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What is the last mile?

In the next of a series of articles from SHD Logistics, we ask and answer: what is the last mile?

‘Last mile logistics’ is the term used to describe the final stage in a product’s journey from the warehouse or distribution centre to the end-user. It is perhaps being somewhat pedantic to make the point, but clearly in the overwhelming majority of cases the distance travelled by most orders on their ‘last mile’ will, in fact, be considerably further than a single mile, so the terms ‘last touch’ or ‘last leg’ logistics are probably more appropriate for the process.

But, whatever name is given for it, last mile/leg/touch logistics is now among today’s most prominent supply chain challenges.

As with so many aspects of modern logistics, the growth of online retailing has been the catalyst for the new emphasis on the last-mile. Changes in consumer shopping behavior - accelerated by the pandemic – are predicted to drive UK e-commerce sales from the pre-Covid figure of 19.2 per cent to 33.8 per cent of total retail sales by 2024. And, four years later, more than half (53 per cent) of all retail spending is expected to be done via the internet.

With close to a quarter of the entire UK population said to have permanently changed the way they shop thanks to Covid, and approximately 40 percent of a typical product’s total logistics costs estimated to be associated with the final phase of the order fulfillment process, it is not surprising that ways of squeezing inefficiency and waste out of the last-leg are being evaluated and analysed like never before. Quite simply online retail success relies on a final-mile delivery model that works at minimal cost.

Delivery costs and changing customer demands are causing retailers and their third party logistics partners to rethink their last-mile strategies to keep pace in the digital age. Some are looking toward business models such as click-and-collect and locker boxes while there is growing belief that autonomous technology solutions - such as drones and ‘delivery bots’ – have a role to play, particularly within built-up, urban environments.

However, in reality, drone and autonomous vehicle technology has not accelerated at the pace expected five years or so ago and predictions that ‘robots’ would be responsible for carrying out the overwhelming majority of last mile deliveries by the mid 2020’s now look little more than the fantasy of someone who has spent far too much time reading science fiction comics.

“Previous predictions regarding developments in last-mile delivery appear to have been overly tech-centric and have downplayed a lot of fundamental structural and regulatory issues,” says Thomas Zunder, from the University of Newcastle’s Future Mobility Group. “For example,” he says, “there is not enough air space over London to deliver every package by airborne drone. It is unclear and - I would suggest – unlikely, that this can be resolved in the short term, whether through technical solutions or otherwise.”

With the Office for National Statistics forecasting that the number of people living in the UK will rise from 64.6 million in mid-2014 to 74.3 million by 2039 - an increase of almost 10 million in 25 years – the pressure on last-mile deliveries will only increase.

Many industry watchers contend that if UK logistics companies are to be able to meet the last-mile demands of a growing population in the digital shopping age, more warehouses will have to be built close to the nation’s most built-up areas. This will mean persuading the Government to allocate land for new warehouse schemes.

Kevin Moffid, from property consultant Savills, comments: “Under pressure to build more homes, local authorities are struggling to balance the needs of a land hungry logistics sector which will become even more important should the private and public sector’s home-building plans be realised.”

“The home-delivery model is already fraught with challenges – not the least of which are traffic congestion in urban areas and other practical issues such as a lack of parking space.

“And, with a lack of suitable warehousing space already an issue for the logistics industry, it is hard to see how home deliveries and, indeed, the more frequent daily drop-offs required to replenish the growing number of town- and city-centre grocery retail stores, can be sustained.

“The time is fast approaching for some kind of Government intervention to set aside part of the public land given up for new housing schemes for use as storage space – to allow warehouses and distribution centres to be built where they will be able to serve our rapidly expanding communities.”

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