The current e-commerce final mile delivery landscape is challenging. The growth of online shopping and consumer expectation for fast delivery has turned the traditional shipping economy-of-scale on its head. The long distance shipping segment of logistics is fairly well optimized to take advantage of a many-packages-per-stop model. Final mile delivery is the last leg of a product’s journey to the consumer and it is a one-package-per-stop model that is significantly increasing the cost to deliver.
Within that bigger picture are the specific challenges facing shippers trying to deliver in very different locations.
On the positive side, consumer density in urban centers offers the opportunity to lower costs by optimizing shipping runs so that more packages are delivered per mile. Also, last mile delivery can be more efficient in cities with layouts that have well-defined population clusters. Unfortunately urban areas also offer challenges that offset those savings like traffic congestion, lack of parking, and inaccessible destinations such as gated buildings, or insecure destinations with the risk of theft. Some congested cities are also adopting noise or pollution control regulations that limit or restrict vehicle access. Additionally, transportation hubs and warehouses have traditionally been located outside urban areas. To optimize final mile delivery, companies are trying to bring those hubs closer to the consumer as a way to speed delivery and lower costs. High real estate costs and lack of available space in dense city centers are forcing them to get creative.
Final mile delivery to suburban and rural areas pose different challenges. Lower population densities and longer distances between delivery stops make it hard to optimize rural and suburban routes. Also, destinations are usually located at greater distances from distribution centers or warehouses. Rural destinations can sometime be difficult to locate and packages left on doorsteps in suburban areas are also at risk for theft. And if a delivery fails, for any reason, the second attempt has to cover those same long and inefficient distances.
The growing demand for final mile delivery that is fast, convenient and affordable is behind a number of new strategies and technologies being explored and pilot tested by transportation companies and retailers.
Only time will tell which of these innovations will prevail and how soon they will become common practice. What is certain is that the demand will only rise.