One of the top growth segments in the vocational fleet market is being driven by the boom in online sales requiring fleets of trucks to deliver purchased items for last-mile deliveries to homes and businesses. The last-mile delivery segment has been growing at a rate of 10% per year for the past five years.
Last-mile delivery is broadly defined as the fleet segment that moves goods from a distribution hub to the final delivery destination, with a focus on decreasing delivery times to end-users. Since the launch of Amazon Prime, consumer demand for same-day delivery has risen dramatically to where 25% of online buyers will now pay extra for this service, which can be as quick as a one-hour turnaround from order to fulfillment.
Several promising cutting-edge logistics programs and technologically driven solutions are being implemented in the last-mile delivery segment that holds the potential of completely revolutionize supply chain management. A key area of focus is the use of predictive analytics to forecast future demand in order to increase operational efficiencies and to drive down the cost of last-mile deliveries.
One example is Amazon’s patented “anticipatory shipping” system, which would employ predictive analytics to start the delivery process before a customer even places an order. Predictive analytics tools will mine Amazon’s massive customer database to identify granular data about its customers’ preferences and habits to project future purchases. Anticipatory shipping holds the potential to dramatically reduce fulfillment times, as it will be used to predict what customers will want and then automatically ship the products beforehand to be pre-positioned near the customer to facilitate lightning fast delivery upon order receipt.
Perpetual Motion Logistics
Amazon’s anticipatory shipping process has the potential to dramatically accelerate product shipping, fulfillment, and logistics management in many industries. If it proves successful, it will alter last-mile delivery significantly and stimulate many other e-commerce brands to develop similar or derivative systems.
The Amazon anticipatory shipping patent also discusses in detail various scenarios for “speculatively shipping” of packages to destinations and how to reroute items already in transit as new nearby customers emerge. Amazon believes anticipatory shipping will provide better inventory management. The patent states “speculative shipping of packages may enable more sophisticated and timely management of inventory items.”
Amazon also postulates that anticipated packages might remain in near-continuous transit on trucks until a consumer makes a purchase, which may be more practical in a future EV-powered autonomous delivery environment than today where the burning of fuel continues to be the No. 1 operating expense and the No. 1 contributor to GHG emissions. It is also likely that anticipatory shipping will be integrated with Amazon’s Alexa platform to allow consumers to order products automatically or on a schedule, which I believe will become increasingly prevalent in future in an expansive interconnected Internet of Things (IoT) ecosystem.
Just-in-Time Logistics Was the Precursor
Logistics providers have decades of experience working with just-in-time (JIT) production in the manufacturing sector, which was pioneered by Toyota to reduce production times and minimize component inventories stored at assembly plants. It was perceived as a superior production system and within a decade, almost the entire automotive manufacturing industry transitioned to JIT, as did many other manufacturing sectors, such as aerospace.
The same may hold true in the last-mile delivery segment. If proven successful, there could be an industrywide adoption of these new logistic systems based on predictive analytics or, in the not-too-distant future, AI-based platforms managing the last-mile delivery process.
In addition to predictive analytics, there are a number of other innovative companies in the last-mile delivery segment, such as Deliv, which crowdsources its drivers, and Postmates, which uses an app as its platform for fulfilling last-mile deliveries.
An Early Adopter & Exploiter of New Tech
Not only is last-mile delivery the fastest growing vocational fleet segment, it is also demonstrating that it will be an early adopter exploiting the technologies and business practices that will become the new core fleet management tools to be employed in the next decade of the 2020s.
Let me know what you think.