Much before the onset of the pandemic, a McKinsey Report had stated, “Everybody likes to get a package. In 2020, we’ll send more than 100 billion of them—and that number could double by 2030. Who will deliver all those packages, and how?” Their report had also announced mail to parcel ratio by 2025 would be 1:1. Their studies on future of last mile logistics initiated a debate on ‘Unmanned aerial vehicles (UAVs) will gain traction and claim a significant share (1 to 5 percent) of urban deliveries by 2030’, in August 2019. This was then!

Circa 2023, in an article published by McKinsey in January this year, heralded drones could be a significant part of supply chain delivery. As per them, with the maturity of technology, evolution of regulation and emergence of new business models, and as a part of last-mile delivery innovations, drones are expected to be one of the cost-effective ways for delivery packages compared to traditional modes of transportation. Over the period of time, their studies, debates have concluded unmanned aerial vehicle (UAV) is the future and will be high performance tools in revenue generation for logistics platforms.

Evolving Landscape of Last Mile Logistics

With the rapid emergence of eCommerce, the algorithm of commercial delivery has altered. With rush to be the best and score more than the competition, each has entered a race to deliver at an increasingly shorter span of time, which surely is benefiting retailers as growth in the demand for last-mile delivery has seen unparalleled surge in recent times. As per World Economic Forum, demand for last-mile delivery would grow by 78% by 2030.

• Challenges Before 3PLs: Last-mile delivery is the most crucial, expensive and challenging junction of supply chain, its success plays an important role in the growth of a business, as it helps in building connection with the customer. 3PLs, while ensuring smooth delivery, also need to ensure sustainable means of transportation from start to finish, that is, from the fulfillment centers to the last-mile delivery. With rise in the demand for fastest delivery, customer expectation is also increasing. They prefer same day or the next day or delivery at convenience options. Some of the challenges faced by the industry is traffic congestion, high delivery costs, urbanisation, decarbonisation, resultant inefficiencies and handling of reverse logistics.

• Changing Dynamics with Innovative Approach: There are no two ways about the fact that eCommerce growth and urbanisation has intensified demand for last-mile delivery. To meet the challenges, 3PLs must innovate and think out-of-the-box for sustainable, fast, cost-effective options to meet the customers increasing demand. Shipping carriers will have to embrace technology and combine it with sustainable ways to optimize efficiency in the last-mile delivery. One such is seamless integration of AI into logistics.

• Real-time Tracking Technology: Empowered by technology, last-mile delivery has witnessed a new shift in the landscape. With real-time tracking technology, it is easy to navigate, dodge traffic congestion, cut costs, cross geographical borders, guarantee time and quality of delivery, yet be sure of the security of products on the transit till the last point. Real-time visibility brings to the platter more than expected. It optimizes routes for 3PL shipping carriers, that allows sustainable ways for delivery, takes cognizance of need for caron reduction and combines orders of the same location from different retailers for quick, smart and cost-effective delivery.

Emerging Trends for Sustainable Last-Mile Delivery

Acceptance of trend and being futuristic is the only way to grow and build an empire. With demand of last-mile delivery increasing along with the popularity of eCommerce, demand for adopting sustainable means for supply chain operations is also escalating. The only way to bridge the gap is integrating advanced technologies for resilient future of last-mile delivery. The technologies like Artificial Intelligence (AI), Machine Learning, automation, autonomous vehicles, robotics, crowdshipping, micro-fulfillment centers hold potential to streamline process of last-mile delivery, improve customer relationship, reduce costs, and improve efficiency. Powered by real-time tracking technology, some innovative technological advancements that has helped shipping carriers in building strong last-mile delivery in supply chain are:

• Drones: According to a report, an estimated 2,000 commercial drone deliveries were happening worldwide on a daily basis in the beginning of 2022! The unmanned aerial vehicle is touted as the most efficient, environment friendly delivery option in supply chain. In comparison with traditional delivery, it is fast, can avoid traffic congestion and can deliver package at the customer’s doorstep.

• Crowdshipping: It is a collaborative delivery methodology and most efficiently used by 3PL service providers. The service provider can combine orders of the same location, date, day and time for opting a single shipping model. Crowdshipping in shipping parlance means clubbing orders for optimizing routes, cost-reduction and adopting eco-friendly approach as it saves time, makes tracking easier and reduces emissions caused due to transportation.

• Micro-Fulfillment Centers (MFC): These are small-scale warehouse or storage facility to stock inventory closer to consumer. These warehouses are mostly equipped with real-time tracking device and are fully automated for improving operation management. eCommerce retailers benefit tremendously with RFID and scanners as tracking of inventory becomes easy and it reduces transit times as well as cost.

• Delivery Lockers: Centralized lockers and hubs are eco-friendly, cost-effective delivery options as well as can be used for efficient handling of reverse logistics. Sometimes, it is difficult to coordinate with the end consumers, from these hubs consumers can collect delivery and even reverse orders if required. This can save time and reduce number of transits. This is also automated and has real-time visibility.