One thing is clear. Growth in e-commerce and omni-channel distribution, combined with consumer expectations for fast and free delivery, are driving increased demand for Final Mile Logistics. This is the final stage in the supply chain that brings the goods we buy online from a nearby transportation hub to our homes and businesses. This last leg of the shipping journey is shaping up to be the most important – and the most challenging and costly.

What do we know about the final mile delivery market today and what will it look like in the future?

A host of recent reports have surveyed stakeholders (logistics providers, supply chain executives, retailers, manufacturers, distributors and consumers) to try and get a handle on the challenges and coming innovations in ‘Final Mile’ logistics.

Here are some interesting highlights to consider.

Final Mile Demand and Market Size:

• There has been a 33% increase in B2B last mile delivery demand over the past 18 months (2017-18)
• There has been a 67% increase in B2C last mile delivery demand over the past 18 months (2017-18)
• Internet retail sales jumped from $290.4 billion to $1.6 trillion between 2008-2018.
• The global Last Mile Delivery market size was 30200 million US$ in 2018 and is projected to reach 55200 million US$ by the end of 2025.
• According to the UN, world population is projected to reach 9.8 billion in 2050, and 11.2 billion in 2100. The current (April 2019) world population is 7.7 billion.
• The global logistics industry is estimated at US$4.6 trillion in revenue.

A Last Mile Balancing Act

One of the biggest challenges is finding a balance between customer satisfaction and profitability. Consumers have high expectations for a quality delivery experience with fast and/or free delivery. Meeting that demand has both retailers and shippers looking for ways to improve performance and profitability.

Customer Expectations:

• 48% of consumers are demanding next-day delivery and 23% are demanding same-day delivery.
• 1.4 days faster The maximum number of days people are willing to wait delivery in exchange for free shipping has dropped from 5.5 days in 2012 to 4.1 days in 2018.
• Offering a 2-hour delivery option for same-day delivery would increase brand loyalty according to 55% of consumers surveyed.
• 73% of consumers said a convenient time slot is more important than fast delivery.
• 63% of shoppers abandoned shopping carts because shipping costs were too high.
• Over three-quarters of online shoppers want their orders shipped the same day.

Final Mile Costs and Strategic Alliances:

• About 50% of transportation shipping costs go to last mile delivery.
• Absorbing last-mile delivery cost is eroding profits. Profits could potentially decline by 26% in three years or $148 million due to an increase in online sales unless final-mile delivery is optimized.
• 63% of shippers are increasing their use of outsourced logistics services.
• 41% of shippers are collaborating with other companies, even competitors, to achieve logistics cost and service improvements

Adoption of future last-mile delivery scenarios:

Surveys of business leaders in Transportation and Logistics reveals that they are actively exploring new approaches and technologies to optimize the final mile segment of the supply chain. Public sentiment, government regulation, and labor costs Vs technology investment costs will influence how fast these approaches are implemented and how successful they will be in improving last-mile performance and lowering costs.

• 600,000 commercial drones are expected to be in use by 2018.
• About 60% of American consumers would accept deliveries by drone.
• 35% of consumers express acceptance of drop-off lockers and 32% say they would use crowd-sourced deliveries if offered (32%)
• Over 40% of consumers surveyed expressed acceptance of the use of Automated Guided Vehicle (AGVs) with lockers.

What’s next?

Some of the new final mile technologies are being field tested now but many will take years to implement broadly. In the meantime, who knows what other new and novel ideas may come along to streamline the supply chain. Stay tuned.