2023 Global Smart Last-Mile Logistics Outlook

Deloitte Consulting China and Cainiao Research Center co-published the whitepaper of 2023 Global Smart Last-Mile Logistics Outlook to share the industry trends and empower logistics ecological partners seize the opportunities and build competitive advantages.

The smart last-mile logistics will greatly improve consumer experience and help solve the problem of last-mile delivery being the biggest cost driver in the whole logistics process. For core last-mile logistics players, it is increasingly important to seize the opportunities in the new era and upgrade themselves through smart means so as to build competitive advantages. 

William Xiong Wei Chief Strategy Officer and SVP, Europe & Southeast Asia Cainiao Network

Under the quick development of demand and new technology, the evolution of global smart last-mile solutions will be strongly promoted by logistics ecological partners to improve the efficiency and reduce cost.

Bryan Zhou Xiaoliang Supply Chain and Network Operation Offering Leader  Deloitte Consulting China

1 Definition and scenario of last-mile logistics

The last-mile logistics delivery mainly refers to activities that directly meet the customers' needs in the last section of logistics distribution.

The delivery mode of last-mile logistics is mainly divided into two types: To-door delivery mode and OOH delivery mode.

• To-door delivery mode mainly refers to the method by which couriers deliver parcels to final customers directly to their homes by driving in specific areas uniformly and notifying customers to pick them up by phone call / SMS / APP. This is currently the main last-mile delivery model in most countries.
• OOH (Out-of-Home) delivery mode refers to the mode in which customers pick up parcels by themselves, mainly by PUDOs and locker banks. PUDO is where one can collect a parcel, which can be a convenience store, a grocery store, a parcel shop, a post office, or a retail store (click & collect). Locker banks are automated mailbox machine that allows users to pick up and drop off parcels by themselves.

2 Smart last-mile logistics is imperative

The importance of last-mile delivery has risen, but there are still many drawbacks and pain points in the development of the industry. Thus, innovation and reformation are urgently needed. The global average cost of last-mile logistics delivery accounts for 41% of the total delivery cost. Meanwhile, low efficiency and the single mode cannot meet consumers’ increasingly diversified needs.

(Figure 1: last-mile logistics is the biggest cost driver)

With continuous upgrading of technology, deeper integration of intelligent technologies, industrial scenarios and wider industrial application, recent years we have witnessed the booming development of smart last-mile logistics represented by smart PUDOs, smart locker banks, unmanned vehicles and drones.

There are two primary driving factors behind it. Firstly, the contradiction between supply and demand is becoming increasingly serious. Along with aging, the increasing labour cost and the high mobility of couriers make employment more difficult. Under the background of the growing e-commerce demand and parcel volume, a more efficient way is needed for last-mile delivery. Secondly, the diversity of consumer demand increases. In addition to the requirements for convenience and flexibility of parcel pick-up, consumers are considering solution diversity, environmental protection, and sustainable development.

We summarized the advantages of smart last-mile logistics from the perspective of "4E":

• Experience: Improve consumer experience, and realize the convenience, time flexibility, and choice diversity of parcel pick-up.
• Enablement: Enrich solution diversity and improve the effectiveness of solutions such as return service and efficient delivery.
• Expenditure: Reduce costs and increase efficiency, ultimately reduce labour expenditure.
• Environment-friendliness: Help the enterprises and customers in their pursuits of environment- friendliness and sustainable development.

(Figure 2: “4E” Model)

3 Global smart last-mile logistics market landscape analysis

To identify development opportunities for smart last-mile delivery in different markets around the world, we have set out with a global perspective to build a Smart Last-Mile Logistics Market Assessment Model. Based on two dimensions of market attraction and maturity, we divided the selected key countries into three groups – key leading markets, potential growth markets and incubator markets, and discussed the strategies they adopted for developing smart last-mile logistics.

(Figure 3: Smart last-mile logistics market landscape)

4. Future-proof Smart last-mile solutions

Technology will continue to change our life. Looking ahead, smart last-mile logistics will continue to develop to better suit user scenarios in the future. Consumers are not the only ones who stand to benefit from intelligent technology, the market participants will also gain a place in the tidal wave of technology. They will be able to develop their competitive advantages through clear insights and active participation. Smart last-mile service.

Smart last-mile service providers can offer a combination of intelligent solutions to meet the demands of consumers in specific markets. Players such as logistics companies and e-commerce platforms may first consider their position, goals, local market characteristics and consumer preferences when choosing appropriate solutions. Secondly, players are encouraged to carry out last-mile network expansion planning based on relevant data, and conduct multi-dimensional evaluations based on different factors, such as the “4E”. Finally, long-term and short-term interests need to be balanced to decide how to participate, for example, decide between self-owned and leasing.

Special thanks to the expert support from Cainiao, including department of Strategy & BI, Europe & Southeast Asia, Cainiao Station & Cainiao APP, Pubic Communication & Marketing, Cainiao User & Business Research, etc.

Contact Us

Bryan Zhou
Deloitte Consulting China
Supply Chain & Network Operations Offering Leader
Brzhou@deloitte.com.cn

Kevin Chen
Deloitte Consulting China 
Partner
kevinjwchen@deloitte.com.cn

Jane Zhen
Deloitte Consulting China 
Senior Manager
jazhen@deloitte.com.cn