Omnitracs' Road Ahead blog

The Future of Last-Mile Delivery

Before developments like e-commerce and same-day delivery emerged as major supply chain and logistics disruptors, last-mile delivery was a simpler process. 

Consumers who ordered packages to be sent to their homes usually did not expect free shipping or one-day delivery. In addition, there were simply fewer home deliveries, which meant fewer trucks on urban and residential streets, and longer timeframes in which a carrier could get a delivery from a warehouse to a customer’s door. 

Today, this scenario is vastly different. 

According to data from Package Guard, home parcel deliveries by the three largest parcel carriers (UPS, USPS, and FedEx) reached 44.8 million in 2017 — that’s a 28% increase from just 5 years earlier, in 2012. 

This is causing significant issues for supply chains, which are having to transform the way they do business in order to keep up with ever-increasing consumer demand. 

Dedicated last-mile divisions need to support their large labor forces with cutting-edge technology to be successful. 

Trucking companies that have their own last-mile divisions have tough competition, most notably against Amazon, which is seeking to dominate the last-mile space. 

While actually beating Amazon may not be a goal (or feasible) for most companies, any trucking company that wants to succeed in last-mile logistics must embrace cutting-edge technology. 

Fleet management solutions with GPS route management, real-time delivery data, and efficient route planning are necessary in order to compete with not only other logistics companies, but with the tech-driven entrepreneurial companies like Uber and TaskRabbit that are also fighting for last-mile traction.  

The biggest challenge is consumer demand for ever-faster fulfilment.

Amazon Prime’s one-day and same-day delivery services have changed the logistics game for good. B2C customers expect faster and faster delivery — often, faster than a company’s available technology and labor force can handle. 

Meeting this demand will require major acceleration in workflow for logistics and fulfilment companies. While many are currently experimenting with speedier fulfilment and faster delivery methods, we can expect that same-day delivery will not be the norm for at least another year or two. 

Drones and driverless vehicles represent the biggest potential disruption to last-mile logistics. 

No discussion of the future of logistics would be accurate — or complete — without a discussion of the potential that drones and driverless vehicles have to completely disrupt last-mile logistics. 

Amazon is already experimenting with drone delivery (Prime Air), and has made successful deliveries to consumers within 13 minutes of their click-to-order. While the regulatory environment doesn’t yet support widespread drone delivery, experts believe that this will not be the case for long. 

In fact, a McKinsey report, Parcel Delivery: The Future of Last Mile, posits that drones and autonomous vehicles will deliver 80% of parcels to consumers within the next 10 years. 

It’s impossible to tell exactly how this will affect traditional trucking now, but one thing is clear: over the next decade, the trucking industry will need to stay agile and tech-driven in order to maintain and expand its market share in last-mile deliveries.