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The last mile

Logistics right into the living room

While the logistics industry is becoming increasingly efficient and more environmentally-friendly when it comes to deliveries in general, it is still the actual delivery that is often the issue. But why is it that a pizza can arrive while it’s still hot and a parcel can only be delivered at the third attempt? New solutions for the very last mile

4,000,000,000 packages – a new record. This is the number of courier, express and parcel shipments that were sent in Germany in 2020 according to the German Parcel and Express Logistics Association (BIEK). This compares with just under 1.7 billion packages 20 years ago. The main driver behind this increase is the private customer sector. Thanks to the ongoing boom in online trade, there has been a huge increase in the volume of goods ordered in many markets and the corona pandemic only served to boost this trend. Furthermore, an increasing number of retailers are now delivering fast moving consumer goods to their customers. And the issue has also been made even more immediate by the recent uptick in on-demand deliveries for food and groceries. According to Lukas Wrede from MHP Management- und IT-Beratung, start-ups such as Gorillas, Flink and Wolt raised more than ten million euros in investor capital in 2021 alone. ‘Sales of fast moving consumer goods will almost triple from 25 billion US dollars in 2020 to 72 billion dollars in 2025. This rapid growth driven by the corona pandemic and changing user behaviour presents new challenges for both companies and cities’, says Wrede.

What is more, customer demands are increasing in lockstep with the rising volume of consignments and upswing in on-demand deliveries – which in turn increases the level of complexity for logistics service providers. More and more customers are expecting same day delivery, delivery at a specified time and the option to change the delivery location at the last minute. There is also huge pressure in terms of the competition: not only are e-commerce giants such as Amazon and Ebay establishing their own fleets, but new players with smart approaches and means of transportation are also entering the market. In many cities, the logistics sector and the transport infrastructure are increasingly reaching their limits. While logistics service providers have spent many years upgrading their services to make them more efficient and environmentally-friendly – and not just for the last mile – it is the last few metres that often remain the problem: duplicate delivery routes, returned consignments and storage for collection mean that although it is entirely possible to make the process greener, the reality often falls short.

The problem? Logistics cost nothing

Prof. Kai-Oliver Schocke calls for a change in philosophy (photo: U. Wolf)
Prof. Kai-Oliver Schocke calls for a change in philosophy (photo: U. Wolf)

But why is it that a pizza can arrive while it’s still hot and a parcel can only be delivered at the third attempt? The answer is simple, says Prof. Kai-Oliver Schocke, Professor of Production Management and Logistics at Frankfurt University of Applied Sciences and Director of the Research Lab for Urban Transport: ‘You’re generally at home to receive a pizza, but not to receive a consignment. The problem? Logistics do not cost the customer anything. The major e-commerce retailers do not charge shipping costs and yet in some consumer sectors, almost half of all the goods are returned. Logistics service providers are trying valiantly to increase their efficiency but this is a vicious circle that is incredibly difficult for them to break’, says Schocke.

To improve delivery and avoid any congestion over the last mile, Schocke is researching using trams for last mile parcel delivery as part of a joint project. Consignments are initially loaded into a standardised container in a Cityhub on the outskirts of the city, then onto converted trams, overground or underground trains and delivered to various stops in the city centre. From there, electric cargo bikes distribute the parcels to the recipient. This three-step supply chain saves costs and up to 60 per cent of emissions.

A change in philosophy is needed

‘Last mile delivery via bike is sensible and is becoming more and more established. But I consider micro depots to be essential’, says Schocke. ‘Fortunately, people’s awareness of this is increasing. But there are few free spaces in the city and they are expensive, plus you would need to flood the city centre with many of these boxes to force people to consciously opt for their parcels to be sent there. To do so, you need to bring various players together and spend a lot of time convincing them. Above all, cities must have the will and courage to see it through.’

Schocke himself is working on getting a provider-independent depot installed on the Frankfurt University of Applied Sciences campus. There are also provider-independent depots in Hamburg, such as the HamburgBox. As he points out, if the major online retailers increased shipping costs on the consignments or at least the returns, it might lead to a change in awareness and a greater sense of responsibility towards the environment. Schocke is convinced: ‘To get products delivered overnight to your home is an incredible feat – and it should cost money!’.

Digital access systems simplify the process of receiving parcels

‘The last mile is also becoming an increasing focal point for property companies’, says Laura Wagener (photo: LEG)
‘The last mile is also becoming an increasing focal point for property companies’, says Laura Wagener (photo: LEG)

Amazon and similar retailers are working on their own solutions. As part of a pilot experiment launched in December 2020, the mail order giant is testing the digital access system Key for Business in collaboration with the housing company LEG based in North Rhine-Westphalia. ‘The system is a purely digital solution whereby people are permitted entry to the respective building only for a short period of time for a specific delivery and the permissions are then deleted again’, explains Laura Wagener, Head of the Operational Optimisation and Projects department at LEG.

This collaboration is currently unique in Germany and has many benefits: receiving a parcel becomes a tangibly easier process, duplicate trips are rendered unnecessary and no additional costs are incurred by tenants. ‘The response from our tenants has been positive across the board and we have now expanded this system to other locations’, says Wagener. Currently, the system cannot be used by other retailers or logistics service providers, which is why LEG is also working with DHL to gradually implement other parcel box services – depending on individual needs and according to demand – at its locations and is in regular negotiations with other forwarding service providers. ‘The thorny issue of the last mile is something that we are deeply committed to tackling and it will become even more of a focus in future’, adds Wagener.

A lot happens in the last mile. Schocke expects that delivery will be emission-free by the 2030s, facilitated by small warehouses located in individual city districts. ‘At the same time, it is clear that mobility services offered by the public transport network need to grow considerably. We need central hubs in cities where you can change from a train, for example, to a bike or charge a carsharing vehicle and also pick up your parcel while doing so. I think this is far more visionary than drones and delivery robots – and it means even more traffic will disappear from our roads.’

Lukas Wrede, Senior Manager and expert in last mile and city logistics at MHP Management- und IT-Beratung GmbH
Lukas Wrede, Senior Manager and expert in last mile and city logistics at MHP Management- und IT-Beratung GmbH

‘Both parcel services and recipients need a secure, flexible and verifiable way of handing over a parcel at the destination. One possible solution is intelligent parcel boxes for the home. They protect against theft and guarantee successful delivery as the delivery service can reserve and ensure that the recipient’s box is kept free for them in advance. In addition, some delivery services are planning to charge recipients fees in future for delivering to their door. This will drive the expansion of parcel delivery hubs in the form of parcel boxes and other points of interest. Delivery services in future will also increasingly rely on electric vehicles and cargo bikes in the future to circumvent vehicle bans. The development of autonomous delivery vehicles and delivery robots is already showing us the future of the last mile, but we will only see market-ready, widespread use of these solutions in Europe in the medium term.’

Andreas Krämer, press spokesperson for PENNY
Andreas Krämer, press spokesperson for PENNY

‘Online food shopping is booming. The past few months of the corona pandemic have only intensified this trend. We are the first discounter in Germany to offer our customers the convenient option of getting their groceries delivered to their home. As part of a pilot project in Hamburg, Berlin and Cologne, we are evaluating whether there is a demand for such a service in practice.’

Karen van der Linde, Hamburger Hochbahn project manager
Karen van der Linde, Hamburger Hochbahn project manager

‘The micro depot in Hamburg’s old town, which opened in January 2021 and was initially a RealLabHH pilot project, has exceeded our expectations. In the summer, we were already handling 17,000 parcels a month. This shows that the solution of a central, provider-independent transhipment point, which enables fine-tuned distribution via cargo bike and thus takes vehicles off the roads, is of real added value for both providers and the city alike. In addition to this depot, we have set up another at Hamburg’s central bus station for establishing partnerships with start-ups from the sustainable logistics sector. Both approaches show that micro depots can help to reduce the volume of city traffic overall, not to mention emissions.`

Frank M. Rinderknecht, CEO Rinspeed AG
Frank M. Rinderknecht, CEO Rinspeed AG

‘The last mile is easy, but the handover isn’t. High-performance computers are able to calculate the most efficient routes, but they cannot take the parcel to the recipient. So what next? The drone and hugely expensive and complex droid can’t fix the problem. The imagined scenario of just-in-time roadside meeting is unpredictable, inaccurate, not particularly customer friendly and inefficient. The Rinspeed ‘CitySnap’ mobile packing stations, which can also dispense things other than parcels, offer an innovative solution for today and an automated tomorrow. After all, with ‘CitySnap’ the driver is able to focus exclusively on their actual professional skill as a driver as everything else is already fully automated.`

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  • Transport & Logistics