Due to urbanization trends, and megacities, the main part of the last mile happens in urban areas. The cost of providing last-mile services accounts for around 40% of overall supply chain costs. This is more than double compared to any other operations, such as parceling or warehousing in a supply chain. It’s a challenge not just in terms of costs, but also in terms of environmental impact. Transportation in the last mile is accountable for around 25% of GHG emissions in urban areas, and it is expected a 32% jump in carbon emissions from urban delivery by 2030. Last-mile delivery is the most inefficient part of the supply chain, because of small order sizes, lack of consolidation, network conditions, short lead times, and many constantly changing and geographically dispersed locations.

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Sustainable Last mile delivery:
challenges & opportunities
Hamid Saeedi
Logistics & Transportation Consultant
Introduction
The efficacy of last-mile delivery plays a crucial role in determining the success of various e-
commerce businesses. As e-commerce continues to gain traction, the significance of last-mile
delivery has been further accentuated, particularly in light of the ongoing COVID-19
pandemic. It is worth noting that the demand for last-mile delivery is projected to increase
by 78% worldwide by 2030, potentially leading to a 30% increase in emissions.
The main challenges associated with last-mile delivery
Due to urbanization trends, and megacities, the main part of the last mile happens in urban
areas. The cost of providing last-mile services accounts for around 40% of overall supply
chain costs. This is more than double compared to any other operations, such as parceling or
warehousing in a supply chain. It’s a challenge not just in terms of costs, but also in terms of
environmental impact. Transportation in the last mile is accountable for around 25% of GHG
emissions in urban areas, and it is expected a 32% jump in carbon emissions from urban
delivery by 2030.
Last-mile delivery is the most inefficient part of the supply chain, because of small order
sizes, lack of consolidation, network conditions, short lead times, and many constantly
changing and geographically dispersed locations.
Last-mile delivery: conflicting expectations of stakeholders
E-retailers and LSPs are facing a range of challenges, including the need to meet
individualized customer needs and manage additional costs for repeated delivery or non-
deliverables. Additionally, coordinating last-mile delivery becomes complex when balancing
the priorities of different stakeholders, such as consumers, residents, government, and other
stakeholders, who all have different concerns, such as on-time delivery, not at-home
delivery, high delivery charges, long delivery time, clean air, less transport, emissions, and
traffic noise. Therefore, e-retailers and LSPs need to find ways to solve these problems to
ensure efficient and successful last-mile delivery.
Last-mile home deliveries
In addition to routing issues, several novel challenges exist in developing a successful home
delivery strategy. The most challenging ones are time slot schedule design and determining
the charges associated with the deliveries on those time slots.
To achieve efficient time slot scheduling for home delivery, companies can use technology
solutions such as route optimization software, scheduling and dispatch software, mobile
apps, smart lock technology, geofencing, and machine learning & AI. These solutions can help
companies plan efficient routes, schedule deliveries, increase customer satisfaction, and
optimize delivery routes based on customer demand. The most suitable solution may vary
depending on the company's specific needs and can involve a combination of the above.

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Making last-mile delivery more sustainable
In last-mile delivery, companies are faced with the challenge of balancing the cost and
customer convenience of delivering goods with the need for sustainable practices. To
mitigate this trade-off, companies can consider implementing a sustainable last-mile
delivery strategy that incorporates multiple solutions. For example, they can use green
delivery options like electric vehicles, bicycles, or cargo bikes which are not only eco-friendly
but also cost-effective in the long run. They can also reduce packaging materials and
implement a carbon offset program to offset any emissions caused by delivery.
Additionally, companies can also consider consolidating deliveries, where multiple
deliveries are made to a single area at the same time. Smart routing can also be used to
optimize delivery routes, reducing the distance and time required to make deliveries, which
in turn reduces emissions and fuel consumption. As another solution, dynamic pricing can
be used to incentivize customers to choose more sustainable delivery options by offering
lower prices for eco-friendly deliveries. By implementing a combination of these strategies,
companies can achieve a balance between cost-efficiency, customer convenience, and
sustainability in last-mile delivery.
Innovative solutions for last-mile delivery
The growing number of packages to be sent to customers' homes increases the number of
delivery vans entering city centers, which worsens traffic, pollution, and health effects.
Therefore, it should come as no surprise that numerous novel delivery solutions for the last
mile have been developed recently, which generally can be divided into five different
categories: vehicle change (e.g., EV, drones, or autonomous vehicles), secure delivery (e.g.,
parcel box, or trunk/ in-car delivery), consolidation/ customer movement (e.g., pickup/
locker points, and click & collect), last-leg change (e.g., AGV lockers, and micro-hubs) and
delivery environment (e.g., crowd logistics, dynamic re-routing, or real-time traffic lights).
In general, vehicle change solutions, secure delivery solutions, and consolidation/ customer
movement solutions are more viable in the near term as they have been tested and
implemented or can be easily integrated with existing infrastructure. While Last-leg changes
solutions and solutions that involve delivery environment changes may require significant
infrastructure changes and coordination.
Crowd logistics, as one of the solutions changing the delivery environment, is getting more
popular in last-mile delivery. It is carried out using cooperative platforms and mobile
applications that link individuals and businesses to peers to perform basic logistics services
on an ad-hoc basis and make the best use of distributed, idle logistics resources and
capabilities (e.g., Amazon Prime Now and Uber Rush, or startups like Storemates, and
Pickthisup). The growth of crowd logistics is facing different challenges and barriers, for
example, Perceived risks of good security, service reliability, and trust in the crowd;
compliance issues; expertise/knowledge, and logistics capabilities.
Digital proof of delivery
The volume of shipments for delivery is increasing every year due to the fast adoption of e-
commerce worldwide, and the result is that there’s more potential for errors and confusion
in deliveries as well. According to the statistics, more than 11% of annual shipments in the
United States are misdelivered, damaged, or lost.

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Proof of delivery can be useful in addressing different challenges, e.g., refunding or replacing
an item, and consumers' demand for a high-quality delivery experience. The key is to ensure
that POD has been transformed into a digital one that is completely connected with the rest
of the last-mile workflows. Digital POD allows businesses to empower customers to capture
an electronic signature, photograph, or barcode scan of the recipient, as well as GPS location
data upon delivery using mobile applications, or scanners. Moreover, digital POD can use
technologies such as sensors, GPS tracking, and RFID to automatically capture and record
delivery information, such as the time and location of delivery, without the need for human
intervention. Therefore, it can increase visibility/ traceability, and streamline many back-
office procedures which could result in huge cost savings.
References
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• The Future of the Last-Mile Ecosystem, 2020,
http://www3.weforum.org/docs/WEF_Future_of_the_last_mile_ecosystem.pdf
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