The Future of Last Mile Delivery

June 2019

This report looks at the problems associated with the most inefficient leg of the delivery process – often referred to as the “last mile” – and examines the key trends and challenges impacting the delivery market. It identifies the novel commercial mobility modes being utilised, such as app-based crowdsourcing and electric cargo bicycles, and uses case studies to showcase specific examples of companies employing new commercial mobility modes to improve the overall delivery process.

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Key Findings

Last mile delivery requires a re-think

The last mile describes the movement of shipments from a sorting centre to the final customer. This is the most inefficient part of the delivery supply chain, and is estimated to account for up to 28% of the total shipment cost.

Challenges restricting deliveries

Numerous issues are making deliveries more challenging. City centre vehicle restrictions on highly polluting vehicles are reducing access to households and businesses; meanwhile customers are increasingly demanding free delivery, requiring firms to improve the efficiency of last mile delivery.

Sustainability and efficiency are key

Commercial mobility needs to become more sustainable through reduced fossil fuel energy use. Electric vans, bicycles and route optimisation systems can reduce overall emissions, leading to a cleaner urban environment.

Electric fleets to replace internal combustion engine (ICE) vehicles

The use of electric vehicles for commercial deliveries is slowly catching on, with major logistics firms including FedEx and DHL adding electric vans to their delivery fleets. However, for full take-up to occur, issues such as range, cost and charge point availability need to be better addressed.

Autonomous delivery: the future

Autonomous delivery vans, drones and droids can potentially offer a solution to last mile delivery by helping to reduce costs, while improving the pace of delivery. However, further technological advances are needed in AI, while regulatory compliance also remains a hurdle.

Different delivery models for different cities

The differing characteristics of various cities – population density, labour costs and affluence – can influence the most appropriate delivery mode. For instance, drone deliveries would work best in cities which are less dense.

Introduction

Scope
Key findings

Trends and Challenges

Why the last mile?
Understanding commercial mobility
Global consensus on climate change dictates need for green policies
Vehicle restrictions create access hurdles for logistics firms
The growth of urban e-commerce and urbanisation
Cost and convenience: customers are picky when it comes to deliveries

Identifying New Mobility Forms

The last mile: start-ups feeding the market with new innovative solutions
Crowdsourced delivery: the Uberification of deliveries
Cycling boom embraced by business
Electric vehicles gaining traction among companies in logistics
Electric vehicles to support night deliveries in cities
Urban consolidation centres: lessons learnt from unsuccessful ventures
Autonomous delivery vehicles: the future of delivery
Other methods used to improve commercial mobility

Case Studies

London Boroughs Consolidation Centre (LBCC)
DB Schenker pilots electric powered bicycle deliveries in Norway’s cities
New York pilots out-of-hours delivery
Scania unveiling hybrid and electrical urban trucks
FedEx to add 1,000 electric vans to its delivery fleet
Google Wing: drone deliveries started in Canberra

Conclusion

Identifying mobility types for different cities
Some options will take time to develop large-scale commercial use
Policymakers should make implementation of green strategies gradual
Last mile delivery needs sustainable and efficient solutions
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