Trends & Issues-II

Turning Last Mile Logistics Challenges into Optimized Deliveries

Last-mile logistics sounds simple, as it is the last leg of deliveries to customers. In truth, it is one of the most complex, expensive supply chain operations, and comes with a large carbon footprint. - BY Andrew Hale Last-mile logistics is the final stage of the delivery process, where goods are transported from a warehouse or distribution center to the end consumer. It is the most complicated and expensive segment for many supply chains, especially in urban areas. Meeting customer delivery expectations and establishing a logistics system that supports environmental sustainability and social commitments to local communities is challenging. A last-mile logistics strategy can be integrated with a supply chain localization strategy, reducing delivery lead times for efficient customer service and the environmental impact of vehicle emissions. Efficient last-mile logistics can reduce the use of fossil fuels, but in urban areas, businesses often find that factors such as traffic congestion, weather, road work, poor road infrastructure, and other factors all create difficult challenges. The implication is that addressing last-mile logistics also presents opportunities focused on customer service, cost savings, and a reduced carbon footprint.

Financial and Environmental Cost of Idling
Vehicle idling consumes billions of gallons of diesel fuel and gas each year. Semi-truck idling is estimated to consume more than one billion gallons of fuel annually, emitting more than 11 million tons of CO2, 180,000 tons of nitrogen oxide, and other harmful particulate matter. The idling trucks are not found only at truck stops or on the side of highways. Delivery vehicles of all shapes and sizes pollute urban areas as they burn fossil fuels in a rush to deliver goods within a timeframe that meets customers’ expectations and needs. In most cases, customers want their packages and other items within 1-3 days of their orders and may refuse to do business with a company that fails to meet their expectations. The logistics platform company FarEye's research has found that the cost of the last mile can account for as much as 53% of total shipping costs in the supply chain. The customer demand for speedier deliveries puts more trucks on urban roads.

Researchers reviewed 42 peer-reviewed papers investigating the major challenges of last-mile logistics in urban areas and found they are the least efficient part of the supply chain. The literature review was prompted by the fact that urban freight flow has experienced steady growth due to population growth, densification, urbanization, online and omnichannel retailing, globalization, and urban economic development. The challenges companies faced were sorted by category - technological, infrastructural, system and management, and cost challenges. The last-mile logistics opportunities were discussed from environmental, economic, and social sustainability perspectives, indicating the significant impact of logistics.

Navigating the Urban Landscape

 Given that last-mile logistics have been rigorously studied for decades, it is not surprising that there are many challenges associated with last-mile logistics, nor that some of them are proving difficult to address because they are related to infrastructure in densely populated areas. Large cities often have poorly planned urban roadways, forcing delivery trucks to take longer routes than the address would indicate is necessary. In some cases, there is also an issue of idling vehicles in loading/unloading zones in densely populated urban areas. If parking is limited, the delivery trucks must park farther from the final destination.

Urban congestion is a challenge. Navigating through urban congestion and traffic delays deliveries and increases fuel consumption. Vehicles depending on inaccurate GPS data end up doing excessive driving around town. If finding parking space is a problem, the driver may drive around until space becomes available or park in the middle of multi-lane roads, sometimes forcing passenger vehicles to idle while the delivery is made. Last-mile logistics depends on effective communication between stakeholders to reduce and achieve fast and accurate delivery. Poor communication between the distribution center or the customer and the delivery driver can cause issues, such as the need for redelivery or driving additional mileage around town to locate the correct address. Consumers today want their items within three days - and prefer within one. The result is that compared to consolidating orders, more deliveries are needed. Communication determines how quickly a delivery vehicle can be rerouted when faced with a traffic delay. Writing for Fareye, the logistics company mentioned earlier, Komal Puri discussed how ineffective communication between the warehouse personnel and the seller can lead to poor inventory management. The result is more deliveries are needed as inventory becomes available at the warehouse, when good inventory management could have led to fewer deliveries.

Micro-fulfillment centers (MCFs) are an option. MFCs are small-scale warehouses located closer to urban areas, allowing retailers to fulfill online orders more quickly and cost-effectively. By decentralizing inventory storage, MFCs enable faster order processing and same-day or next-day delivery options. They also reduce the travel time between the warehouse and the final delivery destination. This approach fits nicely with supply chain localization.

The World Economic Forum predicted the number of delivery vehicles in the 100 largest cities globally will increase by 36% by 2030. This increases traffic congestion by over 21% and emissions from delivery vehicles by 32%. The carbon footprint of those last mile deliveries will only expand unless innovations are used to minimize the increase of greenhouse emissions, which is important for both the quality of life in urban areas and global environmental sustainability.

Last Mile Logistics Innovations

 Given the fixed nature of urban roads, technology provides some of the best options for reducing the carbon footprint. Route optimization using GPS and mapping software can identify the shortest and most efficient delivery routes. Artificial intelligence (AI) is already being used to sequence route stops based on parameters such as when a delivery must be made to a customer, or when a delivery is for a medical emergency. Wise Systems is a web-based software solution, for example, that optimizes last-mile deliveries in any city. It optimizes routes by factoring in business variables and constraints, and this enables dispatchers to optimize delivery plans and customize for route zoning, on-demand orders, and time windows in real-time. Consolidating deliveries is another strategy. When people order goods on Amazon now, there are usually delivery options, which include picking a delivery day to receive multiple orders made or an Amazon delivery day for the area. This kind of coordination and enhanced route navigation requires advanced technologies such as machine learning and AI. This strategy enables more efficient utilization of delivery van space, too.

The two main focus areas of last-mile logistics for companies are keeping customers satisfied and reducing the carbon footprint. Technology addresses both. For example, a simple strategy for reducing greenhouse gas emissions while improving customer service is using electric bicycles, which are possible for small deliveries. Electric and hybrid delivery vehicles will reduce greenhouse gas emissions, but access to recharging stations remains challenging.

The future (some say it is about five years away) will include using delivery drones, which are being tested now. Though the drone delivery market is considered to be in its infancy, the delivery drone market is estimated to be $2.81 billion in 2024. Google and Deutsche Post DHL Group are already investing in delivery drones.

The expanded use of unmanned autonomous intelligent robots is also on the horizon. Already being tested in various markets, autonomous roadside delivery robots (ARDRs) can reduce greenhouse emissions since they are powered by electricity and reduce the need for delivery vehicles. They also reduce traffic congestion. The delivery robots require multiple technologies including a sensor suite, wi-fi, GPS, a computing module for processing data, batteries, a battery management system, and AI.

Integrating last-mile logistics into a supply chain localization strategy makes sense. The closer the distribution center is to the final destination, the less gas or diesel is burned, and the easier it is to plan for rapid deliveries. The one apparent thing is that increasing last-mile logistics efficiency while protecting the environment and people’s health is necessary - but not simple.

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