6 Key Trends Impacting Last-Mile Delivery in 2020
December 02, 2020
6 Key Trends Impacting Last-Mile Delivery in 2020 and Beyond
Here are the last-mile delivery trends that companies should be watching right now and the technology solutions that will help them optimize their supply chains and add visibility into their transportation networks.
From autonomous drones to parcel lockers, the mechanisms used to close last-mile delivery gaps are wide and varied. Driven by consumer demand for faster order delivery times and better visibility into order status, the movement of packages from the nearest shipping hub to the customer’s doorstep has become a focal point for retail companies and the supply chain organizations that support them.
Already underway before the COVID-19 pandemic, the push to improve last-mile logistics accelerated in 2020. In fact, the global pandemic turned that section of the supply chain upside down as more people began shopping online due to quarantines, stay-at-home orders, and health concerns over in-person shopping.
This acceleration is driving growth in the courier, express, and parcel (CEP) market, which has been growing steadily over the last 12 years, both domestically and globally. The market is on track to reach $400 billion in revenues by 2024 and is experiencing a compound annual growth rate (CAGR) of 8-10 percent.
“A huge transformation is taking place in the last-mile delivery,” Mordor Intelligence points out, “with companies looking at alternatives, such as delivery lockers, pickup points, crowdsourced deliveries, drone deliveries, and autonomous vehicles.”
6 Key Trends to Watch around Last-Mile Delivery
The business-to-consumer (B2C) market has exploded over the last few months. According to McKinsey & Co., most product categories have seen a 15% to 40% percent increase in online channel user growth due to the pandemic. “Consumers have also quickly adopted many digital and contactless services,” the consulting firm reports, “including curbside pickup, delivery, and buying online for in-store pickup.”
This momentum isn’t expected to let up anytime soon. “More consumers intend to continue to shop online even as the crisis subsides,” McKinsey predicts, “with a portion of consumers shifting almost entirely to the online channel.”
With consumers ordering online versus shopping at brick-and-mortar stores, the fight for companies to claim the last-mile delivery space is in full force. Couriers and other providers are exploring how to maximize this aspect of the transportation network, make it profitable, and improve efficiency.
Here are six key trends that are impacting the last-mile delivery right now:
New delivery pressures due to COVID-19
The shipping environment has changed dramatically in 2020. Contact-free deliveries and remote dispatching are becoming the new norms. Customer demand is obviously increasing as fewer people visit physical stores. An existing driver shortage is also being exacerbated by the current environment. Illness, quarantine, and/or absenteeism are all taking a toll on driver availability.
Amazon has presented a major challenge for shippers for years, but that was exacerbated in 2020. The e-tailer is changing the game, adding its own ground-delivery fleet, and using third-party deliveries. With its own logistics network, Amazon landed in the top spot of third-party logistics providers (3PL) by revenue in 2019, creating increased competition among other 3PLs.
Consumers want their deliveries faster than ever
Same-day delivery has become a reality, which means parcel customers will push more carriers and shippers to offer that shipping option. Companies will have to adapt to this model or risk getting swallowed up by larger competitors that can offer it.
Outsourcing of last-mile delivery drivers
Last-mile is the most expensive part of the delivery, partly because these packages are small and are going to households versus pallets of the product being shipped to warehouses. Uberization of last-mile delivery has expanded the number of people who qualify as couriers; anyone with a driver’s license can deliver last-mile parcels.
Self-serve kiosks and pickup lockers help companies reach more customers
We’re seeing an expansion of kiosks, both for pickups and deliveries. Retailers and carriers will begin to implement more self-service kiosks to give shoppers the freedom to pick-up and send packages without the delays of manual paperwork or in-person interaction. The same process can be repeated in reverse, giving customers another option for returning packages.
Autonomous robots and drones
Last-mile accounts for more than 50% of the overall delivery cost, yet it’s the least productive and least automated step. Autonomous vehicles and drones have high upfront costs, but in the long-term, this technology will save companies an enormous amount of money.
Technology to the Rescue
As demand for B2C deliveries continues to skyrocket, organizations are turning to technology to keep pace while operating efficiently and profitably. They’re using real-time tracking to ensure that delivery windows are met; providing real-time notifications; and taking pictures (instead of requiring signatures) to prove deliveries took place.
Couriers and other last-mile delivery services rely heavily on mobile devices and strong network connections to support communications and collaboration. Using control towers, they can see which drivers are available and call them into service on-demand.
As traditional drivers become scarce, application-based crowdsourcing fleets like Lyft, Uber, and Postmates are becoming more popular in the last-mile space.
- Advanced dispatch and route optimization. Using advanced dispatching, companies can automatically optimize their final-mile route sequences to help increase efficiencies, while route optimization software helps organizations determine the most cost-efficient routes. Both facilitate faster deliveries, auto-routing, auto-suggesting, and dispatching from anywhere to help with social distancing. It allows companies to operate with fewer drivers, while also being more efficient and lowering their costs.
- The Internet of Things (IoT). Massive sensor networks such as Narrowband IoT and LTE-M help improve the intelligence levels of critical infrastructure. Connecting supply chain assets both inside and outside the four walls of the warehouse, these advanced technologies use sensors to track vehicles, trailers, and possibly even individual packages as they navigate the supply chain, to drive efficiencies, and reduce costs.
- 5G Networks. A quantum leap for networks, 5G is changing the way devices are communicating with their networks. With 5G connecting billions of devices, faster speeds are possible, so organizations can achieve optimal visibility across their end-to-end transportation networks.
- High bandwidth. Broad use of video is desirable for transportation but not a reality due to the limitations of most current networks. With the deployment of 5G, the bandwidth will exist, and companies will deploy video. For example, high-quality surveillance positioned at port entrances will help companies track vehicles in real-time and gives them the ability to collect data, analyze it in real-time, and take action quickly to truly optimize their operations.
As COVID-19 continues to impact human life, livelihoods, businesses, and governments, last-mile delivery operations will play a critical role in getting both essential and non-essential goods from distribution hubs to their final destinations.
Technology will be a key enabler in closing the operational “gaps,” with companies like Panasonic providing the continuous innovation, integration, capabilities, and customizable solutions needed for quick adaptation during these uncertain times.
If you would like to learn more about Panasonic and the last mile delivery solutions we can provide, reach out to us: TOUGHBOOK@us.panasonic.com