The future of last mile delivery: 10 most important trends

An increase in e-commerce in B2B, B2C and C2C markets has given rise to a greater number of challenges around urban freight: increasing use of public space, pollution levels, noise, road congestion and safety. E-commerce results in more, and smaller, and time critical deliveries in cities. It’s clear that there is a need for improving urban freight. What are the 10 most important trends in last mile delivery? What innovations are necessary?

Trend 1

Options, options and more options

You can never beat the customer! Companies must adapt to changing customer demands in both B2C and B2B (and even C2C) markets; home deliveries, same day deliveries, time windows, delayed deliveries, alternative locations, unmanned pack-station at offices, stores and in public transport stations, customer centric return processes and just-in-time deliveries to service-engineers and building sites. You name it.

And, customers want better, real time and predictive information about the actual delivery; ‘your parcel is arriving now’.

Customers expect no less than 100% on time-in full-no error-no contact (OTIFNENC).

Trend 2

Address intelligence: involve customers

To balance cost-to-serve, parcel companies should be in control of delivery cost on customer level; which deliveries and customers actually bring profit? Based on ‘address intelligence’, parcel companies could work on alternative delivery (and returns) networks and options for specific areas, smart outsourcing and collaboration and even dynamic pricing of deliveries.
In e-groceries and the delivery of bigger products like furniture and DIY customers could be incentivised to choose the most efficient option from a cost perspective. Incentives could be given with alternative ‘token’ currencies.

Trend 3

Robotisation in the supply chain

Robotisation will be at the heart of urban freight solutions. Autonomous vehicles will ‘follow’ the delivery guy like a loyal dog. We will see unmanned deliveries by robots and drones, unmanned pack-stations for pick-up and delivery at offices, stores and in public transport stations.

Robotisation downstream will impact e-commerce ready packaging, picking and sorting processes, transportation upstream and containerisation in the supply chain; operational excellence is necessary in the integral door-to-door supply chain.

Trend 4

Clean air zones

The introduction of ultra-low emission zones and clean air zones encourage parcel companies to invest in more zero emission vehicles. Those not meeting emissions standards required by zones will face strict penalties. It is likely that more cities will see similar penalties for non-compliant vehicles, or financial incentives to encourage the take-up of zero emission vehicles for the last mile.

Trend 5

Zero emission transport modes: no pollution, no noise

A trend for last mile delivery is the requirement for zero emission transport particularly in central and densely populated areas of cities; e-mobility. Not only cargo vans and trucks will be electrified. We will see more light electric freight vehicles (like cargo bikes) on the cities streets because of lower cost and greater flexibility. And, what are options for water transport and using trams in cities?
Technology is rapidly changing. Will new OEM’s in transport technology lead the way? Or, will the old OEM’s finally understand the moment of truth is now?

Trend 6

Smart planning, IoT and Uberfication

Currently, most transport planning and scheduling systems are based on reducing the distance travelled. However, in urban freight, most time (and cost) is spend on finding an unloading zone, walking and actual delivery, not on driving. New transport planning and scheduling systems will be developed using big data to forecast delivery routes (for tactical planning) and using real time traffic information and availability of unloading zones (for operational planning) for planning and scheduling. Smart charging of electrical vehicles will be integrated in planning operations.
Also, the capabilities for dynamic planning will include pick-ups of goods and integration with planning of sorting and loading processes. The planning buckets will be in seconds, no longer in minutes.

The Uberfication of last mile logistics is unstoppable. Social delivery networks will lead innovation in urban freight. Sharing capabilities and capacities, and co-loading, require sharing data with many private and public partners in the supply chain. Alternative ‘token’ currencies will enable collaboration.

Trend 7

City distribution centres and hubs

To meet customer demands for same-day instant delivery, there is a growing trend for companies to build or take advantage of urban warehouse space. Also, city hubs and micro hubs (within the city) will play an important role in decoupling slow, large scale mobility from personalised, small scale mobility. City hubs will be ‘white label’ and will be developed in public-private-partnerships.

Trend 8

Sense and respond

There’s a strong focus on visibility in the delivery process. Data that demonstrates proof of delivery along with tracking information is invaluable for when a delivery is late or gets lost. It also improves customer satisfaction, as customers can see exactly where their delivery currently is, with a realistic estimated time of arrival. IoT-technology will support ‘sense and respond’ planning and control of the delivery supply chain (in picking, sorting and delivery).
Smart technology can be used to deliver further insight and improve deliveries. For example, the temperature of sensitive items can be monitored, which is particularly beneficial to temperature controlled supply chain, or last minute credit and identity checks can be done at the door.

Trend 9

Safety: vision zero

Heavy goods vehicles and cargo vans are overrepresented in incidents and fatalities. Actions to improve safety are: improving overall vehicle design to increase driver direct vision, increasing awareness of the levels of direct vision, improving ground conditions at construction and work sites to reduce the need for ‘off-road vehicles’, supporting purchase of quality safety equipment and providing planning and procurement guidance to encourage procurement of safer trucks.

Trend 10

People

Social innovation is needed for urban freight innovation. On strategic level, companies need to collaborate (also public-private) and develop more customer centric services with their alliance partners.
On tactical level, planning is becoming more critical, more dynamic, and much more fact based. Advanced planning tools, with simulation capabilities, will support a new generation of planners; perfect preparation prevents poor performance.

On operational level the role of the driver will change. The driver will need to navigate deftly between cars, public transit buses, pedestrians and cyclists. His (or her) vehicle will be considered a guest in our cities. Only those drivers who really know the way and who strictly observe the rules will be welcome. The driver will be supported with advanced information technology for last-minute planning and scheduling and informing customers about deliveries.

A simple driving license really isn’t going to be enough anymore. Even just the idea of leasing a truck tomorrow and becoming a transport contractor will no longer be a viable option; you need a licence to operate.

Food for thought

An interesting fact: 80 percent of urban freight today is done by companies on own account and not by professional logistics service providers. Even today, more companies are organising transport in house. The market share of professional logistics service providers is not growing. Why? Because their services are not in line with future customer requirements of consumers, construction companies, retail companies, offices and HoReCa.

Urban freight offers great potential for existing and new professional logistics service providers if they are capable to align their services with requirements of specific customer segments in urban freight (B2B, B2C and C2C). The success of Foodora and Deliveroo in Europe should be a wake-up-call for the transport industry. Agility in developing new services together with alliance partners will be key; release early, release often. And listen to your customers!

Walther Ploos van Amstel