The Future of Last Mile Logistics
Thanksgiving is such a magical time, isn’t it? It is a time to give thanks for all our blessings but also the beginning of a countdown to the holiday season and a new year. This year of course, we cannot wait to flip the calendar to 2021 but that story is for another day.
As we prepare for celebrating the upcoming festivities with family and friends (virtually or in person), we should also be preparing for a deluge of delivery vehicles crowding already busy thoroughfares with blinkers on while an e-commerce delivery is being made. This year, the growth of multi-channel commerce as the buying mechanism of choice has accelerated. Online sales in Q2 2020 were a phenomenal 44% more than Q2 2019 and Q3’s e-commerce sales growth is only slightly lower at 37% more than last year.
The thing is that other than the obvious disruption caused by delivery trucks near our homes and workplaces, last mile logistics is heavily flawed with problems of cost, transparency, efficiency, and friction with the end customer. So while every retailer is trying to get same day delivery in place, they are losing profits and are unable to inform and satisfy customers with the current tools available to them.
Thus, last mile logistics is ripe for disruption. In the next five years, we expect drone deliveries to be the biggest disruptor in this space. Along with UPS and Alphabet’s “Wing”, Amazon has been leading the way with Prime Air recently obtaining FAA approval for their drone fleet. The company’s stated goal is to get to a sub-30-minute delivery time after an order has been placed online. There have been challenges and more needs to be done to make drone deliveries ready for “prime time”. For example, there will have to be infrastructure changes, and further regulatory approvals will be needed one government at a time for this to become mainstream.
Drones, autonomous vehicles, automated reversible lanes, and artificial intelligence to make delivery more cost efficient are coming our way at breakneck speed. The day when gifts dropped into a delivery pad at our homes (could be our chimney) arriving from an airborne delivery vehicle (perhaps looking like a red sleigh) may be here very soon.