Last link

The last mile in the supply chain has been thrust into importance in recent years, as the balance between e-commerce and traditional retail channels continues to shift. That’s particularly so this coming week, when couriers expect to double the volume of parcel deliveries thanks to Cyber Monday, and as the large operators such as Amazon and Alibaba seek to vertically integrate last mile operations into their businesses. Despite the increased use of e-commerce, the final stage of delivery to a collection point or home remains disproportionately expensive when compared with other logistics elements in the supply chain. A paper recently released by our Logistics & Industrial Research team examines the drivers of cost in this ‘last link’ and what this might mean for the future of urban logistics. A key takeaway is that the cost of rent in a typical consumer goods logistics operation is very small (<5%) relative to other costs, such as transportation (50%+). For the time being, therefore, the cost focus is not on the rent. Rent is however a higher proportion of cost in the last mile, where rents are higher and distance travelled is less; automation of some transport modes will amplify this. So will rents come under pressure? The research shows that for many urban locations (particularly those where travel time to destination is >30 mins) the inclusion of an e-fulfilment centre in the supply chain design is accretive. View the research and the underpinning cost model HERE.