Tackling the Last Mile
It’s a problem that is on the mind of almost every company that needs to transfer goods to a consumer. How do you most efficiently handle the final leg of delivery, otherwise known as “the last mile”? Last mile distribution encompasses any movement of product between a distribution center and the end point at which the consumer, whether it be a retail store, a restaurant, or a home, receives it. The last mile is the most important segment of the supply chain, as it is the only part of the product’s journey that the end consumer experiences. But whether the proposed solution is bicycles or drones, last mile delivery is fraught with complexities and complications. Here’s why. The global logistics system has figure out how to move immense quantities of product around the world. We can load a ship with huge containers filled with goods and efficiently transfer them to trucks and railroads and then store the product at high-tech distribution centers. But then things get messy.
First and foremost there is the issue of transporting individualized shipments to distinct and variable destinations through constantly changing routes. Different customers in different locations need different goods every day, and so the route has to constantly adapt while maximizing efficiency. Additionally, since the quantities being delivered are small, the relative delivery cost to product volume is high (1). And if you are delivering fresh goods which can’t just be left on a customers doorstep to rot, you have to account for when the customer can receive the product in the timing of your delivery (2). Add to these obstacles the issues of limited parking availability, difficult to find locations, and the increasing expectation for faster delivery, and you have the formidable last mile problem (1). Considering all these factors, it’s no surprise that 28% of the total delivery cost to a business comes from the last mile (3).
The Last Mile in New York
As the most populous city in the United States, New York City requires an incredibly vast food distribution system. The system services the city’s 8.4 million residents, over 60 million annual tourists, and hundreds of thousands of daily commuters (4). To feed all these people, around 19 billion pounds of food are distributed throughout New York City each year from about 42,000 separate points of sale. More than 50% of the last mile food distribution in New York City begins within the five boroughs and 96% of last mile delivery in the city is done by truck (4).
Not surprisingly to anyone who has ever driven in New York City, one of the biggest obstacles in last mile food distribution is parking. Many truck drivers are forced to park illegally in order to deliver their goods at the risk of receiving expensive parking tickets. The removal of designated loading zones in many neighborhoods of the city has only exacerbated this problem (5). Baldor estimates that they spend about $180,000 on parking tickets annually. In fact, parking fines for food deliveries have become so prevalent that some companies even budget this cost into the price that consumers are paying for these goods (5). Another hurdle to last mile distribution in the city is the high population density and infrastructure issues leading to infamous traffic congestion which has shaped the way food travels through the city. For example, to avoid debilitating traffic delays, many food distributors deliver between midnight and six AM (5). Additionally, due to the limited amount of on site storage space at points of sale, the NYC food system holds roughly 4 to 5 days of food stock on average, with restaurants and cafes holding only 3–4 days of stock (4). The combination of all these factors makes for an incredibly dynamic, and at many times overburdened, last mile distribution system.
Any discussion of last mile delivery in New York City would be incomplete without mention of the Hunts Point Food Distribution Center in the South Bronx, where oranges from California, beef from Australia, and blueberries from Chile all await delivery to their final destination. Hunts Point is located on 329 acres, making it one of the largest food distribution centers in the world (6). It is home to 800 industrial businesses which employ over 25,000 workers who distribute 4.5 billion pounds of food annually through the center, with about half of it going to New York and the rest transported outside the city (4). While some large retailers use national distributors such as Sysco, White Rose, General Trading, and C&S, most smaller stores and restaurants are very reliant on the markets in Hunts Point. In fact, 49% of the consumers served by Hunts Points are independent restaurants (4).
Among the facilities that make us the food distribution center are a produce market, a meat market, and a fish market. The New York City Terminal Market carries fresh produce from 49 states and 55 countries. The Hunts Point Cooperative Market handles the production, processing, distribution, and sale of meat and poultry. The Fulton Fish Market generates $1 billion in yearly revenue as it allows seafood distributors to store their goods in a temperature controlled warehouse with access to NYC, New Jersey, and Connecticut (7). The main challenges currently faced by the Hunts Point Distribution Center are mostly concentrated in the terminal produce market where about 60% of the produce that reaches the city passes through (5,7). One major issue facing the Hunts Point Terminal Market is that the infrastructure is in desperate need of repair. It dates back to 1967 even though transportation methods have significantly shifted over the last 50 years (5). The produce market is currently threatening to relocate to New Jersey unless updates are made. Another issue is that there is not nearly enough storage space and only 50% of the product volume can be stored within the facilities. The rest of the product is stored in “flex storage” or diesel powered trucks located on the property. At any given day there are 600 to 1,000 trucks used for this purpose (5).
Although New York City’s food distribution system is incredibly comprehensive, there are still significant shortcomings. A 2010 study conducted by Columbia University entitled “Understanding New York City’s Food Supply” found that one of the major shortcomings in food transportation in New York City is that regional farmers and producers around the city struggle to access urban markets and are still largely on their own in terms of transporting their products into the city, as opposed to larger farms which are part of more established distribution networks. Similarly, retailers that want to buy from regional producers face challenges sourcing those products (5). So even with all these advances in delivery technology, smaller producers with fewer resources are still facing prohibitive hurdles to feasible last mile distribution.
The report also identified food banks as the most vulnerable point of consumption in regards to food supply. About 1.3 million people in New York City go hungry every day and there are many neighborhoods, known as food deserts, which lack access to healthy food, particularly fresh produce.
The demand for food in New York City is growing at 1.6% per year which is more than double the national average (4). The city’s food distribution infrastructure needs to be able to accommodate this growth sustainably and equitably. A major component of this is increasing access to urban markets, both for local producers and for currently excluded consumers. At Foodshed.io we are working to help local farmers access urban markets by providing them with a marketing and distribution platform that reduces the inefficiencies of local food distribution. Since high costs and burdensome organizational overhead prevent most small farmers from accessing urban markets, the Foodshed.io platform allows disparate farms to aggregate local produce listings. This way, restaurants and purveyors can buy produce in larger quantities than may be available from a single farm, and farmers have an affordable and efficient method of transportation which collects product from multiple farms. By eliminating the middleman and providing a simple platform to enhance sales, we hope to lower food costs which will enable us to enter markets that currently have minimal access to fresh, local produce.
- Lopez, Edwin. “Why Is the Last Mile so Inefficient?” Supply Chain Dive, 22 May 2017, www.supplychaindive.com/news/last-mile-spotlight-inefficient-perfect-delivery/443089/
- Gross, Daniel. “Amazon Wants You to Pick Up Your Deliveries. That’s Why It’s Buying Whole Foods.” Slate Magazine, 16 June 2017, www.slate.com/articles/business/moneybox/2017/06/amazon_s_purchase_of_whole_foods_is_about_the_last_mile_problem.html.
- “4 Challenges of Last Mile Delivery for ECommerce.” Bringg, 3 Dec. 2017, www.bringg.com/blog/insights/4-challenges-of-last-mile-delivery-for-ecommerce/.
- Eat. “Five Borough Food Flow: 2016 New York City Food Distribution & Resiliency Study Results.” www.nycedc.com/system/files/files/resource/2016_food_supply-resiliency_study_results.pdf.
- Barron, Matt. “Understanding New York City’s Food Supply.” May 2010, mpaenvironment.ei.columbia.edu/files/2014/06/UnderstandingNYCsFoodSupply_May2010.pdf.
- “NYC Department of City Planning: Special Hunts Point District”. Archived from the original on 2008–12–01. Retrieved 2008–08–10.
- “Food Supply.” A Stronger, More Resilient New York, 11 June 2013, www.nycedc.com/sites/default/files/filemanager/Resources/Studies/Stronger_More_Resilient_NY/Ch13_CriticalNetwork_FINAL_singles.pdf.
