Taking the fast lane in the last mile with multimodal logistics

In the era of e-commerce, shopping has never been easier. But behind the few simple clicks it takes to confirm a purchase, there is an intricate supply chain – and a whole lot of careful planning and coordination – to ensure that a parcel arrives safe and sound on your doorstep. The item would probably have traversed thousands of kilometers across air, sea, and land, before finally reaching its destination.

However, the various transportation modes might involve multiple parties with different processes,  making the delivery more complicated than it be. To streamline this process, logistics firms offer a service.

But while goods travel the greatest distance via sea or air freight in a multimodal model, the last-mile delivery is the most critical to the shipping process. Unsurprisingly, customer satisfaction hinges greatly on the effectiveness of the last leg in the supply chain distribution. For businesses to adequately deliver on consumers’ efficiency expectations, last-mile delivery must be optimized. Strategically utilizing multiple solutions, just like in earlier parts of the shipping process, is crucial to its success.

The last mile problem

Consumers’ online spending has increased since the onset of the pandemic and will continue to do so. The e-commerce market is estimated to grow from US$3.3 (€3.07) trillion to US$5.4 (€5.02) trillion in 2026.

With increased online spending also comes higher expectations and demand for speed. Real-time tracking has become an industry norm, giving consumers greater visibility over where their orders are at any one time. Knowing where their purchases are offers customers peace of mind but creates more avenues for scrutiny. Today, consumers are far from patient.

However, last-mile delivery is not as simple as it sounds. The difficulty of meeting consumers’ expectations of fast – and often affordable – delivery is the most complex and costly part of the shipping process. This makes up about 53 percent of total shipping costs, or more than half. These costs include fuel expenses, which can skyrocket when operators have a large fleet to manage, or if vehicles get stuck in prolonged traffic jams in urban areas.

Then there is the issue of product returns and exchanges or, worse still, failed deliveries, which necessitate extra trips. Up to 20 percent of e-commerce packages are not delivered on the first attempt, costing companies billions each year.

Besides the costs associated with last-mile deliveries, their success also depends on variables such as the geography of a place and the accessibility of its delivery routes, which in turn require different modes of transport to efficiently navigate.

Scoring the home run

In short, last-mile delivery can make or break a business. Businesses must find ways to shorten this process to meet consumers’ expectations of speed, boost customer satisfaction, and profitability.

Multimodal logistics solutions can give them the control, speed, and flexibility they need over last-mile delivery. Using a heterogeneous fleet allows businesses to choose the modes of transport that best suit the conditions of different delivery routes. By selecting the most economical options, businesses save on travel time and operational costs in last-mile delivery.

Take urban areas, for example. Delays in last-mile delivery are likely to be caused by traffic congestion. While bigger vehicles like trucks are useful for long-distance deliveries or bulk orders, relying solely on them to make deliveries might not be the optimal solution. Due to traffic congestion, a single truck might be parked quite a distance from the delivery destination. It can spend 60 percent of its time stationary while drivers make the last-mile delivery on foot.

Instead, it would make sense for large trucks to rendezvous with more compact and faster vehicles at designated transfer points. Smaller vehicles can navigate narrow paths, allowing them to move closer to the destination, thus reducing walking time.

In some cases, it is possible to do away with vehicles completely. In densely populated Hong Kong, DHL Express Hong Kong found that the most effective way to quickly reach its customers is on foot. Walker couriers navigate narrow alleyways, following carefully mapped out and optimized routes to make their deliveries. Sometimes, when they are required to make deliveries to neighboring islands, they are dropped off at ferry piers by DHL vans before continuing their journey.

On top of congestion, urban areas are also more prone to traffic accidents. When it comes to fixed, frequently traveled routes, smart drones offer a compelling solution, reducing the risk of accidents and saving on time and manpower costs. On the other hand, rural areas pose a different set of concerns. Delays in rural, sparsely-populated locations are not so much due to traffic – quite the opposite. They are usually not as well-connected by rail or public transportation, resulting in drivers having to cover great distances between drop-off points.

These remote locations may even fall outside of companies’ existing logistic networks. To effectively reach these areas, they can hand over the delivery process at central distribution hubs to local logistics providers, or even explore crowdsourcing options that tap into the services of local, non-professional gig workers who are more familiar with the local terrain.

Whether navigating urban jungles or rural villages, multimodal solutions are key at every stage of the shipping process, all the way to last-mile delivery. Beyond just delivering packages, it is about delivering on customers’ ever-increasing expectations via multiple modes.

By hook, by crook, or by foot.