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Blog May 2022

Last-mile delivery: three areas you need to address

We’ve written before on how to gain efficiencies and reduce operating costs within the last-mile delivery industry. But there are three other areas often overlooked that most companies need to target for making improvements. First, let’s look at the situations as they are now.  

1. Sustainability: the need to reduce CO2 emissions

The continued growth of e-commerce is projected to see the number of delivery trucks in the top 100 global cities increase by 36% by 2030. With that figure comes an estimated 6 million tonnes of CO2 emissions¹.

Cities are responsible for 70% of global greenhouse gases. Compared to passenger cars, delivery trucks and vans add disproportionately high amounts of CO2.

One of the drivers behind the growth of e-commerce is the demand for last-minute delivery, which is projected to rise by 78% in the same time period. Currently, there are three channels for shopping:

(1)   bricks and clicks, meaning buy online and fulfilment through a physical store

(2)   bricks and mortar, meaning traditional in-store shopping

(3)   parcel delivery

Research shows that it’s this last channel, involving last-mile delivery, which generates the most CO2 emissions.

Speed, of course, is the contributing factor to the increase in last-mile deliveries. While deferred delivery of one to three days is the most popular choice for shoppers, same-day and instant delivery are the fastest-growing areas in the last-mile arena, increasing annually by 36% and 17% respectively.

Smart parcel lockers are one solution for achieving sustainability. Of course, delivering to lockers still involves last-mile efforts, but it also significantly reduces failed deliveries. Around 5% of all last-mile deliveries fail and result in more CO2 emissions for re-delivery. Lockers can at least eliminate the need for those second delivery attempts.

Trucks will continue to constitute the majority of last-mile vehicles. Bikes, drones, droids and other green types of last-mile transport can make a difference in sustainability, but they come with their own challenges. Bikes can only cover a short distance and a limited number of parcels while drones involve regulations and air-traffic issues. Electric vehicles and H2 electric vehicles are another solution, which can reduce CO2 emissions by 16% and 24%, respectively. The drawback here is the sizeable investment required.

2. Customer service: experience is everything

By 2024, it’s estimated that around 22% of all retail sales will be completed online. Meanwhile studies show that 86% of consumers will pay more for products and services if they have a good customer experience. A further 55% will discard shopping with a retailer altogether if they experience a late delivery two or more times.

Last-mile delivery is the most complex stage in logistics. It determines the outcome of the customer experience. Once an order has been processed, the last mile will leave the customer either satisfied, indifferent, or dissatisfied.

All of this increases the pressure on last-mile delivery. To meet tight delivery windows and ensure customer satisfaction, companies need to be flexible, accurate and consistent. Of course, that’s easier said than done.

3. Cybersecurity:

Up until recently, the logistics industry as a whole was slow to adopt digitalisation compared to most other sectors. Still, the industry is struggling to create a digital culture while lack of training presents another challenge, with 38% reporting unresolved questions around data security and data privacy regarding the use of external data.

When last-mile delivery is part of a supply chain, the risk of cyberattacks increases. Malicious actors exploit the weakest link to gain access to networks, making those companies vulnerable to ransomware and malware. As last-mile delivery adopts digitalisation, they’re gaining significant benefits, but also increasing attack surfaces.

Last-mile delivery is especially sensitive to the disruption caused by cyberattacks. Recognising attacks right away and becoming resilient should be the goal. With ransomware attacks increasing significantly in the logistics sector over the last few years, cyber security must become a priority.  

Solving the problems

Digitalisation can lower CO2 emissions and improve the customer experience. The right platform can also shore up cybersecurity.

For example, consider the complexities with logistics in last-mile deliveries, which makes meeting customer demand no small feat. Inter-depot transport, distribution from various depots and the routes for each vehicle are just a few of the issues that have to be taken into account – and all the time, volumes are changing.

If you can optimise your logistics, you’re on to something. Through optimisation, you exploit efficiencies. This expands your margins and lowers your operating costs, but for our purposes here, let’s just consider the effect on the customer experience and CO2 emissions.

Digitalisation enables optimisation of every aspect of operations by implementing advanced algorithms, from planning to routes. This is how you meet tight delivery windows. As ad hoc orders come in, the plan and routes are re-optimised. It’s a continual process done in real time, cutting out wasted journeys and time – and with it, CO2 emissions. Traffic and peak rush-hours are avoided. Vehicle idling, driving and mileage is reduced.

To encourage digitalisation in the logistics industry, a new EU regulation (2020/1056) will come into force 21 August 2024. Among the purposes of the new regulation – which includes reducing administrative costs, is to enhance the efficiency and sustainability of transport. This will certainly impact last-mile delivery.

Really, digitalisation is about optimising the whole of your operations. You can collect data from your delivery vehicles, again, in real time, and send information back. Every efficiency you gain is an efficiency your customer experiences. You become more agile, able to meet customer expectations with relative ease.

And Cybersecurity?

You really have two options here: edge computing or working on the cloud. Edge computing keeps your data on your own servers. Those that opt for this route do so under the assumption that housing their data is protecting it. And that can certainly work, but dedicated staff and resources are needed to ensure it happens. They’ll also need to stay on top of constantly changing regulations to ensure compliance. Every day, more than 1,000 regulatory bodies worldwide release an average of 217 updates per day⁷.

Working on the cloud-based system removes the necessity for this, as your provider handles it for you. Your data is automatically backed up. The perfect example of this is Microsoft Azure, which is built with multi-layered security. An enterprise-grade platform powered by Microsoft Azure will have behind it 3,500 global cybersecurity experts protecting your business assets and data. 

Results of digitalisation

AMCS Transport Optimisation Suite, which leverages the security and power of Microsoft Azure, is designed specifically for logistics and last-mile delivery. The results our own customers have experienced include up to a 25% reduction in the number of vehicles and driver shifts needed. They’ve lowered the number of miles, driving time and CO2 emissions by up to 30%.

It’s also worth noting that the time spent optimising routes fell by up to 90%. This is the perfect example of an efficiency that has led to significantly improved customer service and visit accuracy.

Your data is also safe. AMCS’s SaaS technologies put security at the forefront with Microsoft Azure. You should also know that AMCS is SOC 1 and SOC 2 compliant.

To learn more about the security and other benefits of AMCS Transportation Optimisation Suite, we urge you to get in touch.

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