The challenging logistics of last-mile delivery

Last-mile delivery, or last-mile logistics, is just what it sounds like: the movement of goods on the last leg of their journey from manufacturer to warehouse to local fulfillment center to final destination – the doorstep of the customer. Most of us know this last “out for delivery” step well from impatiently tracking our orders online. Covering this last mile in a way that is simultaneously fast, cheap, reliable, and green is tremendously challenging – yet critical to gaining market share in the highly competitive post-Covid ecommerce sector.

Just to be clear: The proverbial “last mile” might be 30 kilometers to a customer at the end of a rural road or just a few blocks in dense city centers. Urban, suburban, and exurban environments pose unique problems requiring diverse last-mile delivery solutions – and this very diversity defines the challenges that ecommerce businesses and supply chain managers face in their last-mile logistics. There’s a lot to know about last-mile logistics and the advantages of using last-mile delivery services.

Ecommerce exploded onto the scene a generation ago as the internet became widely available. It has steadily gained market share every year since then. But this gradual growth became a sudden surge when the Covid-19 pandemic brought brick-and-mortar retail to a near standstill in March 2020. Ecommerce is now predicted to account for a whopping 24% of total retail sales worldwide by 2026. This puts pressure on e-tailers and shippers to find sustainable solutions for getting all those goods across the last mile and into the (impatiently) waiting hands of customers. It has also increased demand for reverse logistics.

Despite robust demand, ecommerce remains highly competitive. The primary factor in getting customers to click the “Buy” button is fast, cheap, and reliable shipping. Oh, and don’t forget green: Today’s customers are more environmentally aware and increasingly demand planet-friendly delivery options.

1. Fast
   Studies consistently show that orders with a delivery time over two days are often not completed. Amazon changed the game with the same-day delivery option. Then came food apps, which boomed during the pandemic and introduced us to on-demand delivery, also known as quick commerce. The old adage “time is money” certainly applies here. Getting goods where they’re going quickly means embracing smart storage concepts such as predictive warehousing and micro-hubs, smart routing software fed by real-time data, and smart vehicle concepts tailored to urban, suburban, and exurban environments.
2. Cheap
   Free shipping has become so ubiquitous that it is now expected. People will not hesitate to abandon their shopping carts before checkout if they see a shipping charge. E-tailers must incorporate shipping costs into their prices, so minimizing them is a key competitive factor. Making the delivery process fast and efficient can also make it cheaper by driving down personnel costs, so there’s synergy at play here.
3. Reliable
   The customer’s first interaction with a product is when it arrives at their doorstep, so last-mile logistics planners need to ensure that goods arrive on time and undamaged. Secure drop-off locations like DHL’s growing network of 11,500 parcel lockers in Germany alone are a crucial component in reliable last-mile delivery.
4. Green
   Urbanization is an unstoppable trend: Cities already contain 56% of the world’s population and account for 80% of global GDP. By 2050, some 68% of the world’s population is expected to be urban. This means that last-mile logistics is overwhelmingly urban logistics. Conventional delivery trucks and vans are still the norm, but they’re far from green – and if they’re stuck in traffic, they’re not fast, cheap, or reliable either! Smaller vans, increasingly electric, are a good start, as are cargo e-bikes and even boats!

Cargo e-bikes

Electric cargo bikes are the gold standard for last-mile urban logistics, able to navigate narrow or crowded streets that vans and trucks can’t penetrate. Our green DHL fleet of cubicycles can even use bike lanes, which is why we’ve expanded our successful European trials to cities in North America and Asia.

The upward trends of both ecommerce and urbanization will certainly continue. Fast, cheap, reliable, and green last-mile logistics remains a critical factor in making these trends sustainable and keeping ecommerce businesses competitive. We’re hard at work implementing cutting-edge last-mile delivery solutions on the road to achieving carbon-neutral global logistics operations by 2050. Getting to zero ain’t nothing: It’s actually a very ambitious challenge, but one we’re proud to embrace. The future of last-mile logistics is green – with a dash of yellow!