Ayomide Ayofe, senior product strategy manager at Doddle, explains that discussions of automation in the last mile are usually dominated by wishful thinking and adventurous predictions of self-delivering robots, drone takeovers or other technological advancements. Of course there’s no harm in looking at what the future might hold and, in fact, we predict what the next year will bring in ecommerce delivery and returns every January.
But there’s a difference between realistic predictions to inform strategy and out-there theories just for fun. The reality is that automation is happening in the last mile, but it’s about improving the efficiency of current processes, cutting costs, and boosting profits rather than creating a futuristic utopia.
In order to predict what’s on the horizon for the last mile, and how carriers can use automation to inform their strategy, firstly we need to evaluate current automation solutions, analyse their effectiveness and then determine what (realistic) future developments we could expect to see in the next few years.
Parcel lockers continue to automate out-of-home delivery – but not take over
Parcel lockers are an automated alternative to traditional PUDO points, providing an immediate range of benefits. They are often available 24/7, allowing consumers to collect at their convenience. They are self-service, saving time having to queue at the counter and designed to handle collections and drop-offs, satisfying an increased demand in returns and C2C sends. They also provide parcel consolidation for carriers, increasing route efficiency and long-term sustainability.
However, although lockers are certainly popular, they won’t take over traditional PUDO – we expecta mixture of lockers and PUDO points to make up carriers’ out-of-home (OOH) networks.
There are several reasons for this. Firstly, lockers come at a much larger expense than traditional PUDO locations, which tend to be in useful, high-traffic locations like convenience stores and have minimal costs compared to siting, installing and maintaining a large hardware device like a locker. If carriers want to increase network density, the easier and cheaper option will generally be to add new PUDO locations.
In our Post-Covid report, when we asked which OOH options customers would most likely use, preferences were almost completely even between the three formats of parcel lockers, parcel counters and post offices. Some customers prefer parcel lockers, but not all. To deliver the best customer experience, a mixture of different PUDO options must be available for customers to choose from.
Route planning is the backbone of last mile automation
Route planning is an essential aspect of last mile automation, as better routes equate to more parcel deliveries in fewer miles. That means better efficiency, lower costs and fewer CO2 emissions for long-term sustainability.
The next step for automation in this area is calculating the likelihood of delivery success for each stop and factoring in real-time updates to divert to OOH. To achieve this, carriers need smarter access to consumer behaviour, revealing insights about when they are in, what times deliveries have failed before and what times increase the chances of each stop on a route having a successful delivery. In addition, if a stop is predicted to fail, the technology must be able to incorporate a re-direct to an out-of-home location nearby, increasing the overall success rate and efficiency.
Customer communications to get more advanced
Keeping consumers in the loop helps to provide a great delivery experience. Automation already plays a key role here, with many carriers using automated systems that send out branded communications when the parcel has been received or is out for delivery.
The next step is for the automated systems to become more intelligent – for example, sending the communications at a time when they’re most likely to be useful and visible to a customer, or connecting to other systems to enrich the comms with more customer data. For example, if a parcel is on the way, these communications could be used to set up redirects to OOH from the consumer, which ties into the route planning system.
As well as real-time tracking, carriers can use data to send out more personalised communications. For example, if a consumer consistently uses a particular locker bank to send their packages, and space is available there, why not notify them to help encourage more outbound volume into the parcel locker?
Robotic deliveries aren’t on the horizon
We couldn’t talk about automation in the last mile without bringing up automated delivery robots. The reality is that robots will not likely find broader last-mile use cases. This is partly due to their small capacity which in most last-mile use cases would limit them to a very small number of deliveries per journey – the exact opposite of carrier efficiency.
In addition, robots can only be used when consumers are guaranteed to be in to accept delivery. If the consumer isn’t there, it’s a failed journey, and the robot must travel back as no method of unattended delivery can be achieved. The robot can’t remove the package by itself and can’t wait hours for the consumer to return. In such cases, it’s a total loss of time, resources and money.
Finally, these robots are expensive for carriers to purchase, maintain, and potentially replace if people steal or damage them. Comparing all those factors to the cost of a delivery man with a van, who can deliver more parcels and at lower cost, there’s one clear winner for carriers.
Drones will struggle to get off the ground
Drone delivery is another popular topic that keeps coming around for last-mile innovation. However, they simply aren’t practical for last-mile delivery. They are weather dependent, require safe spaces to land, require regulatory approval, and they need expensive and buggy self-piloting tech to be scalable. McKinsey estimates that drone deliveries will become similarly economically efficient to a single van when one operator can manage 20 drones simultaneously – something which is not yet legal in most jurisdictions, and which is technologically a long way from being feasible.
Portable lockers haven’t emerged, but maybe self-driving will
Vehicle automation in the last mile is largely focused on self-driving technology. However, as a person will still be needed to hand parcels over to consumers it’s unlikely that we will see fully driverless vehicles in the last mile.
However, while they’re still some way off for the last mile, driverless vehicles might be more appropriate in the mid-mile, particularly between two fixed distribution centres on repeatedly travelled routes, which could save costs and free drivers up to travel different routes.
Will the parcel industry ever be fully autonomous?
The pace of change in logistics tends to be fairly slow, but given the long-term trend of parcel volumes is clearly still heading upwards, efficiencies are only becoming more valuable over time, and automation promises to deliver plenty.
In a decade’s time, we might see a quite different last-mile, where a consumer might see a curated set of delivery options on the checkout based on their previous purchases, location and preferences. These options probably won’t include delivery by drone or autonomous ground vehicle, unless the regulatory and technological picture changes rapidly. Our shopper might select delivery to a parcel locker, served by multiple carriers using semi-autonomous vehicles based on intelligent real-time routing, and the package could be picked and shipped largely autonomously out of the warehouse – but it will still probably be placed into the locker by a human.
The vagaries and challenges of B2C last-mile delivery will always require human input and ingenuity. That’s not to mention the power of friendly interaction and service with a smile, which greatly affects how customers experience their delivery.
In practice, most successful last-mile automation won’t be focused on replacing the human factor, but on improving productivity, removing friction and reducing costs. From a last-mile business’ perspective, getting the workforce on board with automation rather than resisting these changes will require thinking carefully about where automation can add value for employees as well as to the bottom line.
Ayomide Ayofe, senior product strategy manager at Doddle