You have done everything right. Or so you think. You have planned the supply of a good diet. You have made the effort to banish bad, and expensive, habits. In general, your organs work correctly in a chain. But the decisive moment arrives to deliver oxygen (the product) to your cells (the clients) and it weakens due to a deficient capillary system.
Something similar can happen with the last mile. It is a link, but not just any link because it completes the entire logistics chain, puts the quality of the entire service to the test and a serious error nullifies previous successes, at least for the customer because that delivery is their only direct contact with the process. .
Last-mile deliveries account for up to 50% of the logistics cost of e-commerce deliveries
José María Gómez, CEO and co-founder of Scoobic
Hence, it is considered a key specialty. Due to its mission itself, placing the order in the hands of the consumer, but also due to its condition as a sensor to diagnose the health of the logistics organization. If a new factor hatches, for example the e-commerce, or a bottleneck narrows, that final face-to-face accuses him. The International Logistics Exhibition (SIL 2022, organized by the Consorci de la Zona Franca de Barcelona from May 31 to June 2 in the city) will dedicate several work sessions to it.
It’s also about money
We are not only talking about quality or environmental impact, but about economic weight. “Last mile deliveries account for up to 50% of the logistics cost in deliveries of e-commerce, with products that may come from other countries by plane or ship. This first and long shipping chain costs half of the delivery and taking it to a home, the other 50%, “says José María Gómez, CEO and co-founder of Scoobic, which designs small electric and hydrogen vehicles for agile and non-polluting delivery. . In addition, in rental and pay-per-use mode, not only for purchase in property.
The companies in the sector announce drastic changes in form and substance. A decade from now, more or less, we will have an unprecedented last mile with a direct effect on the reconfiguration of urban planning.
The indicators are clear: concentration of the population, the economy and consumption in the cities; sustained boom in e-commerce fueled by the pandemic; and also the challenges of delivering with greater energy efficiency, linking with global chains and, as if that were not enough, responding to the growing expectations of both end customers, who “want to choose how, when and where they deliver or receive packages”, as well as of businesses in the accelerated process of digitization, “that buy, store and sell anywhere in the world”, says Nicolás Mouze, director of Marketing and Sales of DHL Express.
Customers want to choose how, when and where they deliver or receive packages
Nicolás Mouze, Director of Marketing and Sales of DHL Express
For Ignasi Sayol —CEO of Inprous and president of PIMEC Logistics and the Logistics Cluster of Catalonia—, “we are facing a paradigm shift where companies look for plans B, C and even D to anticipate”. This new last mile seeks to square the circle: to immediately deliver more and increasingly personalized products, at a competitive cost and with a smaller environmental footprint, explains the expert.
The reindustrialization effect
And it must do so while another trend accelerates: the regionalization of supply chains to produce much closer to the consumer. “We have realized that not everything can be manufactured in China,” says Sayol, “and it is key to develop chains that withstand successive crises.” “We are going from just in time to the just in casewhich implies having stocks and nearby providers. Although its costs are higher, the cost of not selling and losing customers is greater”.
For José María Gómez, locating much more central logistics and distribution centers “is a change without going back” that is completed with technological support such as geolocation, management of stocksfleets and routes, a new generation of zero-emission vehicles that are small, operational and much less inconvenient than vans and trucks, or fully automate the preparation of individual orders in the warehouse.
“Inventory closest to the customer”, calls it Mickael Devena, VP Southern Europe & LATAM of Project 44, a multinational logistics platform that integrates all possible means of transport into a single chain.
A big trend is inventory closer to the customer due to both positive impacts on sustainability and reduced transit times
Mickael Devena, VP Southern Europe & LATAM of Project 44
The trend is distributed management, where retailers can resort to several distribution points for the same product, from micro-stores in the city or its metropolitan area to modalities such as store pick-up, shared route management to reduce “miles empty” and thus improve retail competitiveness against giants such as Amazon. These small businesses are also beginning to share data on their inventories in real time so that the management system can define the closest collection or delivery points.
Alliance of stores and platforms
In this sense, Sayol believes that part of the solution is already given: “The convergence of retail and the on-line”. In other words, urban proximity commerce can serve as a convenience network to pick up and deliver products from the e-commerce. “No matter how much automation we have, the model is not scalable”; The increase in electronic commerce needs this exchange network in stores so as not to collapse the traffic and bring the sustainable objectives closer.
Sayol insists, to this framework of management and organization, a mental framework must be added. Collaboration does not only concern companies, it is not only technical in data or routes, but human and of all the sectors involved, including citizen associations and administrations. To what end? Agree on laws and urban ordinances allied to this flexibility, which do not become the opposite of what they intend.
Steps towards the new model
While this public-private collaboration materializes, or not, the sector anticipates movements. Devena, for example, sees the takeoff of distribution by drones or electric bicycles, robotization in warehouse management or common distribution services for several companies, in addition to transparency in the environmental impact of each service or new uses such as lockers intelligent points (PUDO points) of delivery and collection.
We are facing a paradigm shift where companies look for plans B, C and even D to anticipate
Ignasi Sayol, CEO of Inprous, president of PIMEC Logistics and the Logistics Cluster of Catalonia
For Mouze, the model will be flexible in the service on demand, where the client decides the date, time and place of the exchange. We will have a more automatic, more robotic, more digital last mile, more data analytics, with more artificial intelligence to deduce and optimize patterns, more coordinated between micro-logistics centers scattered throughout the urban fabric, and with many more own service points or of third parties.
But whether it is done on time, in the form and at the height of the need will also depend on another human factor, in addition to social consensus: the advanced qualification of the workers to hurry up the promises of the new logistics. Cultural change prior to technological change.
That logistics city could be Barcelona
José Luis Haro, technician of Local and Emerging Economies of the Metropolitan Area of Barcelona (AMB), the city that has been hosting the International Logistics Exhibition (SIL) for 22 editions, believes that never before has the fate of the city been so attached to the last mile.
On the one hand, the great trends overlap: urban growth, globalization, new ways of producing such as Lean (minimizes losses) or zero stock, decarbonization and habits such as the boom in e-commerce. And on the other, its effects accumulate: proliferation of routes, vehicles and their threat of collapse, pollution and problems such as supply bottlenecks and now energy prices that undermine profitability. Thus, the last mile “has the challenge of reducing these risks and increasing urban resilience”. Moreover, “the metropolitan city will base the competitiveness of its economic fabric on services and logistics infrastructures with high added value, which connect its citizens and companies with global chains and at the same time rebalance themselves with relocated activities”.
You can do it on several fronts. For example, management to optimize the occupation of vehicles and routes, segment schedules and that trucks only deliver at night, delivery from multiple micro hub with smaller zero-emission vehicles, adapted to narrow streets and coordinated with municipal infrastructures such as car parks to use their free spaces. Haro is committed to hybridization and mutual benefit between traditional commerce and online commerce, that stores are also delivery and collection points.
The segmentation will reach the fleets: electric propulsion in small and medium-sized vehicles and hydrogen for large ones (AMB already does this with its buses that refuel in the first hydrogen for public use in Spain). And digitization will improve coordination through the physical internet that interconnects networks and logistics vehicles.
And again the human factor: the need to make consumers aware of the impact of the different models of consumption and service. Why rush an immediate delivery if a client is not in a hurry and prioritizes energy efficiency?
