The Final Hurdle – Innovation in Last-Mile Logistics

Executive Summary

This report covers innovation in last-mile logistics, a key component of the supply chain that presents unique challenges and exciting opportunities for improvement. The report covers three components of last-mile logistics: transportation, delivery and reverse logistics.

• Last-mile logistics costs accounted for an estimated 53% of overall delivery costs in 2016. Adding further complexity and congestion to the matter is the steady increase in delivery volumes, up by approximately 38% in the period 2012–2017.
• Facing high costs, large delivery volumes, shifting consumer expectations and increased competition, numerous parties are investing heavily in last-mile innovation. Big retailers and logistics providers have made recent acquisitions and are developing new technologies and models in-house, while startups are also entering the space.
• Regulatory restrictions and other challenges present significant hurdles for some of these new technologies, including delivery robots and drones. Although the vehicles themselves are being developed quickly, issues such as air traffic control and malicious interference may prevent or significantly delay scaled use of these devices for last-mile delivery.
• Advances in smart lock technology have enabled in-home delivery, but consumers are skeptical about the solution, citing concerns including theft and privacy. Secure lockers have popped up as an alternative delivery model, offering convenience to customers and addressing package volume issues for residential and office property managers.
• Retailers are also experimenting with solutions to ease and limit returns. Free returns are increasingly expected by consumers, and the offering is important to drive purchasing. However, incentives and promotions may be used to reduce the number of free returns, especially when combined with artificial intelligence (AI) solutions that can predict likely returns.