Last-Mile Delivery: Definition and Trends

Credit: Global Supply Chain Logistics

Last mile is a term used in logistics planning to describe the movement of people and goods from a transportation hub to a destination. Last-mile delivery is the last leg of transportation that focuses on the movement of goods from a warehouse or a distribution store to the final delivery destination, which is usually located around 11 miles or 17 kilometers from the warehouse. First-mile delivery addresses the movement of goods from manufacturer facilities to distribution hubs, while middle-mile delivery focuses on goods delivery from distribution hubs to warehouses.

As a share of the total cost of shipping, last-mile delivery costs are substantial — comprising 53% overall according to Business Insider Intelligence [Source].

Last-mile delivery is a process that has been around for as long as we have been doing delivery. However, customer expectations in terms of delivery speed, flexibility, and transparency are changing. These expectations have been pretty much set by Uber and Amazon alike. They dictated the rules of the game and its new standard. In order to meet customer expectations and comply with this new delivery standard, last-mile delivery systems should employ new technologies for faster, more elastic, and transparent delivery services.

In my book “Smart Mobility: Exploring Foundational Technologies and Wider Impacts”, I discussed the need for efficient digital platforms in last-mile delivery to provide customers with the following essential features:

  • Scheduling and rescheduling the delivery
  • Selecting and changing pickup location (home/delivery to the doorstep, click and collect, parcel smart lockers, pickup and drop-off points known as PUDO points, curbsides or dark stores, which are traditional retail stores converted into local fulfillment centers to eliminate disruption to in-store customers or deal with customers during pandemics)
  • Visibility and transparency (delay notification, communication channel with dispatchers, and/or deliveries) regarding the nature of the delivery item in order to get the customer engaged and be part of the experience.

Other features should be also available for suppliers such as dynamic order orchestration, delivery tour planning, optimal deployment and efficient and adaptive multi-criteria routing, and fleet management.

UPS reduced the total length of its delivery routes by 28.5 million miles, which has resulted in savings of about three million gallons of gas and has reduced CO2 emissions by 31,000 metric tons by reducing/eliminating the number of left turns and adjust to road construction. As per Jack Levis, Director of Process Management of UPS, a reduction of one mile per driver per day translates to savings of up to $50 million a year.

Nowadays various innovative solutions for last-mile delivery are currently being developed or tested to reduce the delivery cost, increase customer satisfaction, and minimize the negative environmental impact. These solutions include, but are not limited to, delivery to car (e.g., Amazon in partnership with General Motors and Volvo), self-service smart parcel lockers (e.g., Amazon, Quadient, RTN), delivery inside home when the customer is away (e.g., Waitrose, Albert Heijn), all-electric commercial delivery pallets (e.g., GM BrightDrop EP1), green logistics/electrified and connected delivery (e.g., GM BrightDrop EV600), electric cargo bikes, self-driving delivery droids, semi-/fully autonomous last-mile delivery trucks or delivery robots (e.g., FedEx’s autonomous robot SameDay Bot, Amazon Scout, Nuro, Starship, Alibaba DAMO, Tiny Mile AI’s Geoffrey, KiwiBot, ZMP Inc.’s DeliRo, TeleRetail and Refraction AI’s REV-1), delivery drones (e.g., Amazon Prime Air and 7-Eleven), and drones working simultaneously with trucks serving as their mother ships.

Moreover, several software-as-a-service platforms are available for order fulfilment, delivery fleet management, scheduling, route optimization and for enabling crowdsourced delivery and mainly same-day and instant delivery services. Examples include, but are not limited to, Uber Eats (online food ordering and delivery platform), Amazon Flex (for independent contractors/partners to deliver Amazon orders), Cabify, Stuart (delivering parcels); Deliv (delivering parcels); FedEx Express (short and long-distance delivery); GoShare (assist customers in need of drivers or movers); Kanga, EZER, and Bellhops (for movers); Onfleet, Locus, OnTime 360, Bringoz, LogiNext, GSMtasks, eLogii, Dispatch Science, Track-POD, Locus, OptimoRoute, Routific, FarEye and Elite Extra.

The outbreak of COVID-19 has changed the shopping preference of the population and made them lean toward online shopping to minimize unnecessary contacts and to comply with mobility restrictions imposed during the pandemic.

The rapid increase of ecommerce during the COVID-19 pandemic was a catalyst for the surge in contactless last-mile services. A survey of 1,000 Americans’ shopping behavior during the COVID-19 pandemic showed that 87% were shopping online and 64% replaced traditional weekly shopping trips with online ordering according to TopData [Source]. Another survey of 5,000 consumers from around the world conducted by Selligent indicates that 36% of consumers now shop online weekly, an increase from 28% before the pandemic [Source]. According to Bazaarvoice’s survey [Source], 62% of US shoppers say they shop more online now than they did before the pandemic. Globally, 49% of consumers shop online more now than they did pre-COVID-19. This change in shopping preferences and customer behaviors helped grocery and food service providers in continuing their business and surviving the lockdown from the pandemic and also encouraged delivery companies to test and deploy innovative delivery methods such as contactless delivery, curbsides or dark stores, unattended delivery, front porch delivery or leave at door delivery, and robot delivery. Some shared mobility service providers also started to focus on last-mile delivery services. According to Uber’s financial report [Source], the revenue of Uber Eats grew 103% year-over-year due to the pandemic.

The high contagiousness of the coronavirus results in one of the worst outbreaks. Social distancing is the main measure taken to reduce the spread of the virus through minimizing contact between people. Last-mile delivery robots played a crucial role in fighting the coronavirus spread as a contactless way to deliver medicine, food, or grocery. Contactless last-mile delivery systems and services can result in avoiding physical contact between caregivers and patients or between delivery workers and recipients. These contactless delivery systems benefit from the rapid proliferation of connected technologies and the recent advancements in semi- and fully autonomous delivery platforms that revolutionize the urban logistics and provide a safe and efficient delivery method for medical supplies, medications, food, grocery, and other goods. The demand for food delivery has never been higher as most restaurants and cafés were closed during lockdown. The need for social distancing and surface disinfection has accelerated the development and adoption of robot delivery. More information about these solutions is available in “Smart Mobility: Exploring Foundational Technologies and Wider Impacts”.

To combat person-to-person transmission, Amazon has made available an “unattended delivery” option for customers, in addition to a “front porch delivery” option for scheduled delivery. Uber Eats similarly adopted a “leave at door” contactless delivery as an option for customers. However, finding the right pick-up and drop off points (e.g., main entrance or parking entrance or service gate), parking fines and delivering packages to a wrong person or a wrong address are common problems in last-mile delivery.

According to Mapillary’s Mapping in Logistics Report, over 95% drivers have faced problems with inaccurate mapping and over 71% drivers spend anywhere from 4 to 10+ minutes trying to find the exact drop-off location [Source].

Misdelivery and wrong delivery are frequently occurring problems in last-mile delivery services. The frequency of misdelivery or wrong delivery increases if the delivery worker handles multiple packages under time constraints, and these problems are more problematic in some last-mile delivery sectors such as medication and food delivery to multi-residential buildings. This misdelivery problem results in customer dissatisfaction, negative brand image, and increased delivery cost for delivery service providers.

Informed delivery platforms are used nowadays to digitally notify users in advance of delivery of physical mail and allows users to report mail that was previewed in an email but does not arrive. Photos are also used as electronic Proof of Delivery (POD). However, these systems are limited to the correct delivery and prevent proactively the wrong delivery and the misdelivery cases specially in “unattended delivery” or “front porch delivery” or “leave at door” scenarios. Dropoff AI, a Toronto-based startup, focuses on eliminating failed deliveries through services such as smart addressing for enhanced geocoding, smart capture for visual address validation and smart guidance to provide delivery workers auto-sourced and/or crowd-sourced information such as destination type (commercial vs. residential), nearby parking, buzz number, concierge availability, closing time in case of commercial and accessibility ramp availability information. Inaccurate drop-off addresses, lack of high-definition maps, limited precision of publicly available and phone-enabled localization services used by delivery workers especially gig workers, and human mistakes of inexperienced delivery workers are the major root causes of misdeliveries.

In the post-pandemic future, ecommerce will likely continue to grow but not at the same incredibly high rate observed during the pandemic.

The increasing tendency toward online shopping will also likely contribute to increased demand for last-mile delivery services. This behavior will be ever-lasting in the post-pandemic world.

This growing interest in last-mile delivery will accelerate innovation in this field making last-mile delivery services more capable of handling challenging aspects such as surge in e-commerce, health, safety, package theft or porch piracy, failed deliveries, and misdeliveries. Impacts of the COVID-19 pandemic on consumer behaviors and preferences and the expected short-term disruptions and longer-term structural changes in different aspects of mobility systems especially in contactless last-mile delivery services, micro-mobility, shared mobility and public transit are discussed in more details in the book.

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Alaa Khamis

AI and Smart Mobility Technical Leader at General Motors Canada | Former Professor of AI and Robotics