delivering aid supplies to areas affected by natural disasters or lacking infrastructure.

Why is the Last Mile Delivery so Important?

Implementing an effective last-mile delivery strategy can bring several advantages:

  • Faster delivery and convenience for consumers: Last-mile delivery enables quicker purchases and brings packages directly to consumers' doors, eliminating the need to travel to stores or designated pickup points. Delivery times are accelerated as the process often starts at local distribution centers.
  • Boosted sales and revenues: Companies with reliable and fast delivery services are more likely to attract and retain clients, leading to increased revenue. Last-mile delivery can also expand businesses' reach to remote and rural areas, providing access to new customers and potentially boosting sales and revenues.

What are the Challenges of Last Mile Delivery?

Several challenges are associated with last mile delivery, including slower travel speeds, lost deliveries, return logistics, and environmental considerations. Retailers strive to reduce the costs of last-mile delivery as a primary objective.

Last mile delivery costs depend on various factors such as packing requirements, multiple delivery routes, waiting times at dispatch, and low load sizes. Estimates suggest that last mile delivery costs range between $10 and $50 per package, with heavier items trending toward the higher end of the spectrum. Failed deliveries, on the other hand, have an average cost of $17.20 per instance.

By understanding last mile delivery and addressing its challenges, businesses can enhance customer satisfaction, increase efficiency, and ultimately thrive in the competitive market.

How to Solve the Last Mile Delivery Problem?

To tackle the challenges of last-mile delivery, several approaches can be taken:

  1. Crowdsourced delivery: This method involves assigning a local individual to oversee the package's origin and the customer's delivery location. It leverages technology and contracted couriers who use their own vehicles, often starting from the retailer's store instead of distribution centers. Companies like Amazon have adopted this approach with services like Amazon Flex. Crowdsourced delivery is cost-effective, simpler, and faster, enhancing the overall customer experience.
  2. Micro warehousing: Retail companies, following Amazon's example, have started using dedicated transportation hubs known as micro warehouses. These hubs are specifically designed for expedited deliveries, such as Amazon's Prime Now service, which delivers orders on the same day.
  3. Robots and drones: Automation is another trend gaining momentum in last mile delivery. Robots and drones are being explored as solutions for faster and more efficient deliveries. About 16% of retailers anticipate using drones for delivery in the future. Implementing autonomous vehicles and robots into distribution networks can lead to cost reduction, increased efficiency, and improved delivery speed.

By leveraging crowdsourced delivery, micro warehousing, and exploring automation through robots and drones, companies can overcome the challenges associated with last-mile delivery, providing faster and more convenient services to customers while improving operational efficiency.

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