Logistics Disruption: The Race to the Urban Consumers
Today, urban consumers around the world are better connected and informed. Their preferences are widely voiced and they are willing to spend more on convenience and positive experiences. These combined factors provide a favourable environment for the transport industry to expand e-commerce while posing a challenge for facilitating the final steps of the delivery process, the last mile. DHL and Euromonitor International identified four key trends shaping urban last mile transportation and ways in which companies can adapt their supply chains to the changing market environment and achieve competitive advantage.
Localised Delivery Networks
Approximately three-quarters of adults who shop online would pay a premium for an expedited shipping option. A localised delivery network enables the kind of flexibility, connectivity and convenience necessary to shorten and streamline the last mile. This is shifting the industry from making bulk deliveries to more frequent, smaller deliveries.
As companies work to get closer to the city, they are also balancing the potential implications of this shift. Population-dense cities cannot absorb more delivery vehicles and congestion restricts delivery time. However, the greatest challenge in achieving efficient localisation lies in inventory management. Partners may not have the resources and technical expertise to ensure their inventory is managed efficiently in these smaller but closer hubs.
Customers increasingly expect to select when, where and how parcels are delivered. Logistic players are pioneering into unconventional solutions such as service points, parcel lockers, bicycle delivery, electric vehicles and crowdsourced deliveries. Streamlining, standardising and shortening the final mile for delivery is a primary concern in achieving same-day, one-day or two-day footprints.
For same-day and same-hour deliveries, fundamental shifts to the supply chain are being considered. Crowdsourced deliveries, or outsourcing deliveries to third parties such as Postmates, are rising in adoption. These methods are becoming more of a necessity from an industry perspective in the wake of courier shortages and rising costs within the conventional last mile. Creating a more elastic framework that includes alternatives to standard delivery methods will help overcome barriers and control costs.
Globally celebrated holidays such as Christmas and Valentine’s Day place unprecedented pressure on delivery networks. Urban consumers expect a guaranteed on-time delivery on a timetable of their choosing.
Creative operations are key and maintaining the efficiency of the last mile is critical. Solutions to this can be more agile and ad hoc, creating a more elastic business model. For example, training contract personnel on key operations such as packaging techniques can help manage seasonal spikes. However, this can be challenging to manage and costly.
To serve the ever-increasing demand among urban consumers for online shopping solutions, new platforms are being invented and existing ones further developed to optimise the last mile. Often, these innovations have proven more grassroots and pragmatic. On the other hand, cloud computing, artificial intelligence (AI), data collection through the connectivity of the Internet of Things and blockchain technologies have contributed to a general automatisation of transport operators. AI and the use of big data analytics are increasingly being adopted by all players to work towards the more adaptive and flexible model the industry should strive for.
Urban consumers will continue to demand solutions that make their lives easier—convenience, flexibility and costs are all themes that emerged as relevant to both e-commerce players and transport operators. Ultimately, parcel delivery is going to grow alongside rising sales in internet retailing, more digital connectivity and an evolving urban environment. Adapting to these trends is critical to survive and prosper in the future.
Download the custom report for Deutsche Post DHL Group ‘Shortening the Last Mile: Winning Logistics Strategies in the Race to the Urban Consumer’.