HYDERABAD, India — ReAnIn Analysis – Last mile delivery refers to the last leg of supply chain management when a product is moved from a warehouse to the doorstep of the customer. This is the costliest step in overall logistics. According to an estimate, last mile delivery accounts for about 40% of the overall logistics and its share goes up to more than 50% if we consider only shipping costs. Therefore, companies are focusing on optimizing last mile delivery to maintain or maximize their profits.
According to ReAnIn, the global last mile delivery market was valued at USD 134.6 billion in the year 2021 and is projected to reach USD 269.0 billion by the year 2028, registering a CAGR of 10.4% during the forecast period. According to the World Economic Forum (WEF), demand for last-mile delivery is expected to grow by 78% globally by 2030. Five main drivers of this exponential growth are – rapid urbanization, growing customer base (online shopping is gaining pace in rural areas), new product categories such as grocery through online channels, increasing demand for same-day or instant delivery, and adoption of autonomous delivery vehicles such as drones or robots or electric vehicles (EVs). However, the lack of infrastructure for autonomous vehicles and the high cost associated with last mile delivery is expected to be the primary barrier to the entry of new players into this market.
5 Key Trends that Will Shape Last Mile Delivery in 2022 and Beyond
- Quick Commerce: Consumers are increasingly demanding the fastest delivery and there is a good chance that a delay in delivery may cause the cancellation of the order. According to the WEF report, same-day delivery is expected to witness a growth of 20-40% in the next few years.
- Greater Transparency in Real-Time: Technology is expected to play a pivotal role in the success of last-mile delivery companies. Technologies such as the Internet of Things (IoT), location intelligence (LI), etc. can help in keeping customers informed while route optimization will bring down the delivery cost.
- Insourcing Deliveries: Outsourcing has been successful in multiple industries but it can be pretty expensive in the case of last mile delivery. Moreover, the service provider has limited control over third-party regarding the time of delivery or customer satisfaction. Therefore, an increasing number of companies are trying to develop their in-house delivery teams.
- Robotisation of Delivery Vehicles: Autonomous vehicles and trucks, drones, and robots are gaining traction owing to various advantages such as faster delivery, lower cost, and minimum error. Furthermore, electric vehicles can help in reducing carbon footprints. However, companies will have to make these decisions based on location density, consumer awareness, etc. For example, drones can be very successful in cities with low population density but may have limited success in dense cities.
- Contactless Delivery: The COVID-19 has forced more people to purchase through online channels but it has also brought safety concerns. Contactless delivery has become the most viable solution during the pandemic. Moreover, electronic proof of delivery and digital payments are more convenient to customers as well.
Access the report description on: Global Last Mile Delivery Market
Leading players in the last mile delivery market include FedEx Corporation, United States Postal Service (USPS), DHL, Amazon, CEVA Logistics, United Parcel Service (UPS), Cargo Carriers, CJ Logistics Corporation, Interlogix Pty. Ltd., Transtech Logistics, and Swift Transport. Moreover, prominent players in the autonomous last mile delivery are Starship Technologies, JD.com, Zipline, Kiwi Campus, Wing, Flirtey, and Aerodyne Group.
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