As cities are being challenged by congestion and pollution, businesses must work with municipalities for a smarter, strategic approach.
Smart city logistics represent a significant opportunity for businesses to optimise supply chain performance, in particular around last mile deliveries, but it is not technology alone that is making this possible. Nor is it technology that will drive the continued development and expansion of smart city initiatives globally.
A collaborative strategy between businesses, governments, and technology providers is the key to making this happen, driving mobility and reducing challenges for logistics operations and urban populations around the world.
Significant increases in delivery truck traffic driving up congestion
Ironically, it is greater connectivity that has contributed to the rising challenges around last mile deliveries. The Interactive Media in Retail Group [IMRG], UK’s industry association for e-retail, reported that UK online sales exceeded £130 billion in 2016, fuelled in particular by a 47% year on year growth on sales made through smartphones. The impact of this has been a significant increase in delivery truck traffic, adding to our cities’ already congested roads.
A collaborative strategy between businesses, governments, and technology providers is the key to driving mobility and reducing logistics challenges
Currently, many business-to-consumer (B2C) deliveries are limited to one package per stop. This means that as online shopping continues to grow, the requirement for delivery vehicles will rise with it as businesses strive to meet increasingly high customer expectations around delivery times and availability.
Inefficient last mile deliveries limiting supply chain profitability
According to estimates, the last mile of delivery can comprise up to 28% of a product’s total transportation cost, making it the least efficient leg of a supply chain.
The requirement for delivery vehicles will rise as businesses strive to meet increasingly high customer expectations around delivery times and availability
Increased requirements for delivery vehicles will have a further impact on fuel costs both in terms of the increased number of vehicles requiring fuel and the increased fuel wastage associated with congestion times and delays. Returns processing and failed deliveries only exacerbate this.
With no indication that this consumer trend is set to slow, it is easy to imagine the state in which our urban areas could find themselves in the near future as populations placing online orders continue to increase. Such far-reaching impacts require a collaborative intervention on the part of governments, businesses, and technology providers in order to address the challenge now.