Last mile delivery is a fast maturing, yet challenging component of the logistics and transportation space. Last mile delivery accounts for as much as 30-35% of the total delivery cost, meaning better last mile support in transportation management and storage becomes critical. The increased importance of last mile delivery has become evident across all modes of transportation – rail, road, air, and water.
Long-standing freight shippers are implementing or upgrading technology to enhance last mile support. The focus is on improving reliability, reducing waste, enhancing customer experience, and increasing overall competitiveness of the transport ecosystem. During COVID-19, multiple shippers and carriers incorporated digital platforms and transportation intelligence systems to enhance last mile experience by achieving:
The future is also going to be impacted by the evolving regulatory landscape to govern use of advanced technology-powered solutions such as autonomous mobility and automated parcel lockers, as well as sustainability-targeted solutions such as use of low-emission/electric modes.
With rise in global shipment through omnichannel modes and digitally advanced supply chains, modern last mile strategies are becoming more crucial to customers and shippers. Service providers are observing changes related to process standardisation and integration, preferred mode of delivery, and buying preferences of customers, which is influencing new investment priorities.
Holistic policy approach to gain traction globally – sustainable last mile transportation
New technology alliances and investments shaping last mile in transportation sector
Cross-border last mile delivery is emerging as an opportunity with huge potential
Experimentation in last mile freight transportation mode preferences – on track a priority
While focuses differ, investments in the last mile startup ecosystem have been initiated across all geographies. Currently, the US and Asia Pacific (APAC) are the most mature, based on investment thresholds and volume of last mile startups. Considering the startup investment trends, autonomous fleet adoption is relatively more mature in the US, whereas Europe has a stronger green fleet.
Regulatory landscape and relevant policies
Today’s last mile regulatory landscape is highly heterogenous. In certain instances, the absence of legal boundary conditions or country-wide policy standardization, have resulted in increased challenges for last mile services, particularly in transportation. A WEF report5 (2020) cited autonomous mobility regulation inconsistencies in the US as an example of discordant regulatory ecosystem:
In the US, 29 states have passed certain laws for autonomous vehicles, and there is a clear risk of proliferation of different, occasionally conflicting regulations. While in California, the law requires that pilot data related to vehicle and robot testing is shared with the state government, other states such as Texas and Arizona have a less explicit regulatory framework that, in the end, creates compliance challenges, reduces street safety and prevents technology players from developing scalable, standardized offerings.
Technology and data-powered innovations such as autonomous driving and droid delivery could mature over the next 5 to 10 years and benefit last mile functions related to freight transportation and warehousing. With this, the risk of cyber and data attacks is simultaneously likely to increase. Thus, governments are prioritizing updates to regulatory frameworks governing cyber-security, street-safety, and offering-standardisation. In addition to technology, policy makers are targeting the climate impact of last mile services in the transportation sector.
Future regulations related to last mile are likely to be focused on transformative infrastructure, standardization and regulation oversight issues, and ease of adoption of autonomous technologies.
The last mile delivery landscape in transportation is evolving significantly, particularly the adoption of autonomous and zero-emission delivery modes. A shift in preferred modes of last mile delivery (for both bulk and non-bulk freight) is also likely to take place, with an emphasis on rail transport to enhance cost-efficiency of last mile delivery function.
From an efficient execution perspective, policy makers continue to prioritise efforts to standardise processes and improve adoption of security, sustainability, and technology regulations, while players continue to invest in technology and compliance initiatives.