Last Mile Logistics – Facts You Should Know

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The middle mile sector in particular has continually increased the demands on logistics:

With the concept of getting goods to the buyer ever faster, digital platforms (see also below) like Amazon tapped into the zeitgeist. While online shops had previously lagged behind as multi- or cross-channel outlets alongside the "actual" and conventional sales channels, the simple idea of ​​"fast" delivery catapulted e-commerce into the Champions League, becoming the leader.

Middle Mile E-Commerce – Image: Xpert.Digital

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Payment methods became more diverse and simpler. Likewise, the process became easier for both consumers and sellers. It had to be quick and easy. Products had to be searched for and found quickly and easily. Ordering and processing had to be quick and easy. Delivery had to be fast. The simple USP (Unique Selling Point) for success in e-commerce was born: "Speed!"

A romanticized view of the pure-play e-commerce business model – Image: CuteCute|shutterstock.com

With the rise of digital platforms, especially Amazon, pure-play e-commerce companies sprang up like mushrooms. In e-commerce, "pure play" refers to a business model where goods or services are sold and delivered exclusively online, without a physical store.

These companies generally do not handle the delivery of packages themselves, but rather leave that to CEP services, fulfillment service providers or Amazon itself: Fulfillment by Amazon (FBA).

Even in the area of ​​FBM – Fulfillment by Merchant (retailers), one is dependent on CEP services.

The last mile is a term used in supply chain management and transportation planning to describe the movement of people and goods from a transportation hub to a final destination. The term "last mile" was adopted by the telecommunications industry, which struggled to connect individual households to the main telecommunications network.

Similarly, in supply chain management, the last mile describes the challenge of transporting people and packages from hubs to their final destinations. Last-mile delivery is an increasingly studied area as the number of business-to-consumer (B2C) deliveries grows, particularly from e-commerce companies in freight transport and ride-sharing services in passenger transport.

Challenges of last-mile delivery include minimizing costs, ensuring transparency, increasing efficiency, and improving infrastructure.

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Trends in the courier, express and parcel (CEP) industry – PDF Download

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Last mile logistics worldwide – PDF Download

The term "last mile" was originally used in the telecommunications industry to describe the difficulty of connecting private households and businesses to the main telecommunications network. This last "mile" of cable or wire is used by only one customer. Therefore, the costs of installing and maintaining this infrastructure can only be recouped through a single subscriber, compared to many customers in the main trunks (bundles) of the network.

In supply chain management, the last mile describes a similar problem for both passenger and freight transport. In freight networks, packages for many customers can be efficiently delivered to a central hub using ships, trains, large trucks, or airplanes. Once at this central distribution hub, these packages must be transferred to smaller vehicles for delivery to individual businesses or consumers. In transportation networks, the last mile describes the challenge of getting people from a transportation hub, such as an airport or train station, to their final destination. Just as in telecommunications networks, the costs associated with last-mile delivery are often higher.

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Transporting goods via rail freight networks and container ships is often the most efficient and cost-effective method. However, once goods arrive at a freight yard or high-capacity port, they must then be moved to their final destination. This last leg of the supply chain is often less efficient and accounts for up to 41% of the total cost of transporting goods. This has become known as the “last mile problem.” The last mile problem can also include the challenge of making deliveries in urban areas. Deliveries to retail stores, restaurants, and other businesses in a central commercial district often contribute to congestion and safety issues.

A related last-mile problem is the transport of goods to areas in need of humanitarian aid. Relief supplies can sometimes reach a central transport hub in an affected area, but may not be distributed due to damage from a natural disaster or a lack of infrastructure.

One challenge in last-mile delivery is unattended packages. Shipping companies like UPS, FedEx, USPS, DHL, and others leave packages unattended in a store or home, exposing the item(s) to the elements and the possibility of theft by "lodge pirates" (someone who steals packages from customers' porches or front doors).

One solution to this problem is the installation of lockers in urban centers. In the United States, Amazon has set up lockers where customers can pick up packages instead of leaving them at home. This protects them from theft and damage and allows companies to deliver to one location instead of multiple individual apartments or businesses.

Similarly, in Japan, South Korea, and Taiwan, some online retailers offer the option of delivery to a convenience store of the customer's choice for in-store pickup. This not only reduces the likelihood of theft and consolidates packages, but also allows for in-store payment.

To reduce costs, retailers have explored the use of autonomous vehicles for package delivery. The US company Amazon and the Chinese company Alibaba have researched the use of drones for delivering goods to consumers. In Europe, Germany, Great Britain, and Poland have experimented with services that enable automated package delivery.

“Last mile” also describes the difficulty of getting people from a transport hub, especially train stations, bus stations, and ferry terminals, to their final destination. If users have difficulty getting from their point of origin to a transport network, the scenario can alternatively be referred to as the “first mile problem.”.

Solutions to the last mile problem in public transport include the use of feeder buses, bicycle infrastructure and urban planning reform.

Other methods to alleviate the last mile problem, such as bicycle transport systems, car sharing schemes, pod cars (personal rapid transport) or motorized shoes, have been proposed with varying degrees of adoption.

At the end of 2015, the Ford Motor Company received a patent for a self-propelled monocycle, intended as a solution for last-mile commuters. Bike-sharing programs have been successfully implemented in Europe and Asia, and implementation is beginning in North America. From the end of 2017, micromobility services emerged, offering shared vehicles such as rental e-scooters or electric-assist bicycles in cities.

E-mobility in cities – Image: Macrovector|shutterstock.com

Partly due to demand from retailers and product manufacturers for expedited deliveries (same and next day), technology-driven last-mile delivery platforms have emerged. This increased demand for last-mile fulfillment has put pressure on shippers to manage many types of delivery companies, ranging from traditional parcel services and courier services to on-demand providers that operate, for example, an “Uber for delivery” model with contractors.

Matching delivery supply with the demand created by shippers is a challenge addressed by various last-mile technology platforms. These companies connect shippers with delivery service providers to facilitate last-mile delivery. These last-mile technology platforms enable shippers and recipients to receive real-time data, allowing managers to take immediate action when issues arise, such as late deliveries, incorrect addresses, or product damage.

A disadvantage of this technology is the lack of trust among consumers and retailers in such decentralized systems.

Europe & USA: Last Mile Market, Courier, Express and Parcel Shipments – Image: Oakview Studios & alphaspirit | Shutterstock.com

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• Last Mile – The final mile
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Principle of digital platforms – Image: Xpert.Digital

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Digital platforms and unified commerce – Image: Xpert.Digital

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This statistic reflects the results of a survey on the future of the platform economy in the DACH region in 2017. At the time of the survey, 45.5 percent of respondents agreed with the statement that the platform economy makes it easy to access new procurement markets.

Platform economy in the DACH region – Image: Xpert.Digital