This article about last-mile delivery originally appeared in the October Issue of Logistics Journal, a monthly publication for 3PLs produced by TIA (Transportation Intermediaries Association). Banyan is a regular contributor to Logistics Journal. To receive the publication directly, visit the TIA website to learn more about becoming a TIA member.
Last-mile delivery, now more than ever, has become a problem for the logistics community. But, if it is the shortest distance, what’s the big deal? Last-mile delivery is so critical because the current best practices surrounding this part of the freight cycle are outdated, costing carriers big money. The Council of Supply Chain Management Professionals estimates that 28% of all transportation costs occur in the last mile. For just being one part of the overall process, that’s a huge percentage. In today’s tough economic climate, companies and shippers that figure out how to save money on last-mile delivery will be the ones who continue to grow and profit while those who don’t will continue to lose money.
So why is there such a large price tag associated with last-mile delivery? Why has this single part of the freight cycle become such a financial black hole for carriers and shippers? One of the main reasons is that customers are changing their demands for delivery. Twenty years ago, the technology wasn’t available to facilitate same or next-day delivery. Now, that option has become the expectation, rather than the exception. With consumer-demands changing, those delivering goods experience increasing stress on their performance.
With more demand entering the space for same-day delivery, companies are changing the way they deliver to private residences. That more parcel deliveries are now occurring in residential areas, instead of distribution centers or stores, is another reason why last-mile delivery charges are skyrocketing. Between the fuel spent when a truck is waiting to deliver goods in a densely-packed city, to that delivery only being one of the many that the truck makes that day, the challenges of last-mile delivery are present in many different parts of the process. And e-commerce is only one fragment of last-mile’s problem. There are still industries like food and pharmaceutical that take up more space on city streets. If the shipping industry is going to keep its head above water where last-mile delivery is concerned, it needs to know what is on the horizon that can help companies streamline their last-mile procedures.
Future Last-Mile Delivery Tech
When discussing tech trends for last-mile delivery, one would be remiss not to mention autonomous vehicles. Going beyond Amazon’s drone delivery—which has been highlighted by numerous news sources—there are other well-known companies that are trying to tackle the problems faced by last-mile delivery. One such company is Mercedes-Benz who recently released concept images and a plan for their Vision Van. The Vision Van is billed as “a revolutionary van study for the urban environment.” A kind of rolling transportation center, the Vision Van combines an electric drive system with drone-launching capabilities. This is a two-pronged attack on last-mile delivery problems. For one, the electric motor will save the operator money when the van is sitting in traffic in a highly-populated density zone. Secondly, the van serves as a docking system for drone delivery. Meaning, an operator can make deliveries through the air, while making deliveries on the ground. If the logistics industry is going to solve last-mile delivery, it needs established companies like Mercedes-Benz to continue to innovate and solve problems within the space.
Stepping away from the air and the street, there is one area that is also being tapped to help fix last-mile delivery: the sidewalk. Marble, a company that is “re-imagining urban logistics”, recently began testing their “fleet of intelligent courier robots.” Marble recently teamed up with Yelp to provide autonomous delivery in San Francisco. The robot looks like a mini Mars Rover and uses lidar to get around. The lidar (light detection and ranging) technology allows Marble’s robots to navigate busy city streets to reach their destinations. When this technology becomes ubiquitous, it will be a game-changer for the food-delivery industry. Food vendors only have to place their food in the temperature-controlled pod on the back of the robot and send it off. If you are the one who ordered the food, simply walk down to your sidewalk, enter the keypad code provided to you by the food company, open the pod, and pull out your prepaid food. This technology can be distributed across any industry imaginable and will help last-mile delivery by conserving man power and working efficiently in urban areas.
Moving past “touchable technology,” there is cloud or data-backed technologies that are assisting in solving last-mile delivery issues. With e-commerce purchases—especially parcel—on the rise, there is more and more data available for consumption and analysis. McKinsey & Company estimates the cost of global parcel delivery to be around $82 billion with a potential growth rate of 10% over the next few years. That amount of last-mile deliveries means that companies need to take a closer look at consumer-supplied data to make their delivery process more efficient.
One way companies are trying to optimize their delivery process is to cut-out wasted time. While GPS technology has improved over the years, it is far from perfect. This means that for instant, last-mile fulfillment, companies may have a hard time tracking down their customers and waste the time of whoever is delivering the product. Start-up companies like Fetchr, what3words, and OkHi are all contributing new technology for e-tailers to help them better locate their customers during last-mile delivery. OkHi and Fetchr use the customer’s mobile device to provide an exact location for goods delivery. What3words uses a completely unique method to locate customers. The company uses a digital grid of the world and assigns a combination of 3 random words to each 10-ft by 10-ft square on Earth’s surface. For example, the what3words address for Banyan Technology’s office is “dribble.duck.leaner.” Like an easier, mobile, less-complex version of latitudes and longitudes, what3words can help e-tailers find their consumers simpler and more precisely.
Beyond last-mile delivery solutions that are in use today, some innovators are tapping into independent moving and storage companies to bring them connectivity online through a single API. Integrating these unlikely home-delivery sources are the next stage for completing last-mile delivery access. Imagine an urban-based moving company with a surplus amount of vans. That company has knowledgeable drivers with resources to spare. If they were connected by an API to a last-mile delivery service, they could put their extra employees and vehicles to work delivering parcels. Killing two birds with one stone, an API solution would keep a moving company busy and profitable, while also getting more packages delivered.
As can be seen by the different kinds of technology entering the logistics space, the last-mile delivery problem is an issue people are actively trying to solve. With companies like Marble, what3words, and Mercedes-Benz looking to save deliverers money, it seems like the problem won’t be around for long. If you are an LTL shipper and looking to save money on last-mile delivery, staying up-to-date on the newest technology trends entering the market would be the best place to start.
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