Last Mile Delivery Trends and Challenges in Australia

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Last mile delivery is arguably the most crucial part of the delivery process because it ultimately determines how the customer rates their satisfaction with the whole consumer experience a company offers. Nothing makes a customer happier than getting hold of their desired product in the most hassle-free way. And our business owners and courier companies are working around the clock to achieve just that. Today, Australian courier companies such as StarTrack, Australia Post, and Sherpa have partnered with the country’s biggest brands to ensure the best experience when it comes to last mile delivery. As they say in their witty quote, the last mile is your last smile. 

Alongside the fact that automated delivery systems such as drones and bots are being developed and are being projected to become dominant in the next few years, existing last mile delivery systems have been consistently developed and improved over time. Imagination grows even more, and more out-of-this-world proposals for last mile delivery are currently in the buzz. In this blog, we discuss the major trends and challenges of last mile delivery in Australia. 

Trends

Last mile delivery has certainly changed and progressed over time, especially in the past few decades. The industry has gone more robust, and with the introduction of eCommerce, we are continuously in the search for the most efficient ways to deliver people’s necessities and those occasional wants. Business owners and delivery services must always be innovative and keep themselves abreast with the latest trends to stay on top of the game.

The desire for instant gratification

Consumers worldwide love shopping and the options are increasingly diversified. Some prefer in-store shopping, while some like ordering from a website and then picking the items up at the store. But in the past decade, the use of online shopping via doorstep delivery has gained its dedicated place in shopping options. And as shopping is literally at our fingertips, more people are developing a desire for instant gratification. And Australians are no stranger to this global developing trend. Speed and accuracy are steadily becoming factors with which to measure whether a consumer experience is satisfactory or not.

People nowadays have found eCommerce and online shopping very convenient and complementary to their robust lifestyles. However, as schedules become more irregular, the usual 2-3 day waiting time can be tedious for some or even make a customer anxious. Fortunately, companies and services invested in last mile logistics are exploring ways to cut down that time to an even shorter next-day or same-day delivery. 

That’s on top of the fear and anxiety the pandemic has brought about. Retail companies found a way to respond to these changes in preference by offering on-demand grocery delivery so that someone can work safely in their homes but at the same time, be able to fulfill their needs and gratify their desires. Although not an end-all-be-all solution to the worries our fast-paced world has brought upon us, satisfying your immediate needs can be of great help in temporarily relieving these anxieties.

The rise of micro-fulfillment hubs

Also in direct response to the pandemic changing the landscape of last mile delivery, micro-fulfillment centers or hubs have been put into place by Australia’s leading brands such as supermarket chain Woolworths. These micro-fulfillment hubs are established to keep up with the increasing orders online. Dubbed as an eStore, it uses automated fulfillment technology where products are sorted and moved from automated storage units and brought to the staff who hand-pick the orders. Due to its speed, convenience and efficiency, more customers are preferring to order from the eStore despite the relaxation of Covid-19 restrictions. These micro-fulfillment hubs are regarded as an integral part of physical supermarkets to diversify their ordering options to accommodate differing shopping preferences. 

Aside from the convenience, it brings online shoppers, the rise of eStores have also allowed the decongestion of traditional supermarkets providing a win-win solution for those who prefer either physical or online shopping. The concept is not only a win for the customers, but also for the business owners with Woolworths reporting a 90.5% growth in annual eCommerce sales alongside the launching of the eStore.

‘Safe drop’

Instead of giving you the peace of mind, the uncertainty of the exact day and time of your delivery can keep you worrying if you will be there to personally accept the delivery. Thankfully, delivery services such as Australia Post have already started introducing their ‘safe drop’ option which entails the customer identifying what delivery services call a ‘safe place,” where the parcel can be left without requiring a signature from the customer. Safe Drop can easily be requested via email or via the tracking app. However, this option only applies to select items for now. More items are expected to be included in the list of safe-droppable items soon.

Automation and digitalisation

Automation and digitalisation of the last mile has been seen by many as a viable alternative to the current system’s increasing need to keep up with the ballooning demand of eCommerce. Despite a multitude of significant hurdles yet to be overcome, automated delivery using drones, delivery robots and the like paint the picture of the future of last mile infrastructure.

Around the world, cities have been chosen as test areas for the operation of the delivery drones and robots. However, the majority of these trial robots have been tried in fair weather conditions, so one obstacle that has to be addressed is how to make them weatherproof. Different cities and suburbs have specific layouts and climate conditions that have to be studied carefully in order for manufacturers to fully adapt these game-changers. A few potential accidents have also been recorded from time to time, setting back the trials, but there generally has been steady progress in the use of these robots and the like. 

Data and privacy are also to be considered. Some fear that preparing the robots to be fully-automated might compromise people’s data rights. Creators of these fully-automated systems must balance efficiency and privacy to allay these fears. Currently, data are accessed by these drones and robots through Bluetooth and WiFi. There also have been concerns about poor data encryption on these devices, making them vulnerable and susceptible to malicious actions by certain cyber actors. 

Added to that, only a few areas have allowed the test trials, but there lies the limitation – it is on a trial basis and a massive scale launch must surpass major legal obstacles to finally be greenlit. 

3D printing

Even more stunning is the prospect of 3D printing as a new trend in the logistics industry. This revolutionizes not just only last mile services but the whole delivery process, because the distance between first mile and last mile is virtually erased. Instead of mass production, companies can shift to a more mindful, and more economical just-in-time production. 

Designs and specifications are uploaded in databases and cloud storages while 3D printers are placed in different sites where your product can be created on demand. Customers will also have more freedom in determining what product they want, and suit them better to their concrete and urgent needs. Moreover, 3D printing further decreases the chance of creating products unwanted by the public. It is more efficient in both the cost of material and the amount of labor put into production. 

The development of these 3D printer systems are still in their infancy. More rigorous research and development must be conducted, along with paradigm shifts in the philosophies of production to make this dream a reality. Yet, the concept is very promising and points to the right direction as the world constantly shifts to seeking more cost-efficient, sustainable and environmentally-caring ways of production and consumption. 

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Challenges 

Challenges are part of any process. But what’s good about these challenges is that they push things forward in our search for quicker, easier and more sustainable methods. Though it may seem difficult in our modern world to balance efficiency and sustainability, the ways stakeholders address these challenges prove that the only way to move forward is finding that healthy compromise between business, customer satisfaction and sustainable means.

Increased pollution and noise

The urge for instant gratification intensifies as more innovations in production are made. Every day, millions of online orders are placed and millions of deliveries are conducted. As of late, last mile delivery, in its current systems, contributes greatly to the general increase of air and noise pollution. Retail currently accounts for 50% of carbon emissions, and the current numbers are expected to even double by the year 2050. 

This amount of carbon emissions has often been disregarded owing to the fact that last mile delivery in retail has been hailed as highly important. However, not just because it is essential, does not mean it always has to be as harmful to the environment as it is today. Many activists, and even companies, are proposing a shift towards electric-powered vehicles as a more sustainable alternative to cut down these carbon emissions once and for all. 

Instead of a city full of noisy trucks and motorcycles, why not imagine where drones and robots deliver your medicine or food? Shifting to these more efficient (and more silent at that) options not only cuts down delivery time but provides an overall more enjoyable experience as they are less intrusive and noisy. 

Delivery density

Delivery systems must not only be developed in the technological sense, but also in its operational sense. There is a steady increase in the number of orders that are made by consumers every day. The building use shift from the traditional retail buildings to industrial buildings, or even a hybrid of both, might signal a huge step toward addressing the problem of delivery density. Case in point, the Woolworths eStore has been successful in providing convenience for varying categories of customers – both those who prefer onsite shopping because of decongesting the physical stores and those who prefer online shopping by providing a nearer logistics hub, thereby making the deliveries quicker and more accurate. Retail-to-industrial shifting offset the daily density of deliveries as hubs are becoming more localised and a central structure can cater to the needs of a more specific, smaller population. 

Drones and delivery bots can also lessen delivery density when small parcels such as food and medicine are reassigned to these relatively newer systems. Smaller parcels in shorter time is equivalent to an overall larger amount of deliveries made, without the problem of these parcels piling up. 

Obviously, the development of a 3D printing system might present itself as a more sustainable approach in the long term. But as said, that would be in for the long term. We might have to wait.

Routing optimisation

Due to the increased volume of deliveries, the need to optimise delivery routes from ordering to the last mile. A central file or database of all orders, sorted into different categories should be available for the shippers to efficiently assign this to the last mile delivery system be it the traditional driver, a drone, a delivery robot or whatnot. These are then sorted according to their addresses and zip codes so that dispatching will be easier and lessen the risk of lost parcels or parcels which are delivered to wrong addresses. An efficient routing optimisation scheme is more possible in smaller settings as evidenced by local hubs in a specific area. Last mile infrastructure developers are also considering automated vans as temporary hubs, with drones as final delivery vehicles to doorsteps. 

Heavy cost of transitioning to automated delivery

Aside from the obstacles of transition to automated delivery in terms of research and development, the high cost of production of infrastructure and materials can also be a challenge. With all the advances in the past few years, companies have already invested around $8 billion to fund research and development, and trials in select areas. More money is expected to be poured in to further concretize and stabilize the development of automated delivery systems. Thankfully, albeit new and in the exploratory stage, the automated last mile logistics infrastructure is expected to grow bigger in the next decade.

Whatever the future holds for e-commerce and last mile delivery, one thing is for certain. We will always look for a myriad of ways to do things to make life easier and more enjoyable for everyone. Fortunately, technology is helping forge ways on how these challenges can be addressed.

Last Mile Delivery Trends and Challenges in Australia

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