The last mile in logistics: software solutions for urban deliveries
Last mile delivery is a critical yet costly part of logistics. Depending on the type of delivery, it accounts for as much as 35% of total delivery cost. Optimising your last mile delivery is therefore crucial to maximising the efficiency of your logistics and boosting profits. On top of that, a company’s performance on the last mile also has a big impact on customer satisfaction.
What is last mile delivery?
Last mile delivery, or last mile logistics, can be defined as the last step of the supply chain where goods (e.g. parcels) are transported from a warehouse, hub or retail store to the customer.
The goal of last mile delivery is to deliver goods as cost-effectively and quickly as possible to keep transport costs low and customer satisfaction high. Delivery is often difficult, especially in urban areas. The costs incurred are therefore closely linked to urban logistics.
Challenges and solutions for last mile delivery
Last-mile delivery is one of the biggest challenges for logistics partners in modern urban logistics. With the growing demand in e-commerce and consumers' desire for ever faster goods shipments, especially in Germany, traffic is becoming increasingly congested. But what exactly are the main problems of the last mile and how can companies and cities deal with them effectively? Analysts at the World Economic Forum estimate that the growing demand for e-commerce deliveries will lead to 36% more delivery vehicles in city centers by 2030. As a result, they expect last mile delivery to increase by 78%. There are numerous reasons for the increasing demand:
- The number of items being shipped to one location is decreasing, which results in more individual deliveries and more frequent trips. This inefficiency affects the entire process and increases the cost factors for delivery companies. eCommerce is moving toward Next Day Delivery, or even Same Day Delivery, which increases the number of individual deliveries. This rapid response not only requires a larger number of vehicles, but also more employees to ensure that deliveries run smoothly.
- The range of products being shipped today is constantly growing and now also includes temperature sensitive goods such as food or medicines. as well as goods that require two people or a service technician with special skills for delivery, such as the delivery of large household appliances. These products require special transport conditions, such as temperature-controlled vehicles or specialized personnel, which further increases the cost factors.
- The increase in last mile deliveries may be convenient and comfortable for consumers. However, for cities the resulting congestion and traffic pose major challenges. The transportation providers are struggling with more stops, lower vehicle utilisation, inefficient deliveries and, as a result, higher last-mile costs, especially in urban areas. That can be remedied by the use of a professional route planning tool that optimises the sequence of stops and creates a cost-effective route plan.
Impact on cities and logistics companies
The increasing number of deliveries is causing considerable problems not only for cities, but also for logistics partners. In many cases, urban logistics areas are scarce, which means that delivery vehicles cannot find suitable parking or stopping options and often have to risk traffic violations. This leads to more congestion, a worse traffic situation and increased emissions in urban areas.
For logistics partners, this means higher costs due to inefficient journeys and longer delivery times. In addition, vehicle utilisation decreases, which further increases the cost factors. Well-planned and efficiently organized logistics are essential in order to keep pace with rising demand.
Learn more about our software solutions for overcoming the challenges of the last mile
Innovative last mile delivery concepts
In addition to efficient route planning, many companies are developing innovative delivery concepts to fulfill the requirements of the last mile. One example is the creation of micro-hubs, which serve as distribution points in urban areas. These smaller hubs reduce the distances that delivery vehicles have to travel, as they are closer to the customer and therefore speed up logistics overall.
The use of alternative forms of transportation, such as cargo bikes and electric vehicles, is also becoming increasingly important. These are more environmentally friendly and easier to maneuver through narrow streets. They also relieve urban traffic and help to reduce emissions.
In the future, the use of drones and autonomous vehicles will also play a role in increasing the efficiency of goods shipments and overcoming the challenges of urban logistics.
What are the major benefits of route optimisation for last mile delivery?
Improved real-time visibility
Nowadays, customers expect real-time tracking of their shipments. With advanced route optimization software, companies can accurately calculate and regularly update the estimated time of arrival (ETA) and seamlessly share this information with the entire supply chain, including the end customer.
Shorter time windows
With a software solution that optimizes your last mile logistics, you can offer your customers shorter delivery windows. When they no longer have to wait hours for a delivery, overall satisfaction is improved and customer loyalty is intensified. On-time delivery also increases the number of successful first delivery attempts.
Reduced fuel consumption
Route optimization software can help your planer to find the most efficient route, avoid traffic jams and reduce idle times - which reduces overall fuel consumption, transport costs and, last but not least, CO2 emissions.
Increased flexibility
Even the best route planning does not protect against unforeseen events: an accident on the route, a technical defect in the vehicle, or an urgent last-minute order. To avoid the resulting delays and rising costs, flexibility is needed.
The planner can send an updated ETA from the system, add new orders to a route via drag-and-drop, or redistribute the shipments to another vehicle. The route can be optimized again with just a few clicks. An advantage for urban logistics in particular.
Optimised utilisation of vehicles
To prevent empty runs and low loads, it’s important to assign the right type of vehicle to your last mile deliveries. With PTV’s solutions, vehicle profiles are created and tailored to your fleet. These vehicle profiles are considered during the planning stage. In addition, the software optimises the loading capacities and ensures better utilisation of the vehicles.
More successful first delivery attempts
When no one is at home, the driver has to return without delivering and to try again the next day. While this scenario cannot be completely avoided, its occurrence can be significantly reduced. Our routing and route planning solutions can be used to send a precise ETA directly to the customer. To increase reliability, the ETA calculation includes historical traffic data, construction sites, driving and rest times, and vehicle-specific average speeds.
Which industries need route optimisation for last mile delivery?
All companies that deliver to customers can benefit from the efficiency gains that route optimisation brings. Due to their specific challenges, the following industries usually profit the most:
● Large quantity of recipients
● Only a few minutes per shipment
● Delivery restrictions in city centers
● Changing availabilities & customers
● Special freight restrictions
● Time pressure
● Customers need to be at home
● Demand for reliable and precise ETA
Find out more about our customers
“The excellent results achieved over the years guarantee a high level of reliability and are our 'eye on the road'.”
“PTV's technology is a benefit for all key players: drivers, partners and those in the background.”
“The immediate availability of information enables us to respond more accurately and quickly to customer and sales inquiries.”
“We know at all times whether an order is being prepared, planned for dispatch or delivered. This makes us faster, more efficient and more productive.”
FAQs about last mile delivery
What does last mile mean?
The term “last mile” refers to the final stage of a supply chain, i.e. delivery to the end customer, the last recipient.
Why is the last mile delivery so difficult?
The last mile delivery is expensive for transportation service providers. There are many reasons for this, including the increased demand for small deliveries, lower delivery volumes, especially in urban logistics, high fuel consumption due to stop-and-go traffic in city centers, high rates of failed delivery attempts and inefficient delivery routes.
What is last mile optimisation?
Optimising the last mile is about increasing the efficiency of routes, meeting the challenges of urban logistics in particular and thereby reducing transport costs. At the same time, this reduces pollution.
How do I optimise my last mile delivery?
Route planning software solves the high demands of optimizing the last mile. The system's algorithms take all relevant factors into account, determine the most cost-effective routes and also ensure better vehicle utilisation.
How can last-mile delivery be calculated?
With route planning software such as PTV Axylog, you can optimize your routes for the last mile and plan them cost-effectively. The advantage of a software solution over manual planning is that the software uses algorithms to calculate routes that are optimized in terms of time, distance and costs, taking into account all restrictions and parameters such as opening hours, loading capacities, time slots and current traffic conditions. Based on these parameters, the tool assigns the shipments to the tours and vehicles and creates a schedule for the entire fleet. Short-term rescheduling is possible at any time.
Get our free eGuide as a further introduction to the topic and find out more about the functions and benefits of route planning software.
Who pays for last-mile delivery?
The customer is not always king: usually they pay the shipping costs. In e-commerce in particular, some companies offer free shipping to attract customers. This is precisely when it is in the company's interest to reduce transportation costs and ensure efficient delivery even over the last mile.
What is an example of last mile delivery?
A good example of last-mile delivery is DPD Fresh. The company uses PTV software to plan and optimise its delivery routes for fresh products. Read the whole story.
Why is last-mile delivery so expensive?
Last-mile delivery is the most expensive part of the supply chain. Particular challenges arise in city centers with narrow and branched streets, which are additionally burdened by high delivery volumes. The high costs of urban logistics in particular are caused by inefficient delivery routes, many delivery stops with small deliveries, difficult traffic conditions and a high rate of failed delivery attempts.
Is last-mile delivery profitable?
Due to the immense costs involved, the last mile of a delivery is rarely profitable. However, there are ways to reduce costs and make last-mile logistics more efficient, even in urban areas. Furthermore, the main goals of the last mile are not profitability, but successful delivery and customer satisfaction.
What percentage of transportation costs are attributable to the last mile?
It’s been estimated that it can account for between 30% and 50% of the total delivery cost. Reason enough to plan the last mile efficiently to reduce costs.
How can we reduce the cost of delivery?
By using route planning tools, such as PTV Axylog, routes are being optimised in terms of efficiency, time and cost. The PTV solutions also calculate a precise ETA, which can be passed on to customers as part of a perfect delivery service. This also reduces the number of failed delivery attempts.
What is the last mile in logistics?
The “last mile” in logistics refers to the final stage of the delivery process, where goods are delivered from the last handling point (e.g. a warehouse or distribution center) to the end customer. This stage is often the most expensive and time-consuming part of the delivery, as it often involves complex transportation routes, individual deliveries and coping with traffic conditions in urban areas.
What is the last mile in the supply chain?
The last mile in the supply chain describes the final step in the delivery of goods, where the product moves from the last logistics point (e.g. a regional warehouse or distribution center) directly to the end customer. This is a critical point, as customer satisfaction and experience are directly affected here and unforeseen problems can arise.
Where does the last mile begin?
The last mile usually begins at the last distribution center, transshipment point or warehouse from where the goods and orders are shipped to the end customer. This can be a regional warehouse, a local distribution center or even a brick-and-mortar store that serves as the starting point for the last mile delivery.
