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Last-Mile Delivery Models to Revolutionize Urban Logistics by 2025

March 30, 2018
Spiraling last-mile delivery costs and changing customer demands are causing retailers to look at click-and-collect, locker boxes, on-demand, and autonomous solutions.

Global logistics spending is expected to reach $10.6 trillion in 2020, with transportation accounting for the majority at 70%, according to a new analysis “Urban Logistics Opportunities—Last-Mile Innovation” by Frost & Sullivan."

About two-fifths of the overall logistics costs are associated with the last mile that are forcing providers to come up with newer innovative solutions to deliver packages within cities.

Frost & Sullivan predicts the market will rapidly move toward mobile freight brokerage-type, on-demand deliveries and autonomous technology, such as the use of drones and delivery bots which are set to solve the last mile delivery challenge by being more cost-effective to end users with lesser regulatory mandates.

 “Spiraling last-mile delivery costs and changing customer demands are causing retailers to rethink their strategies and look toward new business models such as click-and-collect, locker boxes, on-demand, and autonomous solutions,” said Vijay Narayanan Natarajan, Visionary Innovation Senior Research Analyst at Frost & Sullivan.

 “Moreover, the influx of start-ups in logistics has enabled innovative solutions that not only provide value-creation customized solutions for the consumer but also tackle the inefficiencies currently witnessed,” Natarajan added.

Further trends and developments driving growth include:

--Digital freight brokering platforms reducing empty miles by 8% to 10%

--Shift toward low-emission and zero-emission solutions, such as use of low-carbon vehicles or bicycles

--Fleet operators expanding their strategies by developing urban distribution centers for effective logistics management

--Retailers focusing on compact stores to reduce capital expenditure and bring products closer to a growing urban customer base

“Rapid proliferation of connected technologies and solutions, and further advancements in autonomous applications could well usher in new innovations in logistics with delivery bots and drone solutions all set to be the future of urban deliveries,” noted Archana Devi Vidyasekar, Visionary Innovation Global Research Manager.

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