Omnitracs' Road Ahead blog

Winning the last mile game for sustainable cities

As e-commerce and the on-demand delivery that customers have come to expect continue to outshine traditional retail as the dominant shopping model, urban freight is predicted to grow by 40 percent by 2050, according to a report by McKinsey Center for Business and Environment. Though shipping trucks currently constitute less than 10 percent of urban travel, they account for nearly 20 percent of congestion. This can place escalating demands on city infrastructure and contribute to adverse environmental consequences, requiring new approaches to fleet management and building sustainable cities. 

In other words, it is not only online retailers and fleet managers who are looking for smart solutions to delivery-related challenges, but also city governments. Questions from both sides about sustainable development and infrastructure go hand-in-hand with questions about transport efficiency. 

Chief among procedures and structures relevant to these questions is the realm of urban logistics, or last mile delivery. 

“Last mile” is a telecommunications term that refers to a hub-and-spoke network. The closer a network (shipping vehicles) comes to a customer (drop-off or pickup points in cities), the more traffic, bottlenecks, and inefficiencies occur. 

Imagine tens of thousands of people approaching an NFL stadium from surrounding areas. The closer the crowds move to the entrance of the stadium, the more populated these channels become. When the congestion is this heavy, managing the traffic can become challenging. 

It has become imperative for shipping fleets and city planners to address the challenges of the last mile as streets are crowded with more delivery trucks than ever before.

According to Supply Chain Digital, as much as 28 percent of costs are incurred in the last mile of delivery or first mile of pickup. This acts as the key leverage point in achieving win-win propositions, benefitting customers, the companies that serve them, and the sustainability aims of cities. 

According to Frost & Sullivan, global logistics spending is expected to reach $10.6 trillion in 2020, with transportation making up 70 percent of the majority. Emerging technologies such as big data, cloud computing, and crowdsourcing, combined with the proliferation of tech-savvy startups, are deconstructing the value chain and reconstructing delivery models. Frost & Sullivan predict that the market in coming years will see a rapid and dramatic shift toward mobile freight brokerage types, on-demand deliveries, and autonomous technology.

The future of last-mile efficiency and sustainable cities lies in a cooperative relationship between various nodes of supply chains. The potential to improve — and profit from — this relationship is significant, especially in “horizontal” dimensions. In other words, it is possible for multiple companies in the same industry and supply chain stage to consolidate or localize supply and reduce transport flows and costs. 

Both Seattle and New York City have experimented with sustainable initiatives. In Seattle, Urban Freight Lab tests methods to avoid delivery congestion and manage limited parking space. Some of the solutions Urban Freight Labs is exploring include centralized drop-off lockers and improved utilization of alleys and curb space.  

New York is taking a somewhat different approach, piloting an off-hours delivery experiment with 20 partner companies. This results in a higher number of deliveries per hour, improved customer satisfaction, fuel savings, and more readily accessible legal parking. 

Technologically-mediated cooperation and coordination between carrier companies and city logistics are the keys to winning the game of last mile challenges.