Published On: 05-Jul-2020

Last Mile Delivery industry trends 2020:

Scope of Global Last Mile Delivery Industry Reports-

Last mile delivery is the movement of goods from a transportation hub to the final delivery destination which is typically a personal residence. The aim of last mile delivery system is to deliver goods to the end user as soon as possible. In the process of delivering product from warehouse to customer doorstep, the “last mile” of delivery is the final step. Last mile delivery is the most important in logistics, as it is key to the customer satisfaction, most expensive and time-consuming part of shipping process. Due to the number of business to consumer (b2c) deliveries growing especially from e-commerce companies in freight transportation and ride sharing in personal transportation. Last mile delivery is very important as it requires intensive management in factors such as minimizing cost, ensuring transparency, increasing efficiency and developing infrastructure.

Global Last Mile Delivery Industry Market is valued at USD 33.799 billion in 2019 and expected to reach USD 67.005 billion by 2026 with the CAGR of 10.27% over the forecast period.

Global Last Mile Delivery Industry Dynamics –

Application of innovative new technologies, growing business of e-commerce and online shopping as well as increasing penetration of internet is driving the global last mile delivery market. For example, Amozon in United states has installed lockers, where consumers can pick up their goods rather than at their home. This system in turn protects items from theft as well as permits companies to deliver in one location which significantly lessens the last mile cost. Research also going on by big retailers to deliver goods by autonomous vehicles, for instance Amazon and China based Alibaba have researched on using droned for delivering parcels. In Europe, Germany, Britain and Poland are experimenting with services which use automated parcel delivery technology. Such types of innovation also increase the demand of last mile delivery as people are more attracted towards trying new services. Well managed and efficient last mile delivery enables shippers to deliver more goods to consumers faster and cost-effectively. In many cases, consumers are willing to pay premiums for improved last mile delivery services such as same-day or instant delivery. According to Internet Retailer, the e-commerce sale globally was approximately USD 2.93 trillion in 2018 and forecasted to grow with more than 17 percent CAGR rate. With high demand of e-commerce business, it is also a fact that last mile delivery market is also growing rapidly and have bright future ahead.

Recent Development- Coronavirus Apps Expose Tension Between Privacy and Need for Data

The lockdown situation due to Covid-19 has changed the state of last mile due to adding surge demand and it is expected that growth in e-commerce will contribute up to USD 44.88 billion increment in last mile alone in between 2020 and 2024 according to Business Wire.

In 2020 the main driving force for last mile delivery industry are the present COVID-19 pandemic, tensed trade agreements between the U.S. and foreign countries, limited visibility in the final mile, and innovative ideas put forwarded by Amazon. 

In e-commerce sector major companies around the world, are re-focusing their efforts on refining last-mile services during this difficult time. According to Debra Lockridge of Truckinginfo, the company in mid-March put a stop on incoming shipments of less required supplies to its warehouses so that it could focus on critical supplies, and declared it was hiring 100,000 more employees. As it has focused on those essential shipments, delivery times for other items have delayed to weeks, according to published reports. Additionally, Amazon is not the only company struggling to fulfill the increased e-commerce demand during the pandemic. UPS and FedEx both postponed service guarantees, due to the impact of COVID-19.

The main challenge of any logistic company in this difficult time is that they have to deal with spike in demand for their services while implementing necessary health and safety protocols designed to protect from Covid-19.

E-commerce giant stated USD 75.5 billion in first-quarter sales, more than 26% from previous year first quarter. But, meeting the demand resulted in drop in profits.

Amazon founder and CEO Jeff Bezos said he assumes second-quarter operating profit to be more than USD 4 billion, but cautioned shareholders that the company intends to capitalize those earnings into its response to the Covid-19.

Ahold Delhaize, the Netherlands-based food retailer which owns several U.S. supermarkets chains and online grocery delivery company Peapod, informed 42 percent growth in online sales in the US during the first quarter of 2020.

Ahold also said it is increasing its target for U.S. online sales growth for 2020 to over 50%, up from a previous target of 30%. Such type of business strategies are being put forwarded by the companies as a reaction of Covid-19 pandemic.

Recent Last Mile Delivery industry trends 2020

Last Mile Delivery industry trends 1-

Digital-First approach Will be front runner Trends in Last-Mile Service:

Logistic companies that take a digital-first approach to last-mile service will grow in business throughout 2020. Digital-first companies distinguish the potential of Tech-enabled capabilities, because of which digital transformation became the basis of all their decisions. These organizations deploy platforms to increase transparency and understand shipping quotes.

this new generation of tech-enabled freight forwarders are competing with major shipping giants to capture the share of smaller enterprises. They are using platforms that make it easy for clients to get transparent and understandable shipping quotes, book ocean freight and airfreight shipments, complete and submit shipping and customs documentation easily, pay for transportation online, and track international shipments in real-time.

As last-mile is mainly dependent on the perception of degree of quality service for customers, digital-first companies will naturally get a lead in connecting with customers before the delivery, authenticating the delivery, and providing service after delivery.

Last Mile Delivery industry trends 2-

Light Speed Logistics Will Replace Next-Day in the Last Mile:

The degree of quality of last mile service is also determined by how fast the delivery is taking place at the last mile. And in this context, light speed logistics can be defined as the capacity of transforming logistics through enhanced efficiencies within the last mile is improving the speed of delivery. Other than that, customers get access to more information and capabilities to cooperate with delivery drivers through apps, messages and online websites. Moreover, customers have access to more information and capabilities to interact with delivery drivers than ever before. Due to this connectivity trend, major entities, along with Amazon, have introduced innovative last-mile services to connect with customers and decrease potential delays. In the wake of coronavirus, the state of global logistics is evolving in rapid space in terms of connectivity and sharing information.

Last Mile Delivery industry trends 3-

Increasing Use of technology for final mile delivery:

Final mile is always limited in degree of applicable technology due to various reasons. For exxample, each delivery scan activates a notification to a customer, but that information has been previously internalized and can only be accessed through carrier’s eyes only. Carriers does not usually share that information, and even the carrier that provides last-mile tracking with the help of real-time tracking of delivery vehicles, i.e. UPS, has restricted access to that technology. In 2020, there is expectation of increased application of real-time technologies and capabilities to track delivery personnel within the final mile. 

Last Mile Delivery industry trends 4-

IMO 2020 Will Force More Retooling of Drayage Logistics That Transfer Directly to Final Mile:

The implementation of IMO 2020 new rules are having an impact on the expected top trends in last-mile logistics too. As many leading carriers look to cut costs and evade the extra expenses of the regulation, organizations will increase ship size, resulting in extra problems with port management and drayage. The United Nations’ International Maritime Organization (IMO) regulation which imposes limit on the fuels used by marine vehicles in order to decrease pollution, is also affecting subsequent shipping process. According to a report by logistics and real estate services firm JLL on Oct. 7, 2019, ship lines will deploy larger vessels to counterbalance higher operating costs due to an increase in ship size does not mean an equal increase in fuel consumption. This may lead to system paralysis as ports struggle to process huge volumes from the larger vessels.

And the problem becomes more complicated, compelling shippers to reconsider the last-mile to the dock and how that will turn into possible delays in distribution and the last-mile at the customer’s delivery address. 

Last Mile Delivery industry trends 5-

Blockchain in the Last Mile Will Lead to Combination of Last-Mile Logistics Technologies:

Even if some companies have been unwilling to adopt the use of blockchain, the use of the ledger-based “chain” is expected to become a major differentiator in the market in the future. Global shipping companies, such as ShipChain, have already begun to build open source blockchain solutions, and other giants, such as Maersk, have collaborated with tech giants, such as IBM, to promote innovative blockchain capabilities. with blockchain becoming a larger part of the business, supply chain professionals will be forced to adopt.