The last-mile challenge – How can the economic objectives of delivery services be agreed with a resource-conserving urban development?
Courier, express and parcel services (CEP services) are not only essential for the functioning of the fast-growing e-commerce market but also the diversity of inner-city retail trade. Local decision-makers have long recognised the challenge they face in securing the diverse requirements of vibrant cities and simultaneously accommodating customers growing demand for CEP-services. By 2022 parcel delivery will grow to more than 4 bn shipments, from currently already 3,5 bn. As a result, cities must cope with growing noise pollution, poor air quality and congested infrastructure. Already, parcel logistics are responsible for 80% of inner-city congestion. The biggest challenge now is to define and implement new concepts and goals to secure sustainable city logistics. However, municipal competency is fragmented, and each city has its regulations. Hence, transferring new concepts across cities can be difficult. At the same time, the complexity of last-mile delivery increases. Consumers expect highly reliable, on-time, and even faster delivery (same day or even instant delivery). Most customers are highly price sensitive. Unattended delivery (e.g. to a parcel locker) – while more resource-conserving – is still comparatively unpopular.
As a growing number of competitors enter the increasingly complex market environment, competition increases too. Also, large online retailers aim to control the entire supply chain. As a result, many different CEP-services operate within the same area, but with individual delivery-networks. This leads to unnecessary trips, higher costs and an inefficient city-logistics. However, this also creates a highly innovative environment. CEP service providers are, for example, testing autonomous ground vehicles, multi-purpose use of different spaces, or low-noise delivery methods at night to improve the effectiveness of their delivery system. Highly promising are so-called micro-depots in central locations, at which parcels are stored and reloaded onto smaller, more mobile electric vehicles or bikes in order to be distributed within the near vicinity. From the perspective of city logistics, however, a cross-vendor last-mile distribution system would be much more effective. CEP service providers see their concept of last-mile delivery as a key differentiator vis-à-vis their competitors and would rather not share their data.
The last-mile challenge presents a range of question:
Bearing in mind economic and ecologic aspects, what could be the optimal design for a logistic system in your city?
You may want to consider some of the following questions:
Where would be a good location for the micro-hubs? Within which radius should each be supplied? Which vehicles and which systems should be used? Should CEP service providers deliver individually or do you suggest a cross-vendor system (within defined areas / across the whole city)? How could cooperation between CEP service providers look like? What data is needed for efficient delivery and which incentives could help a data-alliance between competitors (and municipalities)?