Last mile logistics:
How 5G can
help enable
fast fulfillment

If your organization ships products to customers, an exceptional delivery experience is more crucial than ever. Increased access to near-real time tracking information and delivery notifications have raised consumer expectations sky-high. People want their packages delivered on time, and they do not care if a missed delivery is not your fault. To meet these expectations, you need to lock down every stage of the package journey, from shipping label creation to last mile logistics.

According to Project44, the provider of an advanced supply chain visibility platform, 74% of consumers look negatively on a brand if their package delivery expectations are not met. And 70% of them demand the ability to track their shipments in real time. Adjusting to this new market mindset is a critical operational goal. Myriad company metrics are at stake, such as brand loyalty, conversion rate and long-term growth potential.

Last mile logistics describes the last leg of the delivery process. It is that last step that a parcel takes from the distribution center to the consumer—when the delivery truck is in your neighborhood but has not quite gotten to your front door.

The concept of last mile delivery is simple, but the logistics are complex. Last mile logistics includes every process, person, system and tool that enables delivery. It is the delivery fleet, the software, the physical spaces, the delivery drivers and the shipping staff.

Optimizing that last mile is not getting any easier. According to a McKinsey report, there could be more than 200 billion yearly parcel deliveries by 2030—more than double the benchmark from 2020.

Last mile delivery costs are high, too, making up approximately 53% of a shipment's total cost. Customers expect free shipping nowadays, but the costs of shipping do not change. Shippers and logistics partners must embrace new technologies to reduce costs and streamline the process.

To optimize your last mile logistics, you must understand your challenges and how they affect your business.

Competition in the logistics industry is fierce, and that makes optimizing logistics crucial—but challenging. Amazon Prime puts the "fast" in fast fulfillment, offering same-day delivery on many products. In some cities, some orders get delivered in a scant few hours. Even standard Prime shipping can get a package from warehouse to doorstep in less than 48 hours. Such fast fulfillment puts tremendous pressure on competitors.

Size matters, too, whether it is shipping capacity, fleet size or cubic feet per package. Delivery vehicles—especially the ones that small- and medium-sized shippers use—can hold only so many packages. Smaller fleets limit how many orders a deliverer can handle—and larger fleets cost more to build, operate and maintain.

Supply chain visibility is yet another challenge. Customers demand real-time information and visibility into all relevant data about their orders—no matter where their delivery is in the supply chain. Maintaining control of your company's last mile logistics helps you quickly identify and address inefficiencies.

With razor-thin margins, increased consumer expectations and a greater need for real-time data visibility, the case for 5G in shipping is clear.

With 5G, companies are no longer tied to the limitations of wired networks. For warehouses that require robots, automation and the Internet of Things (IoT) to improve logistics, 5G can provide flexibility and coordination unattainable with wired networks, and it yields greater visibility and control over transportation systems with near real-time shipment data and weather conditions.

For inventory and warehouse management, 5G's high speed and low latency could allow companies to overcome challenges by enabling new features such as critical process optimization, remote maintenance and control enablement, and autonomous vehicle deployment. 5G and mobile edge computing can also enable faster end-to-end visibility into the supply chain, thereby potentially reducing the time to resolve supply chain interruptions.

New quick, cost-efficient last mile delivery methods, such as at-scale air and land drone delivery, are also changing the game. The market for autonomous, last mile delivery aerial drones specifically is expected to grow from $860 million in 2021 to $4.9 billion by 2030. Additionally, 5G's low latency can help with monitoring air traffic in and out of a busy logistics hub, raising the stakes for last mile efficiency.