The future of parcel logistics: 10 trends for efficient last-mile delivery

Medium- and long-term forecasts for the last mile

The parcel logistics industry is undergoing rapid change. The use of new technologies is opening up enormous potential in terms of efficiency, customer satisfaction and sustainability. Digital solutions in particular will play an increasingly important role in the future.

To remain competitive in this dynamic market, companies must continuously adapt their business processes. From data analytics to dynamic route planning, there are numerous last-mile challenges that need to be addressed.

To better understand the future of the parcel logistics industry, we have compiled the top ten trends for efficient last mile delivery. Find out which mid- and long-term developments are shaping the industry and how you can prepare your business for the future.

10 trends that will change logistics

Let’s start with a brief overview of the ten most important trends in parcel logistics and tomorrow’s last mile:

  • We will spend more on R&D to increase operational efficiency
  • We will prioritize sustainability
  • We will all use dynamic routing and improved package tracking
  • We will value collaborative thinking
  • We will look for a better customer experience (CX)
  • We will have better location data
  • Established companies will adopt a challenger mentality
  • Delivery vehicles will evolve
  • We will enjoy a personalized delivery service
  • Retailers will make the most of the entire customer journey

Let’s take a closer look at these ideas. What changes can we expect in the medium term?

1. We will spend more on R&D to increase operational efficiency.

Delivery companies have always looked for ways to optimize their operations. But today, the market is even more competitive. Disruptive startups and large technology companies are now competing with established companies. As a result, the battle for the bottom line has intensified. In this climate, there is a general impetus to push boundaries in search of cost reductions.

We expect further spending on research and development in the coming years. This means investing in efficiency-enhancing technologies such as automation, artificial intelligence and robotics. Some of these research directions will never leave the lab, but others will help companies streamline their operations and make them more efficient.

2. We will prioritize sustainability.

Climate change is a fact, and the future of parcel logistics will be greener than it is today.

According to the World Economic Forum, “advanced analytics and Internet of Things (IoT)-based solutions such as load pooling and dynamic rerouting could contribute to an overall scenario that reduces [parcel logistics] emissions by 10%, unit costs by 30%, and congestion by 30%.”

More sustainable parcel logistics is not only the right thing to do for the planet, it’s also good for business. Parcel senders and recipients will want to know more about the green credentials of their delivery service – spurring businesses to make greener choices.

3. We will all use dynamic routing and improved parcel tracking.

Parcel logistics has been dominated by static route planning. In the future, the shift to dynamic route planning will accelerate.

The benefits of this development are obvious. The latest software dynamically adjusts routes based on traffic and other factors, lets drivers share their knowledge along the way, and allows dispatchers to learn about performance.

This approach increases productivity, improves the UX, and leads to an all-around better experience for teams. 

Another technical development will be in the area of package tracking. Recent breakthroughs in movement data have leveraged sensors in drivers’ cell phones. In this way, data on successful deliveries is collected and shared with subsequent drivers. This gives them the information they need to make the final steps to the recipient’s front door.

4. We will value collaborative thinking

In the past, we thought that package delivery was a zero-sum game. We believed that any kind of collaboration or partnership meant losing a competitive advantage.

In the future, opinions about that will change. Why? Because, as Gartner suggests, in the age of data and AI, companies that prioritize data sharing will outperform their competitors on most business value metrics.

The benefits of this approach include more data insights, a larger pool of information, more efficient operations and the ability to develop breakthrough products.

It’s worth noting that data sharing will be especially valuable when it comes to competing with data magnates like Amazon. In short, parcel logistics companies will need to join forces to take on the power of Big Tech.

5. We will look for a better customer experience (CX).

Every year, customers are making more and more demands on their parcel carriers. This trend toward better CX will only increase in the future.

In the coming years, we will see a doubling of customer-facing technology. Companies will take advantage of developments in artificial intelligence and invest in technologies like chatbots, real-time delivery, and more user-friendly apps and websites.

Those companies that fail to recognize the importance of this change will fade into irrelevance as new entrants offer customers and clients the opportunity to switch to a more satisfying service. If you don’t offer your recipients a better deal, someone else will.

6. We will have better location data

Every year, millions of recipients are disappointed when their packages are not delivered due to poor location data.

To solve this problem, companies are redoubling their efforts in location information. Given the wealth of location data now available, new technologies are being developed as we speak. From improved geocoding to location information that is not documented in the form of an address, companies have taken on the challenge of translating delivery drivers’ knowledge into shareable data.

For example, delivery drivers are able to recognize when a geolocation is incorrect, but this must be communicated to the solution provider. A feedback loop fine-tunes the system, saving valuable time for drivers and meaning recipients receive their packages faster.

Considering the benefits of this, more initiatives in this area are planned in the coming years.

7. Established companies will adopt a challenger mentality.

The last-mile delivery market is getting tighter. Fifteen years ago, the industry was dominated by a limited number of large companies. Today, the sector is more fragmented and dominated by a variety of startups competing alongside large technology companies like Amazon.

In 2023 and beyond, there will be a push for more digital solutions, improved location intelligence, better CX, and new, greener vehicles.

Agile startups will see this as a favorable environment to either enter parcel logistics for the first time or capture a larger market share.

Faced with competition from all sides, incumbents will need to adopt a challenger mentality of sorts – mobilizing the power of independent thinking and encouraging internal debate.

8. Delivery vehicles will evolve

They may not be autonomous cars yet, but our delivery vehicles will change.

The drive to be green will lead to more companies investing in electric and hybrid delivery vehicles. Amazon is already getting there with its partnership with Rivian. Other parcel logistics companies are following suit.

How long will it be before autonomous delivery vehicles hit the market? The simple answer is: we simply don’t know.

There have already been many misguided developments. In 2018, The Economist proclaimed that “autonomous vehicles are just around the corner,” and Elon Musk has been boasting about the introduction of a fully autonomous driving system for some time. Despite all this, only a small number of people have seen or stepped into an autonomous vehicle.

What changes can we expect in the longer term?

9. We will enjoy a personalized delivery service

Looking further into the future, we can glimpse some interesting possibilities in the field of personalized delivery.

Recipients will demand value-added service that includes tighter and more accurate delivery windows and special requests such as “don’t ring the doorbell.”

Watch this space carefully. It will be a challenge to provide customized solutions at scale, and that could mean startups shaking things up first and established players following in their footsteps.

10. Retailers get the most out of the entire customer journey

In the world of retail, customer experience is a key factor for competitiveness. Fast, reliable and efficient last mile delivery services can help retailers stand out in a crowded market.

The last mile is the last touchpoint businesses have with their customers. An exceptional delivery experience is the cherry on top and fosters loyalty to a brand. After all, customers are more likely to order again if they are satisfied with the service from checkout to receiving their package.

Retailers and delivery companies have a common interest in providing an excellent experience for their customers and will look for opportunities to offer additional services at the doorstep in the future. Providing products and information directly to customers is an effective way to increase sales. For this reason, companies could use their fleet of vehicles as a customer-facing sales team that sells items directly from the vehicle.

Summary – Expect the unexpected

The future of parcel logistics will be radically different from the past. If you value experimentation and change, you will find these prospects exciting. Technology, climate change and customer demands are driving this transformation. New entrants are offering faster, smarter, and greener services. Incumbents need to be agile and open to innovation to respond. Although the evolution of services will be a gradual game between market forces and new ideas, there will be no great leaps from one day to the next.

Nevertheless, it is difficult to predict the future. No one expected a pandemic in 2020, for example, and we all know the shockwave this has caused in our industry. It is therefore important to make predictions, but always leave room for surprises. Expect the unexpected.

Simon Seeger is a logistics industry expert and serial entrepreneur with a passion for revolutionizing last mile delivery. As founder of Bettermile, he has developed a cutting-edge SaaS solution that dynamically optimizes delivery routes in real-time, leading to increased productivity and an enhanced customer experience across 13 countries. Simon's experience in logistics is rooted in his history of transforming traditional industries. In 2009, he founded textunes GmbH, the first e-book platform for smartphones and tablets in German-speaking countries, which he later sold to Thalia Books GmbH. He then developed Tolino, an eBook platform for Thalia, which has a market share of over 40 percent in German-speaking countries, Italy, and the Netherlands.

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