Online retailing has grown considerably in recent years. In particular, the B2C sector has seen massive growth rates, leaving the B2B sector far behind. According to the statistics portal Statista, e-commerce (B2C) sales increased to 44 billion euros in 2016, almost doubling compared to 2010. With the increasing volume of orders in private households, the demand for courier, express and parcel services (CEP) also inevitably rose. Some transport service providers have taken advantage of the boom to focus on deliveries for private shipments. But now they are facing new challenges.

The last mile – a significant cost factor

The last mile in particular, i.e. the last leg of the journey when transporting goods from the parcel service provider’s depot to the customer’s front door, often poses a major problem. The reason for this seems paradoxical: demographic factors, such as increasing mobility and the growing number of working women and single households, are acting as a growth accelerator for online retailing. At the same time, this reduces the probability of personal receipt, because the recipient is often not at home. But it is not only the unsuccessful delivery attempts that make the last few meters a constant issue for CEP services. Either way, shipments to private households are one thing above all: expensive. Due to the small delivery quantities and distributed delivery points, the goods can hardly be bundled. As a result, they account for more than 50 percent of the total costs and are therefore the biggest cost factor in parcel deliveries.

On the brink of collapse: urgent need for solutions in city logistics

While the cost issue of the last mile primarily affects parcel service providers, another symptom of the flourishing online trade is becoming increasingly apparent in urban areas. In addition to the already large number of cars, more and more delivery vehicles are now joining the ranks. There are now so many of them that they account for up to 30 percent of traffic within cities and are responsible for around 80 percent of traffic jams. This is a major problem, especially since the vans produce not only noise but also a large amount of exhaust fumes. This not only harms the environment, but also the productivity of the delivery services. Traffic jams cost so much time that drivers can hardly complete their tours. In addition, there is a lack of stopping places in densely populated areas. Delivering parcels is significantly more difficult and vehicles double-parked in the second row become a traffic obstruction.

“Customer to goods” variant: clear advantage for delivery services

As a result, dissatisfaction is growing – among customers and delivery staff alike. That is why logistics service providers and other suppliers are working on solutions specifically for the last mile in urban logistics. There are basically two concepts to be distinguished here: those that involve the customer going to the goods and those where the goods are brought to the customer. The former includes, for example, the long-established parcel shops and packing stations. The advantage for the deliverers is that they can deliver the shipments in a bundled fashion and the recipient of the goods does not have to be personally present. For the customer, however, this variant means that receipt involves additional travel and time. Thus, the convenience associated with online purchases is practically lost. However, this is the main reason for the majority of customers to order goods for home delivery.

Secure delivery to the front door – even when the recipient is not at home

While the recipient previously had to be present for delivery to the front door, parcel locker or parcel box systems enable secure delivery even when the customer is not at home. This avoids multiple trips. As with a packing station, the parcels can be placed in the container by the deliverer and locked. These solutions are suitable for homeowners as well as for customers in flats, since the systems can be attached either to the front door or directly to the apartment door. The disadvantage for the consumer, however, is that they have to pay for a corresponding box themselves and the respective box systems can usually only be operated by one CEP service provider.

Another solution that delivery services are increasingly offering is delivery within a specific time frame. This delivery alternative is supported by notifications via email or text message. Many CEP service providers have thus responded to the wishes of their customers.

Flying high in parcel delivery

In addition to the comparatively simple service enhancements, other new concepts are also set to conquer the skies. Parcel delivery drones have already been successfully tested by several logistics companies. These flying parcel carriers are particularly useful for use in remote and inaccessible regions or for urgent deliveries of medication. With over two billion parcels shipped each year in Germany alone, it is unlikely that they will replace “traditional” delivery services. The technical limitations that currently restrict drones to relatively short distances and light loads also make flying robots an unrealistic alternative. Furthermore, drone flights over longer distances are not permitted in Germany for commercial purposes. Even in the United States, the commercial use of drones is only allowed under strictly regulated conditions.

Copied from the retail sector: the warehouse principle

This is another reason why further “down-to-earth” concepts are being developed to make the last mile more effective. These include, for example, city hubs and their mobile variants. These concepts are based on the principle of warehouses, which are either located close to the city center or, in the case of mobile city hubs, in the immediate vicinity of the recipients. This form of delivery logistics can, in principle, be integrated into existing processes of CEP service providers or used as an independent service. IT-based solutions that link shippers and courier drivers, for example, are also becoming increasingly popular. This means that goods ordered on the internet can be transported to the recipient in a very short time. So far, these courier-like solutions have been used primarily in the food sector. Even private individuals can offer their services as transport providers and take over courier trips via special platforms.

Every trip counts: increasing the drop factor

Other operator-independent services focus on overcoming the last-mile problem by bundling all deliveries to the recipient and delivering them to a single address. These solutions eliminate the need to travel to different delivery stations, such as private addresses, parcel shops and packing stations. This saves customers and delivery staff a great deal of time and effort. Depending on the provider, the collected deliveries are either delivered within a certain time frame or, as is particularly desirable for professionals, directly and officially to the workplace. This is made possible, for example, by special cloud-based systems. These provide the basis for the professional handling of private parcels in the company.

In addition to these concepts, countless others are already in use or being tested worldwide. It remains to be seen which ones will ultimately prove to be the ideal solutions for the problem of the last mile. Only one thing is certain: both e-commerce and large cities will continue to grow, which is why new delivery concepts are urgently needed. However, the problem is not solely the responsibility of CEP service providers. To successfully implement new solutions, politics, logistics and trade must pull together so that they can actually be implemented.

For more information on route-optimized logistics, see the article: Retailer integration (ship-from-store).

 

Image source: © I, Cacophony, license: (CC BY-SA 3.0)