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  April 26th, 2018 | Written by

Last-Mile Delivery Models to Revolutionize the Space of Urban Logistics by 2025

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  • Global logistics spending is expected to reach $10.6 trillion in 2020.
  • Transportation will account for 70 percent of logistics spending in 2020.
  • Two-fifths of logistics costs are associated with the last mile.

Global logistics spending is expected to reach $10.6 trillion in 2020, with transportation accounting for the majority at 70 percent. Emerging technologies such as cloud computing, big data, and crowdsourcing, coupled with an influx of tech-savvy start-ups, are unbundling the value chain and transforming delivery models.

Those are among the conclusions in Frost & Sullivan’s recent analysis, “Urban Logistics Opportunities—Last-Mile Innovation.”

About two-fifths of the overall logistics costs are associated with the last mile, forcing providers to come up with newer innovative solutions to deliver packages within cities. Frost & Sullivan predicts the market will rapidly move toward mobile freight brokerage-type, on-demand deliveries and autonomous technology, such as the use of drones and delivery bots which are set to solve the last mile delivery challenge by being more cost effective to end users with lesser regulatory mandates.

The study highlights the trends, drivers, new business models, technology scenarios, opportunities and innovations within ecommerce, omnichannel, retail, courier, and post that are set to disrupt the last-mile delivery market. Congestion and emission reductions, policies and regulations, as well as regional perspectives and case studies of key players such as UPS, Amazon, DHL, TNT, and Ocado Logistics are also provided. In addition, the report reveals cleaner forms of deliveries and provides a regional perspective on countries such as the United Kingdom and Germany that are considering ultra-low economic zones to facilitate the objective of sustainable and green transportation by 2020.

“Spiraling last-mile delivery costs and changing customer demands are causing retailers to rethink their strategies and look toward new business models such as click-and-collect, locker boxes, on-demand, and autonomous solutions,” said Vijay Narayanan Natarajan, Visionary Innovation Senior Research Analyst at Frost & Sullivan. “Moreover, the influx of start-ups in logistics has enabled innovative solutions that not only provide value-creation customized solutions for the consumer, but also tackle the inefficiencies currently witnessed.”

Further trends and developments discussed in the report include: digital freight brokering platforms will reducing empty miles by eight percent to 10 percent; there will be a shift toward low-emission and zero-emission solutions, such as low-carbon vehicles or bicycles; fleet operators will expand their strategies by developing urban distribution centers for effective logistics management; and retailers will focus on compact stores to reduce capital expenditure and bring products closer to a growing urban customer base.

“Rapid proliferation of connected technologies and solutions, and further advancements in autonomous applications,” noted Archana Devi Vidyasekar, visionary innovation global research manager, “could well usher in new innovations in logistics with delivery bots and drone solutions all set to be the future of urban deliveries.”