Current Issues

Regular Industry Development Updates, Opinions and Talking Points relating to Manufacturing, the Supply Chain and Logistics.

Last mile delivery in the age of the online shopper

22-Nov-2017
Last mile delivery in the age of the online shopper
The Office for National Statistics’ 2017 first estimate report of retail sales in volume and value terms shows a 14% increase in online sales values compared to the previous year. This supports the huge rise in popularity of online shopping, emphasised by extreme discount retail events such as Black Friday, which naturally has implications for the ensuing home or office delivery.

In its latest Parcel Shipping Index, global technology company Pitney Bowes says that in 2016 parcel deliveries increased by 12% to £2.5 billion and spending increased by 8% to £10 billion. With no sign of slowing down therefore, the huge increase in demand for ‘the last-mile delivery’, particularly over busy periods like Black Friday and the Golden Quarter, continues to test the capabilities of retailers and logistics businesses alike. Compounded by an equally cumulative consumer demand for smaller, more precise delivery windows, how can this section of the transport industry address these real-time challenges and prepare for the online consumer of the future?

The current situation
Presently, telematics software solutions offer functionality to manage activities such as proof of delivery, client signature capture and real-time visual updates to confirm the exact delivery location of a parcel.

Many software solutions comprise of two components, for example a ‘front-facing’ mobile app for fleet drivers, which enables them to view the deliveries they need to undertake during their designated shift. Drivers can use the app to navigate to the destination, complete any workflow actions required for that delivery, capture proof of successful distribution or exceptions upon an unsuccessful delivery.

The second component supports the back-end of delivery tasks, such as the customer service teams who receive and process the data captured by the drivers on the mobile app, including accurate GPS information for where the actions occurred, any signatures and images captured during the delivery, and the times that these events occurred. This allows for clear communication to customers of where their deliveries were completed, by whom they were received and when.

Challenges and opportunities

Compliance
While advances in telematics has enabled fleet customers to operate more efficiently and transparently to the satisfaction of the end-consumer, from an environmental perspective the industry remains under pressure to further streamline operational efficiencies to reduce noise and air pollution, particularly in populated areas.

Unfortunately, the increase in the popularity of online shopping and the resultant home or office delivery has only exacerbated the problem. Data published last year by the World Health Organisation (WHO) says that more than 80% of people living in urban areas which monitor air pollution are exposed to air quality levels that exceed WHO limits. In the UK, more than 40 towns and cities are breaching safe limits for air pollution, with Nottingham, London and Southampton named for having dangerously high levels.

Using electric vehicles, particularly in populated areas, would certainly be a viable solution. Tesla, which only recently launched its electric Semi truck, has already been given the green light by Walmart to pilot the new vehicle, as well as received an initial order from Canadian grocery giant Loblaws for 25 of the heavy duty all-electric transport trucks.

Cost and efficiency
The most costly portion of the total delivery cost to a business comes from the last mile – sometimes up to 30%. When combined with increased expectations in terms of on-demand delivery, the strain on a company’s budget is considerable if not passed on to the consumer.

Shared last-mile deliveries have been successfully tested and offer very attractive solutions not only for reducing costs, but also minimising unnecessary competition, duplication and the carbon footprint. It is a business model that can easily be applied in either a consumer or a B2B environment.

Future solutions
Drones and autonomous vehicles have been proposed as last-mile delivery solutions of the future, able to navigate through urban areas (albeit slowly for safety reasons), choose routes that avoid causing congestion, and deliver parcels when and were needed. Drones that support on-demand delivery services would shorten delivery times, lower delivery costs, and align with consumer choice and flexibility.

Considering the rapid pace of technology these will eventually become reality. Already Mercedes has introduced its urban area concept van, a fully electric vehicle with automatic cargo space and on-board drones aimed at revolutionising last mile delivery.

In the more immediate future, businesses using telematics to be more operationally efficient and eliminate waste, as well as make fast, data-driven decisions to optimise driver and vehicle performance will be ahead of the pack in the race for last-mile delivery success and consumer satisfaction.