E-commerce exploded during the Covid-19 lockdowns, and the trend isn’t likely to go anywhere. That means more packages than ever are being delivered directly to customers’ doorsteps, putting increased pressure on last-mile delivery.
The pandemic has accelerated consumer trends that were just taking root before the onset of Covid-19. The global last-mile delivery market share is expected to increase by $143.75 billion between 2021 and 2026, driven by a growing global e-commerce industry, according to a study this year from Technavio.
“Customer behaviour now is completely different,” Vladimir Nesterov, General Manager for RouteQ in the Middle East. “They started to purchase more and more online, and they started to ask more questions and have higher expectations from the companies which are delivering. In terms of customer experience, like three or five years ago, no one would ever think that you would be able to get some products or goods [delivered] within a particular time.”
In the UAE, the e-commerce market could hit $8 billion by 2025.
The trend comes as global environmental consciousness is at an all-time high, and many last-mile solutions, which are the most costly leg of the delivery journey, rely on large fleets of emissions-emitting vehicles. In the Middle East, a lack of established addresses is an added issue in the last-mile delivery question.
While customers are expecting items to be delivered faster than ever, they also want greater visibility during the process.
Meanwhile, geopolitical events that have caused supply chain disruptions have led some firms to hedge against shortages by stocking inventory locally.
“With this in mind, they will be trying to make this last mile more efficient because they will be freezing more inventory,” he said.
Nesterov said there is likely to be more localised delivery as companies are bringing more inventory on shore.
The pressure is on for last-mile delivery firms. At the crux of the issue is increasing speed to deliver packages faster than ever and cutting emissions through greater efficiency.
Route optimisation is a big part of the solution.
“We are trying to optimise the mileage of these drivers. Instead of making 10,000 kilometres per day for all drivers they will be doing [around] 5,000 kilometres. Less mileage, less fuel spends, less carbon outside,” Nesterov said of RouteQ’s solution. “The average mileage decrease we deliver is 30 to 40 percent, which is huge.”
“[RouteQ’s] algorithm always calculates the lowest number of drivers required for the particular delivery amount, so the biggest things are the automation, the scalability, managing the cost and in terms of customer experience,” he said.
The algorithms are also designed to optimise a driver’s waiting time and the cars to deliver more orders with fewer drivers.
Within RouteQ’s app, the driver has access to all the information they need and the operations team can track the driver’s location and the status of the order.
