Reveel Resources

Going the Final Mile: Trends in Last-Mile Parcel Delivery

Last-Mile Delivery Trends

Companies that ship high numbers of residential products know that, even after packages travel hundreds of miles, it’s the final trip to the customer’s door that can be the most expensive. In the past, carriers could rely on the U.S. Postal Service for home delivery — but in today’s two-day-shipping environment, USPS’s once-daily stops aren’t nearly enough.

Delivery to residential areas is often inefficient and expensive. The challenges presented by these occasional customers in low-density areas have only been exacerbated as online retailers increasingly promise lightning-fast shipping. And then there are the problems that arise at the doorbell: Customers who aren’t home to sign for packages and thefts from porches and lobbies.

Fortunately, there are a few signs of relief on the horizon, including delivery by bike and drone and the rise of parcel pick-up locations. Here’s what you need to know about the future of last-mile parcel delivery.

What’s Changing the Last Mile of Parcel Delivery

At Reveel, we preach collecting and understanding data as a near-universal first step toward reducing your company’s shipping spend. The same goes for your carrier — when they use data to improve efficiencies, some of those savings ought to be passed on to you.

That’s starting to happen. The more online orders big carriers like UPS and FedEx deliver, the more data they collect about the purchasing habits of consumers in neighborhoods all over the country — and, really, all over the world.

FedEx and UPS are starting to use data from customers to develop increasingly efficient routes, making it all the more likely that the package you’ve promised to your customer in two days will arrive as part of a planned trip, not a significantly more expensive exception.

At the same time, cities are evolving. Many urban centers are adopting pedestrian-focused planning strategies that reduce automobile traffic, making it more difficult for traditional delivery trucks to reach downtown destinations. Some municipalities have also set ambitious sustainability goals, which could restrict and increase the costs of truck delivery.

At the same time, demand for urban freight delivery could grow by as much as 40% by 2050, according to the 2017 MHI Industry Report. Already, trucks accounted for 18% of congestion in 2015, according to Texas A&M University’s Urban Mobility Scorecard.

To fit the ever-growing demand for delivery to changing cities, carriers may begin to adopt new vehicles or new modes of transportation altogether.

Related: Shipping Industry Trends: Exploring the Consumer Side of the Equation

Getting There: Bikes and Drones

Already, third-party providers like Postmates and UberRUSH are making inroads into local delivery markets. These services pay contractors on bikes or in their own cars by the trip to deliver one package at a time. While it may not be as efficient as a managed route, these couriers can provide same-day delivery service within an hour and several miles of an order.

Major parcel carriers are starting to adopt similar strategies. At the same time, legacy services remain — Amazon is in the process of rolling out its own delivery service to move products from warehouses to local customers, often the same day they order.

UPS debuted its electric bike delivery service in Pittsburgh earlier this month, following rollouts in five European countries. The battery-powered bike can hold up to 20 packages and makes next-day-air deliveries, which must arrive by 10:30 a.m., on weekday mornings. For now, it’s replacing a package walker, not a truck — but it’s the first of its kind in the U.S.

Lastly, Amazon has received much press for its Amazon Prime Air service, which plans to deliver packages by drone in 30 minutes or less. The program is still in private trials in the United Kingdom, but stands to disrupt small-parcel delivery in urban centers dramatically in the coming years.

From Porches to Parcel Lockers and Pick-up Sites

One option seems to go against the prevailing delivery wisdom: Instead of taking packages to customers, ask them to come pick them up. In early November, FedEx announced that it now offers package pick-up at 7,500 Walgreens locations in the U.S.

The company’s FedEx OnSite program partners with large chain retailers to create package hold locations. Customers can direct packages to these sites for pick-up instead of asking for home delivery.

Some Albertson’s and Kroger grocery stores will hold packages for up to five days; the company says more than 1,800 FedEx Office locations already act as OnSite providers. About 80 percent of people in the U.S. are now within nine minutes of a package hold site, the company announced in a Nov. 6 release.

Amazon Locker offers similar security for customers and convenience for carriers. The company says it has more than 2,000 secure lockers across the U.S., and like FedEx, customers can choose to have packages delivered to these locations instead of their homes. They then receive a unique numerical code that can open the locker when their package has been delivered.

Such innovations are likely only the first of many to come in last-mile delivery and package drop-off. Added security and convenience make life easier for many residential customers, and they can add efficiency for carriers. Develop an up-to-the-minute picture of your company’s shipping data to make sure your carriers pass those savings on to you.