May 5, 2015
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What's the future of last-mile delivery?

Drones get all the headlines, but there are other ways to get orders into customers' hands quickly without relying on costly parcel services.

By David Maloney

Now that the Federal Aviation Administration (FAA) has at least temporarily grounded plans by Amazon (and others) to use drones as small couriers, what alternatives are there for solving the problem of last-mile delivery?

As any shipper can tell you, that last mile is the most difficult and expensive leg of a package's journey. For retailers in particular, keeping delivery costs in check is a growing concern. The surge in e-commerce orders has greatly expanded the number of parcels heading to an ever-increasing number of destinations. And those volumes only look to grow exponentially—especially as Amazon and others move into same-day delivery services.

Drones seemed promising, as they would be able to fly over traffic and other obstacles in cities. Amazon also saw the use of drones as a way to reduce its parcel spend, which is considerable. While most of the national media pronounced delivery drones dead before arrival, it's probably too soon to write their obituary. We have to admit that using drones in urban areas has been suspect from the beginning. There are simply too many people, wires, cars, and other such obstacles—all of which fill insurance underwriters with trepidation.

While these obstacles may make unmanned aircraft infeasible in urban settings, drones may make sense for rural areas that present fewer risks. Traditional delivery in rural areas is very expensive, as trucks have to travel farther between stops. Obviously, the drones still need to launch from somewhere reasonably close by, but in many rural areas, limited delivery with drones may make economic sense. It will take the FAA and industry to come up with rules that everyone can abide by.

While drones may be a possibility in the future, I believe they will be only one part of the solution to the last-mile puzzle. Another might be greater reliance on the U.S. Postal Service for small-package delivery, as it already delivers to nearly every address in the country daily.

Retailers should also encourage customers to pick up at a store, possibly offering discounts and incentives to do so. Uber-type delivery services will also spring up, with ordinary citizens serving as part-time delivery people.

I also believe there will be greater use of kiosks, which have been successfully deployed in Europe and Asia. The kiosks are typically located at places where people gather regularly—transit stations, city centers, supermarkets, big box stores, etc. Customers might be able to place their orders online, possibly from work, and then pick them up at a kiosk on the way home.

With a bit of creativity, shippers can meet consumers' demands for same-day delivery while keeping the service affordable for all involved.

About the Author

David Maloney
Editorial Director
David Maloney has been a journalist for more than 35 years and is currently the editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.

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