Last Mile Logistics: 7 trends of the Last Mile
Booming E-Commerce — 2016 the volume of mail in the private customer segment grew by more than 13% year-on-year.
And it will continue to grow. According to PwC, one in five purchases will be made online in 2020. The customer’s demands are also growing: the package should reach him wherever he wants and whenever he wants. The choice of different delivery options therefore has a great influence on the dealer’s decision:
66% prefer a retailer with multiple delivery options to another retailer when purchasing.
More orders also means more transport journeys. The problem is obvious.
CEP vehicles account for almost ¼ of all CO₂ emissions in the EU and are responsible for over 80% of urban congestion. According to the software and industrial company Honeywell, the last mile accounts for more than half of the total transport costs. Existing delivery services and also new start-ups are aware of this problem and want to renew Last Mile Logistic. The trends can already be seen now:
1. Open Data
Emissions and costs can already be saved to a large extent through more efficient planning. To make this possible, a common platform for networking and data sharing is important. Information from private and public organizations on loading zones, restrictions, road tolls, and especially on resource capacities would facilitate cross-company networking of logistics processes. For example, collaborations can be formed for goods bundling and city hub use, and transport costs can be reduced by, among other things, a higher vehicle filling rate — the current rate is only below 50%. “oneTRANSPORT” in Great Britain is an Open Data Sharing Service that sets an example and serves as a platform for companies to exchange data. Both real-time data and collected data can be uploaded and viewed, creating real-time traffic & transport planning.
2. Predictive Analytics
The tracking of shipments and corresponding status transmission to the customer is established. However, clients not only want to be informed, they also want to determine the time frame within which the parcel is to be delivered. 72% think this is important, according to PwC. Using real-time and historical order data, recurring schedules can be identified and forecasts for future developments made so that delivery processes can be optimised. This requires extensive data on the customer, his availability times and also on traffic conditions. UPS and DPD, among others, are already working on allowing the customer to select a specific delivery time and storage location. But Amazon wants to go even further. With its patented “anticipatory shipping”, goods are to be delivered to customers before they have even ordered them, so that resources can be used and bundled more efficiently.
3. Electric vehicles
E-mobility in the fight against environmental pollution is nothing new. However, e-vehicles in the CEP sector could receive special support in the form of extra-free delivery and loading zones or extended delivery times, so that there is a greater incentive to take advantage. After all, the emission-free vehicles are much quieter and would not represent a noise nuisance at late times. However, according to Dr. Sebastian Stütz of the Fraunhofer Institute for Material Flow and Logistics, the acquisition costs are currently still an obstacle. By 2025, Hermes wants to supply all inner-city areas in major German cities completely emission-free and operate at least 40% of the entire fleet electrically. As of 2018, 1,500 e-transporters are to be used for this purpose in cooperation with Mercedes. Mercedes offers a pool of rental vehicles including maintenance and repair, thus solving the problem of acquisition costs. Electrically powered vehicles also offer advantages such as lower maintenance costs and lower operating costs and are therefore not necessarily more expensive in the long term.
4. Packing stations
DHL has been using it for 17 years and has a nationwide presence in Germany. Amazon now also has more than 400 “Amazon Locker” in more than ten German cities. Studies by DHL, PwC and McKinsey show, however, that consumer opinion is divided: 94% of customers express the greatest satisfaction when they can specify a Packstation as their delivery address, but home delivery is preferred within a desired period of 79% and more than half do not use a packing station and do not want it either. The fact that the stations can be reached at any time of the day appeals to customers again. Further new models are package boxes directly at home, like BoxLock in the USA or also PaketButler in Germany. And deliveries to the boot also offer an alternative. DHL has been making this available in various cities since 2016 in cooperation with Smart and VW. The confidence in it is however not yet particularly large, only 16% would use a trunk delivery, according to PwC study.
5. Drones & robots
Autonomous vehicles, drones and robots: several delivery services and Internet companies are working here on new technologies. Google, for example, has filed a patent for an autonomous delivery van with parcel compartments — a mobile, autonomous packing station. Hermes has been testing the “Starship” parcel robot in Hamburg for two years. It can still only be used with an accompanying person, as the legal permits are still lacking. According to the former Hermes CEO Hanjo Schneider, the aim is to handle robot delivery in five to ten cities in 2018 and to ensure that it takes over 10% of parcel delivery in the medium term. In the air, too, there are forward-looking concepts from Amazon in particular: the “Amazon Prime Air” drone, which could take over the majority of deliveries within a radius of 15 km, a drone hive as a multi-storey loading centre or a mother airship as an “airborne fulfillment center” (AFC), which supplies small drones with goods. To avoid a collision with air traffic, Amazon proposes air corridors at a maximum height of 120 meters for the drones. The problem of reception is also being investigated: Google has applied for a patent for a receiving container that sends signals to the drone, which then targets the container. According to PwC, one third of consumers are in favour of parcel robots and drones. However, in order for the concepts to actually be used in everyday life, the legal framework conditions must change and be defined.
6. Micro-Hub & cargo bicycle
The so-called Micro-Hubs are transshipment centres for bundling deliveries. The Last Mile can then be covered with cargo bikes or even on foot. A DHL pilot project with the “Cubicycle” freight wheels has been running in Frankfurt since last year. UPS is also conducting several tests in different cities. One of the load wheels tested is the “MovR” electric wheel from Rytle. A change box can be loaded onto it. The boxes are stored and exchanged in microdepots. In addition, Rytle offers an app with tracking software and route optimization. In Berlin, the Federal Ministry is supporting the KoMoDo project, a cooperative and vendor-independent depot solution. From June 2018, DHL, DPD, GLS, Hermes and UPS will jointly use a neutral provider for city hubs. In order to successfully implement the concept of Micro-Hubs, the state must provide support in terms of parking space in the city area and exemptions for the bikes in pedestrian zones, so that shops can also be supplied. The combination of Micro-Hub and cargo bicycles saves significant costs and carbon dioxide. According to DHL, a city hub replaces up to two delivery vehicles and saves more than 16 tons CO₂ per year. If robots don’t become cheaper and more effective, McKinsey Consulting is convinced that cargo bikes are the most likely delivery alternative.
7. Private people, taxis and public transport
People or taxis could also deliver parcels that may be on their way anyway. “Amazon Flex” is a model in which private individuals can deliver packages for Amazon customers with their own cars. In some regions of the USA, you even only need a bicycle. You can also use Amazon Flex in Berlin and Munich and earn up to 16€/hour. In London even the biggest bus provider thinks about delivering Amazon packages. However, it is still unclear how exactly this should look in organisational terms. According to PwC, almost half of consumers are positive about such a delivery solution. It therefore appears to have promising potential.
Which solutions go into series production?
It is obvious that many new approaches are being tried out in the Last Mile field and that there is great potential in view of the strong growth. Startups, established CEP service providers and Internet companies are trying to exploit this potential. McKinsey sees a great future in autonomous vehicles with integrated packing stations, drones and cargo wheels and believes that in the next ten years autonomous devices will execute almost 80% of all shipments. The way of delivery will change accordingly considerably in the coming years.
