Amazon recently announced a push to provide its Prime members with one-day rather than two-day free shipping. In a cheeky bit of journalism, Todd Bishop (@toddbishop) and Nat Levy (@NatJLevy) call one-day shipping Amazon’s new “Prime number.”[1] They go on to note, “Amazon’s moves are often followed by its retail rivals, like Walmart and Target, so this strategy could set a new standard for delivery speeds around the world.” Many analysts assert the rise of e-commerce and the emergence of Amazon as an online retailer created the so-called “Amazon Effect” and set the stage for the Retail Apocalypse. It is, therefore, ironic that Bishop and Levy assert Amazon’s latest move is to try and counter the advantage its executives believe brick-and-mortar stores have over online retailers. They explain, “Many of the big retailers now have two-day shipping programs on many of their items. Plus, they’re taking advantage of their network of stores with order online, pick up in-store programs that get more people in the door. Amazon can’t match that because, even with Whole Foods, it doesn’t have a brick-and-mortar footprint on the same scale.”
Cerasis’ Adam Robinson (@AdamRobinsonCDM) suggests Amazon’s effort to speed order fulfillment is one of seven trends converging to create a logistics sector revolution.[2] Other trends include: The rise of supply chain disrupters; smart tech tracking; advanced analytics; insourcing; autonomous vehicles; and changing roles for delivery drivers. Like Robinson, John Eden, founder of iPiphany Group, sees technology as a powerful force changing the logistics landscape forever. “The shipping and logistics space,” he writes, “is being rapidly transformed by technology.”[3] He believes two other forces are also changing the logistics landscape — driver scarcity and regulation. He insists these two forces “are working in unison to forge the shipping and logistics space of tomorrow.” Whether the combination of these changes amount to a revolution remains to be seen. What is undeniable, however, is that these changes are creating turmoil.
Trends reshaping the logistics landscape
Robinson and Eden highlight many of the trends affecting the logistics sector; but, like many things in life, where you sit determines what you think is most important. Logistics professionals cannot afford to take a narrow view of what’s happening in the sector. The only way to judge whether a revolution is underway or not is to take a holistic view of trends now underway. Fortunately, Robinson’s list captures most of the trends identified by subject matter experts.
Faster order fulfillment. Robinson writes, “Fulfillment timetables are changing. Consumers want faster fulfillment, and shippers need to move more product at a faster pace. Shipments that previously required one hour to process are now being forced into three-minute intervals, if not faster times. Consequently, last mile logistics is finally in a position to become part of this push toward faster fulfillment.” He points to research showing “up to 25 percent of consumers are willing to pay extra for same-day delivery.” Faster fulfillment is part of the omnichannel strategies retailers are now pursuing. Emma Cosgrove (@emmacos) observes, “The line between stores and warehouses, when it comes to e-commerce, is slowly breaking down. A single e-commerce order consisting of five items may arrive as five different deliveries from five different locations — all in an effort to deliver as fast as possible.”[4]
The rise of supply chain disruptors. Robinson notes that last mile delivery has spurred the rise of a number of small delivery companies. Some retailers have considered schemes like letting customers make deliveries to other customers or having their employees make deliveries, like local pizza places. Robinson writes, “According to Supply Chain 24/7 (via Business Insider), Amazon is already well on its way to creating and managing its comparable Uber-like app for trucking. Unfortunately, the tech landscape is riddled with cases of supply chain disruptors failing, but the trend is clear and shows little indication of regression.” Other last mile schemes include small, autonomous delivery vehicles, drones, and, even, older technologies like scooters and bicycles. Eden notes, “Regulators are taking a fresh look at the lives of workers in the gig economy, often concluding that many folks classified as independent contractors ought to be treated as employees. … This is causing a sharp uptick in the creation of small-motor carriers.”
Smart tech tracking. Robinson writes, “Through the Internet of Things (IoT), smart technology and sensors can successfully track shipments in real time. Consumers and shippers can both receive SMS alerts, email notifications and even Google notifications for every movement a shipment makes. Combined with the upcoming electronic logging devices (ELD) mandate, the use of smart tech to track last mile logistics will grow.” Although the focus of this article is on last mile delivery, smart tracking, from order to delivery, can help ensure there is a last mile delivery. Cosgrove notes, “An IHL Group study found retailers are leaving roughly $1 trillion in consumers’ pockets from stockouts. Shoppers encounter out-of-stocks in as many as one-in-three shopping trips overall and one-in-five times when shopping for food and medicine.” Whenever the modifier “smart” is attached to a supply chain activity, you can be sure artificial intelligence (AI) is somehow involved. In the case of smart tech tracking, solutions like the Enterra Supply Chain Intelligence System™ can be leveraged to reduce the number of stockouts experienced by retailers.
Advanced analytics. AI is finding its way into every aspect of the supply chain along with embedded advanced analytics capabilities. Robinson notes, “The amount of information coming from automated systems and smart technology can have another purpose when applied through analytics. Analytics allow supply chain entities to isolate the cost-impacting factors across all shipments.” Chris Ricciardi, COO at Logistical Labs, notes, “Savvy logistics companies today use machine learning for forecasting, real-time decision-making, optimizing fleets, preventative maintenance, and more.”[5] He cautions, however, that AI is not a one-size-fits-all solution. Like all technologies, a business case needs to be made for its implementation.
Insourcing. Many companies have created their own shipping fleets to meet rising consumer demands. Robinson explains, “The sudden spike in last mile delivery encourages more shippers to begin insourcing last mile deliveries. In other words, shippers are using their trucks to reach their immediate, local consumers. Yet, 90 percent of shippers have fewer than six trucks, so outsourcing may be necessary for increasing shippers’ last mile delivery options.” Drones and other autonomous delivery vehicles may soon join insourced fleets.
Autonomous vehicles. Drones and small autonomous delivery vehicles are a great segue into the topic of autonomous vehicles in general. Robinson writes, “[Autonomous vehicles and autonomous trucks], otherwise known as self-driving vehicles or trucks, will impact last mile logistics as well. Self-driving vehicles, drones, and robots will become key to increasing last mile delivery options, while maintaining high reliability and same-day delivery, in both rural and urban areas.” Most analysts see a bigger role for autonomous trucks in long-haul transit rather than last-mile delivery. Why? The two biggest reasons are efficiency and cost savings. Experiments with platooning are currently on-going. In these experiments, a human-driven truck leads a platoon of autonomous trucks, thus increasing capacity without having to increase the number of drivers required. There is already a truck driver shortage.
Changing roles for truck drivers. In addition to becoming platoon leaders, truck drivers are being (or could be) asked to perform a number of other tasks. Robinson notes, “Shippers need to find ways to reach more shoppers and convert them into consumers. While up to 65 percent of all purchases use the internet for research purposes before making a purchase, putting information and product in front of consumers remains the strongest way to encourage this conversion. In conjunction with faster, better technology, including driverless trucks, the role of the driver will evolve. Drivers will become merchants, selling items from trucks.” Some drivers are also being asked to provide “white glove” service at the point of delivery — setting up merchandise and showing consumers how to use it.
Whether these trends amount to a revolution may be in question; but, what’s not in question is that change is happening and happening quickly. Retailers and shippers failing to keep pace will likely find themselves out of the race.
Footnotes
[1] Todd Bishop and Nat Levy, “Amazon’s new Prime number: Why the tech giant is shifting its core shipping benefit to one-day delivery,” Geekwire,
[2] Adam Robinson, “7 Top Trends in Last Mile Logistics – The Revolution is Coming,” Supply Chain 24/7, 30 April 2019.
[3] John Eden, “The two forces reshaping the landscape of shipping and logistics,” TechCrunch, 28 March 2019.
[4] Emma Cosgrove, “4 trends in order fulfillment,” Supply Chain Dive, 15 October 2018.
[5] Chris Ricciardi, “Machine learning in logistics: Separating fact from fiction,” FreightWaves, 27 March 2019.
