Dec 6, 2022 – It may be referred to as the last mile in logistics, but it is anything but the least important aspect of the industry. Last mile delivery refers to the part of the delivery supply chain that connects the buyer to the seller, and incorporates operations such as warehousing, transportation and distribution to end-customers. 

In 2021, the worldwide last mile delivery market size was valued at US$ 1.2 billion and is expected to grow by 15.47% a year to US$ 2.8 million by 2027. As with all other aspects of logistics, last mile delivery is undergoing change as e-commerce booms and customer demand shifts.

The Covid-19 pandemic created a new problem for last mile delivery, as, with traditional brick-and-mortar stores shut, customers added large, bulky items – beds, furniture, and heavy appliances – to their shopping carts. Logistics players and retailers have had to pivot. In larger countries, for instance, local and regional stores would have to plug in to national logistics networks in order to get orders across state and even international borders.

Post-pandemic, logisticians now grapple with meeting pent-up consumer demand, especially during the peak year-end holiday season. Surveys show that in the “new normal” 74% of customers expect no more than one to five day delivery period, and a majority of customers (80%) indicate they are “very annoyed” when an order does not meet that expected delivery timeframe. An equally high number say they will not order from an e-tailer after a bad experience, such as a delayed or missed order.

To grapple with these expectations, retailers and supply chain managers must increase their visibility into the last mile, knowing where deliveries are, and what the status is. Experts counsel partnering with partners that can reduce the friction in the supply chain – to take a simple example, partnering with a national postal service, simply to verify that shipping addresses are correct. Finally, logistics players will need to incorporate all their data into their enterprise resource planning systems, to ensure a smooth customer experience.

Logistics companies in one of the world’s fastest growing markets, China, have also embraced novel solutions such as delivery lockers, pickup points, crowdsourced and drone deliveries, and even autonomous vehicles, to solve the last mile fulfilment problem.

How can logistics companies better eliminate last-mile friction in their supply chains?

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Marie Teo
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