There are 5,280 feet in a mile. Logistics providers know their job isn’t complete until every foot of the last mile is covered. Even when a product travels thousands of miles, those last few feet are often the most challenging. Edwin Jiang notes, “Today, the last mile remains both the most challenging and costly segment of the journey, accounting for nearly 50 percent of the total cost of delivery. For retailers, efficiency in the last mile translates into both savings and a more pleasurable transaction for the consumer.”[1] Making customers happy is increasingly difficult as expectations rise. We live in a fast-paced world and, in the current vernacular, customer expectations are off the chain. If you’ve never heard that term (or simply don’t understand it), off the chain means out of control — like having your pit bull getting off the chain in the back yard and tearing through the neighborhood. Logistics providers sometimes feel anxiety similar to the anxiety neighbors experience when pit bulls are roaming uncontrolled in the streets. The staff at Supply Chain 24/7 notes, “In response to today’s online-buying, smartphone-wielding consumer that expects a seamless, faster purchasing journey, [a study published by Zebra Technologies] revealed that 78 percent of logistics companies expect to provide same-day delivery by 2023 and 40 percent anticipate delivery within a two-hour window by 2028.”[2]
The Last City Mile
With over half the world’s population now living in cities (and with that percentage predicted to rise to over two-thirds of the population by 2050), the last mile will increasingly be located in crowded urban areas. That’s a problem. Historically, last mile deliveries in urban meant delivering goods to a store and even that was a challenge. Neil Abt (@NeilAbt) observes, “The growth of e-commerce shipments has many more fleets emphasizing last mile deliveries. For congested metropolitan areas such as Seattle, the focus is actually on the ‘final 50 feet’ of those shipments.”[3] In some cities, alleys behind businesses are used for deliveries. When alleys aren’t available, parking in the street is the only alternative. Anyone who has tried driving through congested city centers knows parked delivery vehicles can jam up traffic. When every building becomes a destination, the problem is exacerbated.
According to Abt, a study by the University of Washington and Seattle Department of Transportation found “e-commerce and urban growth has led to a dramatic increase in the number of vehicles circling the urban core.” He continues, “The study found the most difficult part of the entire delivery is often from the truck to the door inside the office or residential building — referred to as the ‘final 50 feet.’ Part of the problem is that only 13% of buildings in the study area feature private loading bays or docks, requiring delivery trucks to use curb and alley spaces. These spaces are frequently occupied by other delivery drivers, or by Uber and Lyft vehicles waiting to pick up or drop off passengers. The study also found that clearing security accounted for 12% of total delivery time, while riding the freight elevator and looking for tenants’ locations accounted for 61% of overall time.” Even when tenants’ locations are found, some challenges remain. Chris H. Petersen (@IMSResultsCount), CEO of Integrated Marketing Solutions, explains, “Working customers are not home when most deliveries occur. There is often no place to deliver packages at large apartment complexes and office buildings. ‘Porch pirates’ now follow delivery trucks to steal packages from porches after delivery. Getting to your door quicker is not enough. Secure delivery INSIDE your home or locker is the next frontier.”[4] In other words, the last foot of the logistics journey can be the most problematic.
Addressing the Last City Mile Challenge
Dr. Matthias Winkenbach (@mwinkenb), Director of the MIT Megacity Logistics Lab, notes, “Densely populated and digitally connected megacities will create an urgent demand for inner-city, hyperlocal fulfillment centers.”[5] Winkenbach calls the process of merging these digitally connected megacities conurbation. He reports one such sprawling conurbation is found in China, which “plans to merge nine huge cities in the Pear River Delta to create a megacity called JingJinJi. The new urban center would be bigger than Japan by population.” According to Winkenbach, “The growth of sprawling urban conurbations means that efficiency along the last mile — from outside the city into city centers and from within the urban core to direct end-use delivery — will become harder to achieve using traditional supply chain models. New models are required — supply chains that employ inner-city warehousing capabilities to navigate densely populated megacities efficiently. … Logistics and supply chain practitioners will have to think about designing warehouses to fit into the urban landscape in the context of low land availability. The new approach could involve multiple smaller hyperlocal fulfillment centers. Designed to take advantage of vertical construction in space-constrained megacities, the new centers could be developed by public-private partnerships created to modernize distribution systems.”
Even with hyperlocal urban warehouses, goods still need to traverse the last mile. UPS analysts observe, “Most retailers get it, but they struggle to get it right. According an Eye for Transport white paper on final mile delivery, 83 percent of retailers report that customer experience is now a company-wide goal, and 67 percent said that gaining greater control of the customer experience was crucial to delivery.”[5] One of the solutions to the last city mile challenge, according to UPS, is utilizing alternative delivery locations. “In the UPS Pulse of the Online Shopper study, 52 percent of shoppers showed interest in shipping to alternate locations, and 30 percent of online shoppers already have had orders sent to alternate locations. Whether it’s to a local coffee shop or a delivery locker at a convenience store, services that are customized to shoppers’ needs and schedules can help retailers win and keep customers. That’s especially the case among millennials and urban shoppers.”
Summary
Raanan Cohen, co-founder and chief executive of Bringg, told Jiang, “The main challenge for companies is that the last mile matrix is getting increasingly complex with all the different delivery channels. In order to succeed, retailers will have to orchestrate their logistics matrix strategically.” According to Cohen, optimization of all delivery channels must take into account a customers’ location, required service level, price and more. That’s why the last few feet of the last mile remain a challenge.
Footnotes
[1] Edwin Jiang, “In Global E-Commerce, the Race to Solve the ‘Last Mile’,” Business of Fashion, 14 August 2017.
[2] Staff, “40 Percent of Parcels Will Be Delivered Within 2 Hours By 2028,” Supply Chain 24/7, 4 June 2018.
[3] Neil Abt, “Last mile? Crowded cities zero in on final 50 feet,” Fleet Owner, 17 May 2018.
[4] Chris H. Petersen, “Winning the race to the home requires more than the last mile,” Customer Think, 5 March 2018.
[5] Staff, “Rise of the Hyperlocal Fulfillment Center,” Supply Chain @ MIT, 26 April 2018.
[6] UPS, “Last Mile Package Delivery Must Fulfill Online Shoppers’ Quest for Convenience,” The Wall Street Journal, 11 December 2017.
