The last mile is one of the decisive parts of logistics. The last segment of the delivery process constitutes a link between the logistic service provider and the consumer, which involves the physical handover of the purchased goods.
Since the last mile delivery includes all three stakeholders, namely the seller, the intermediary, and the end consumer itself, it is the part of the logistics where the possible disruptions can arise.
Furthermore, the last mile is traditionally the most cost-intensive part of the supply chain. It is responsible for 40% to 50% of the costs that occur in logistics. Purchasing via eCommerce and home delivery is five to 23 times more expensive for the retailer than in-store purchases.
The cost of delivery represents a major factor in the decreasing profit margins of retailers with its mismatch between what the consumer is willing to pay for the provided service and its cost. According to a recent study, the consumers’ willingness to pay is low, which results in retailers and logistic service providers paying the additional cost of delivery.
Apart from the cost, the structure of cities forms a further challenge within the last mile. Growing economies, population growth, and rising employment attract more people to live in urban areas, which positively enhances the demand for goods and services to be delivered within this area. With their denser urban situations and limitations towards the usage of delivery trucks like providing not enough loading and unloading zones, the last mile transportation mode needs to consider those restrictions.
To meet the increased demand for deliveries, the usage of good light vehicles has grown significantly. This upward trend in motorized traffic burdens urban areas and ultimately in time loss due to congested road networks.
A study shows that an increase in traffic delays decreases overall road network capacity, affecting consumers and last-mile operators and the overall urban area with each stakeholder. The increased number of delivery vehicles, especially in residential areas, contributes to noise and CO₂ emissions. Thus, a substantial investment must ensure reliable, fast, and convenient delivery services to meet and improve those conditions.
Based on those challenges, the last mile brought forth further innovations. Previous innovations mainly concerned digital innovations like electronic data interchange, cross-docking, radio frequency identification, forecasting, and replenishment. More recent innovations focus on the way of delivery itself, ranging between home delivery and consumer pickup.
Promising alternative delivery modes like micro depots, self-collection postal systems, automated parcel stations, deliveries to the workplace, or crowd shipping, have already found application in the last mile.
Another innovation within the delivery execution is the use of autonomous delivery vehicles (ADV), which can address the challenges of the last mile, considering the traffic environment and congestion, safety and energy savings, and interests of consumers. This post will focus on two types of autonomous delivery vehicles, namely delivery drones and delivery robots, which can move independently on the ground and in the air since they do not require a pilot on board.
1. Delivery drones
Moving goods from the ground to the air and using unmanned aerial vehicles or drones for transportation could greatly improve urban mobility. They can be pre-programmed to fly autonomously, and the control functions can be done onboard or remotely.
Delivery drones are an interesting alternative for last-mile delivery because they address many last-mile challenges, which cannot be handled with existing means of transportation.
Because drones operate without a human pilot and are powered by electricity, they use fewer resources because no fuel or drivers are required. Thus, unmanned electric modes of transportation have cost advantages over manned ground vehicles in terms of fuel and labor costs for drivers and the potential to reduce delivery costs.
They can also use straight-line routes and avoid traffic jams by flying, allowing for more consistent and faster delivery speeds. Furthermore, greenhouse gas emissions and energy consumption can be reduced because of the low resource consumption.
However, drones’ competitiveness is limited in some areas. Due to current battery technology, drones’ geographical range is limited to 30 to 40 minutes of travel per dispatch. Drones are only good for short distances and should not be used for long distances. This means that they could be used primarily in cities. Thus, relocating distribution centers closer to the consumers or building new ones would be necessary to allow for a shorter distance.
Furthermore, drones’ number of packages per shipment is usually limited. Thousands of drones would be required to handle the daily volume of parcels due to the extremely high number of parcels that must be delivered. This can cause technical and operational problems. Overall, delivery drones represent a new level of quality in terms of technology and organization for e-commerce merchants and especially for consumers.
2. Delivery robots
Another promising alternative to standard delivery vehicles is pedestrian-sized ground-based delivery robots that deliver items to consumers without requiring delivery persons. These delivery robots are mechanical devices that are programmable and multi-task, being able to move freely in the environment and overcome obstacles without assistance.
Delivery robots are a cutting-edge technology that can relieve couriers of their duties, and they can help retailers and logistics companies improve supply chain efficiency while lowering costs. Traditional delivery only specifies the day of delivery, whereas robot delivery provides a 15 to 20-minute time window.
Recent numbers show that express deliveries in Germany are steadily increasing due to growing e-commerce, resulting in delivery robots gaining importance. Robots have a significant advantage over traditional modes of transportation like trucks and vans in that they can reduce traffic and thus congestion. Also, they emit less CO₂ – the robots themselves emit no CO₂, but the electric power plants do if no regenerative energy sources are used.
However, delivery with robots usually requires interaction with vans that can serve up to eight robots as a mobile loading and transport hub. The van drives with the robots onboard to a specified location, for example, the city center, where the robots are unloaded. They drive to the respective consumer with their freight and then return to the van. The consumers can monitor the deliveries with their mobile phones, and the locked loading space can be opened. However, the robots need human assistance to drop off freight. This means that the technology is limited to attended home delivery. However, this is expected to change with the help of smart lock technologies such as Amazon Key.