Release time: Thursday, September 13, 2018
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The innovation in last-mile logistics is a key component of the supply chain that presents unique challenges and exciting opportunities forimprovement.

The three components of last-mile logistics are transportation, delivery and reverse logistics.Facing high costs, large delivery volumes,shifting consumer expectations and increased competition, numerous parties are investing heavily in last-mile innovation.

Big retailers and logistics providers have made recent acquisitions and are developing new technologies and models in-house, while startups are also entering the space. Last-mile logistics costs accounted for an estimated 53% of overall delivery costs in 2016.

Adding further complexity and congestion to the matter is the steady increase in delivery volumes, up by approximately 38% in the period 2012–2017.Retailers are also experimenting with solutions to ease and limit returns. Free returns are increasingly expected by consumers, and the offering is important to drive purchasing.

However, incentives and promotions may be used to reduce the number of free returns, especially when combined with artificial intelligence (AI) solutions that can predict likely returns.

According to 2016 data by Honeywell and published by BI Intelligence, last mile accounted for 53% of delivery costs, surpassing line haul, sorting and collection. And, according to data compiled by Kleiner Perkins for its Internet Trends report, the big three US delivery companies—USPS, UPS and FedEx—delivered nearly 11 billion packages in 2017.Compared with fewer than 8 billion packages in 2012, suggesting a growth rate of approximately 38% over the five-year period.

Costs and volumes are perhaps the biggest issues, but numerous challenges underpin last-mile logistics including theft, repeat delivery attempts, inclement weather, rough terrain, distance between properties,consumer sentiment, regulatory restrictions, trained labor and irregular demand.While these challenges complicate last-mile logistics, they also present exciting opportunities for innovation at every step.

Optimized logistics are not merely a necessary component of operations, but a key point of differentiation on which their businesses may thrive or decline. These acquisitions each offer both logistics infrastructure and optimization software. This combination is crucial for ensuring packages are delivered quickly, conveniently and cost-effectively.

Retailers with logistics efficiency can meet high customer expectations and remain competitive on price. In addition to acquisitions, these and other major retailers are investing heavily in internal research and development (R&D) to enhance last-mile logistics capabilities.
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