The Last-Mile Delivery of Products: History
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Contributor:
Bahram Alidaee
,
Haibo Wang
,
Lutfu S. Sua

Last-mile delivery (LMD) is a challenging and costly supply chain process that involves direct customer interaction. Last-mile logistics is an emerging research area. In particular, the European Commission Directorate General for Energy and Transport provides guidelines for abnormal road transport, such as heavy, bulky, and oversized (HBO) products.

  • logistics
  • last-mile delivery
  • HBO
  • LMD
  • oversized product

1. Introduction

The home delivery of goods, especially heavy, bulky, and oversized (HBO) products, such as recreational and exercise equipment, furniture, and appliances, is at an all-time high. Sales of these products are only considered complete when the customers are completely satisfied with the delivery to the final destination and installation at the place of their choice [1][2]. Last-mile delivery is a crucial aspect of the supply chain, playing a significant role in customer satisfaction and the success of a business. As more consumers shift to online shopping, companies have increasingly been focusing on enhancing the final leg of delivery to meet growing customer expectations. During the pandemic, 64% of Americans bought oversized items online, such as furniture and exercise equipment. Among them, 73% continued purchasing these items online at the same or higher frequency as they did before the COVID-19 pandemic [3].
Last-mile delivery (LMD) is the final step in the delivery process, where a parcel is transported from a hub to its ultimate destination [4]. According to a recent report, the online market for heavy-goods order delivery in 2020 was valued at USD 11.8 billion and was shown to be experiencing a yearly growth rate of 18% [5]. Today, LMD is characterized by “fast delivery, precise order tracking, security, and convenience that requires having people with the right skill sets to manage the rigors of the demanding delivery of big and bulky products” [6]. Furthermore, according to a recent report, last-mile deliveries account for over 41% of the overall supply chain costs [7]. The same report also mentioned that customers are “dissatisfied” with the present state of delivery services, complaining about the cost of delivery, late delivery, and not being able to receive same-day delivery. This report also mentioned that retailers who provide great LMD service will reap significant benefits.
In light of growing e-commerce, the rising population in cities, customer requests for fast, on-time, and clean delivery, and concerns about the ongoing climate crisis, there is significant pressure on logistic providers to improve delivery processes. Innovative delivery solutions utilizing novel technology and business concepts are essential for maintaining customer satisfaction while ensuring sustainable and cost-efficient deliveries [2][8][9]. In a recent report by eMarketer, it was emphasized that “as a share of the total cost of shipping, last-mile delivery costs are substantial—comprising 53% overall [10]. And with the growing ubiquitousness of ‘free shipping’, customers are less willing to foot a delivery fee, forcing retailers and logistics partners to shoulder the cost. As such, it has become the first place they are looking to implement innovative technologies and drive process improvements”.

2. Challenges of HBO Product Deliveries

In light of the figures above, it is clear that there is a fundamental need for an innovative LMD response to customers—in particular, the LMD of heavy, bulky, and oversized (HBO) products. Although many studies exist on LMD problems, the focus of most of these studies is on parcel delivery (small-sized package deliveries) and is mostly centered on densely populated urban areas. The LMD of HBO products is the most challenging and the least studied. Interestingly, HBO products yield the most profitable sales [11][12]. The online share in the US furniture and homeware market is 31.1% and is expected to reach 37.2% by 2027 (Statista market insights). The delivery of HBO items increases the costs of storage and transportation, requiring more space and effort to manage. LMD-related costs make up anywhere between 40% and 50% of an organization’s delivery cost. Handling large goods presents various challenges, including a more complex delivery process [13][14][15]. In an attempt to maintain lower costs while accelerating the rate of deliveries, more retailers are planning to automate their fulfillment locations by using micro-fulfillment centers, pop-up distribution centers, dark stores, etc. (BlueYonder). These items are more susceptible to damage during delivery, necessitating extra caution from delivery personnel. Depending on the level of service to be provided, specific attention and different skills are required to process HBO deliveries [16]. The complexity of delivering large goods is compounded by the issue of responsibility. With the heightened risk of damage, determining who is accountable for the product during delivery stages becomes crucial [14]. In these cases, traditional pallet and material handling tools may not even be suitable for packaging [15].
Sundström and Södergrenluo indicated that even though the delivery of bulky items involves larger markets, the number of studies on how LMD innovations should be used for larger items is limited [14]. Luo et al. indicated that producers of HBO products often outsource the order delivery task to 3PLs, while many 3PLs have limited information technology capacity, and often, the transmission of information relies on paper documents [17]. Additionally, route planning relies on manual experience, lacking real-time traceability and visibility during deliveries.
Another major difficulty with logistics and HBO deliveries includes the cost of return and environmental effects [2][18].
In some cases, e.g., the furniture customization process, the delivery is even integrated with the design, and the production process involves measuring the space, furniture design, part and component production, and delivery and installation of the parts onsite [17]. Moreover, the characteristics of some HBO items further exacerbate the difficulties of the delivery process (e.g., irregularly and long-shaped products and various order sizes).
Lee et al. provided a technological disruption and innovation analysis of LMD [19]. One of their emphases in the near term is the opportunities that may arise for how products are delivered, where they are delivered, and what products are delivered. They further mentioned the kind of challenges that could arise, including the continual emergence of innovative technologies and offering sound business models that are economically, environmentally, and socially efficient and sustainable. As a possible solution, the authors emphasized algorithmic and analytic-based approaches. In a recent interview, Phillip Yeager, the President and Chief Operating Officer of Hub Group, also emphasized that “what we do not really have today is the ability to do appliance delivery and installation. That would be an area of interest to us” [20].
Last-mile delivery has already become a major concern, in parallel with the fast-growing online shopping in today’s business environment. The amount of time US Internet users wait for the delivery of their online purchases was only one day for 38% of the respondents in a recent survey [21]. It is safe to say that the COVID-19 pandemic has also led to an increase in online shopping as a result of lockdowns and health concerns. Nevertheless, this change in consumer behavior has resulted in an increase in shipping volumes, placing further pressure on distribution networks.

This entry is adapted from the peer-reviewed paper 10.3390/logistics7040098

References

  1. Brown, J.R.; Guiffrida, A.L. Carbon emissions comparison of last mile delivery versus customer pickup. Int. J. Logist. Res. Appl. 2014, 17, 503–521.
  2. Mohammad, W.; Diab, Y.N.; Eomri, A.; Triki, C. Innovative solutions in last mile delivery: Concepts, practices, challenges, and future directions. Supply Chain Forum Int. J. 2023, 24, 151–169.
  3. Michell, S. US Consumers Will Continue to Buy Big in 2021 as Oversized E-Commerce Spend Stays Strong. 2021. Available online: https://www.reutersevents.com/supplychain/ecommerceretail/us-consumers-will-continue-buy-big-2021-oversized-e-commerce-spend-stays-strong (accessed on 4 September 2022).
  4. Shen, Z.M.; Sun, Y. Strengthening supply chain resilience during COVID-19: A case study of JD.com. J. Oper. Manag. 2021, 69, 359–383.
  5. Biswas, S. How to Handle Big & Bulky eCommerce Returns. 2023. Available online: https://loginextsolutions.com/blog/handling-big-bulky-product-ecommorce/ (accessed on 17 May 2023).
  6. Transport Topics. CRST Delivers on the Last Mile: Leveraging Its History of Delivering Big, Bulky Items, CRST Grows Its Home Solutions Business. 2022. Available online: https://www.ttnews.com/articles/crst-delivers-last-mile (accessed on 24 November 2022).
  7. Capgemini.com. The Last-Mile Delivery Challenge. 2021. Available online: https://www.capgemini.com/wp-content/uploads/2021/02/Report-Digital-%E2%80%93-Last-Mile-Delivery-Challenge1-1-1.pdf (accessed on 17 September 2022).
  8. Eliyan, A.; Elmori, A.; Kerbache, L. The last-mile delivery challenge: Evaluating the efficiency of smart parcel stations. Supply Chain Forum Int. J. 2021, 22, 360–369.
  9. Muduli, K.; Luthra, S.; Garza-Reyes, J.A.; Huisingh, D. Application of blockchain technology for addressing reverse logistics challenges: Current status and future opportunities. Supply Chain Forum Int. J. 2023, 24, 1–6.
  10. Dolan, S. The Challenges of Last Mile Delivery Logistics and the Tech Solutions Cutting Costs in the Final Mile. 2023. Available online: https://www.insiderintelligence.com/insights/last-mile-delivery-shipping-explained/ (accessed on 5 June 2023).
  11. Yang, F.; Dai, Y.; Ma, Z.-J. A cooperative rich vehicle routing problem in the last-mile logistics industry in rural areas. Transp. Res. 2020, 141, 102024.
  12. Qiu, H.; Wang, S.; Xu, Q.; Yin, Y.; Yu, Y.; Wang, D.; Ignatius, J. Improving First-time Attempts in Last-Mile Deliveries. 2022. Available online: https://ssrn.com/abstract=4195862 (accessed on 21 August 2022).
  13. Macioszek, E. Conditions of oversize cargo transport. Sci. J. Sil. Univ. Technol. Ser. Transp. 2019, 102, 109–117.
  14. Sundström, E.; Södergren, E. Going the Extra Mile: Urban Last-Mile Delivery of Large Goods. Report. 2021. Available online: https://www.diva-portal.org/smash/get/diva2:1588539/FULLTEXT01.pdf (accessed on 9 April 2022).
  15. Rheude, J. Cheapest Way to Ship Heavy Items: Carriers and Classes for Shipping Large Items. 2023. Available online: https://www.shipbob.com/blog/shipping-heavy-items/ (accessed on 5 June 2023).
  16. Beckwith, S. Super-Sizing E-Commerce Deliveries. Inbound Logistics. 28th of February. 2019. Available online: https://www.inboundlogistics.com/cms/article/super-sizing-ecommerce-deliveries/ (accessed on 24 March 2021).
  17. Luo, H.; Tian, S.; Kong, X.T.R. Physical internet-enabled customized furniture delivery in the metropolitan areas: Digitalisation, optimization and case study. Int. J. Prod. Res. 2021, 59, 2193–2217.
  18. Olsson, J.; Hellstrom, D.; Palsson, H. Framework of Last Mile Logistics Research: A Systematic Review of the Literature. Sustainability 2019, 11, 7131.
  19. Lee, H.L.; Chen, Y.; Gillai, B.; Rammohan, S. Technological disruption and innovation in last-mile delivery. Value Chain. Innov. Initiative. 2016, 4, 1–24.
  20. Hirsch, J. Hub Group Reports Record Q4 Revenue. 2022. Available online: https://www.ttnews.com/articles/hub-group-reports-record-q4-revenue (accessed on 24 November 2022).
  21. FarEye. The Last Mile Mandate as Cited in Company Blog. Available online: https://fareye.com/resources/blogs/the-last-mile-mandate-survey (accessed on 10 October 2023).
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