Sure, every mile is technically the same distance. But just ask a distance runner and they’ll assure you that not only is the last mile the longest, but that it can be the difference between a personal best and collapsing just shy of the finish line. It’s not a terribly different story with last-mile distribution in parcel and logistics operations.
There’s often a misconception that because the last-mile depot is a small operational center, it isn’t worth the level of investment in material handling automation typical of larger facilities. But the last mile is really where value is created, as couriers and shippers are paid when the parcel reaches the end customer. For inbound packages, it’s where the delivery journey ends, with parcels moving through the last-mile depot to their final destinations, but it’s also where many logistics missions begin, with last-mile operations collecting outbound parcels from origin points at customer locations and initiating their movement onward through subsequent stages in the network. For these reasons, last-mile depots have huge implications not just for the efficiency of parcel operations within the last mile, but for the entire network.
Typically, a major hub will be served by several regional hubs, which will in turn be connected to a cluster of 10 to 20 last-mile depots. It’s key to view last-mile operations through this lens - not just each depot in isolation, but the relationship and influence each one has on the cluster of depots, and on the regional and major hubs upstream. Think of each last-mile depot like a finger and the cluster of them as the hand. The fingers are more capable collectively, working in unison as part of the hand. The body – the regional and major hubs – doesn’t have the same maneuverability and efficiency without the individual fingers working properly.
Growing Demand for Materials Handling Automation in the Last Mile
Demand for automated solutions in last-mile facilities has increased dramatically in recent years, for a few reasons. For one, volumes are growing. There’s been significant growth in demand and need for last-mile delivery transportation, and several forecasts anticipate massive expansion over the coming years. By 2030, the demand is expected to double in North America, nearly double in Europe, and more than double in Asia-Pacific. E-commerce growth is playing a major role, but lean inventory and retail replenishment practices are helping to drive greater demand for last-mile solutions, too. Retailers want to replenish their stores with lower quantities of individual SKUs more often, to minimize their inventory costs and better align supply with shifting demand. These smaller, but more frequent deliveries place a greater share of the burden on last-mile operations.
At the same time, labor scarcity is making it more challenging to keep up with this demand, and customers have developed very high expectations for quality. Packages must arrive on time, without damage, and ideally with free or low-cost shipping. Parcel operations turn to automation to drive improvements in key performance metrics, like reducing their cost per parcel and the total cost of ownership of their equipment and increasing the time they can spend making deliveries, rather than handling parcels within the facility. Major and regional hubs have been automated, and now last-mile depots are getting their much-deserved time in the sun.
Where Can Automation Fit in Last-Mile Facilities?
Cross-docking is a prime target for automation. Since it’s rare for parcels to be stored in last-mile depots, transporting parcels from one door to another is a common, repeatable task that can be assigned to robotics, like autonomous mobile robots. Sortation is another function where automation can offer support, and also enhance the safety and security of parcels. For today’s shippers, in many ways having information about the parcel’s location is just as or more important than having the parcel itself, and track and trace is much easier with automated systems. For example, a sorting system installed for an express courier leverages barcode readers, automated weight and dimensioning, and x-ray machines. Connected software transmits the shipment data captured by the sorting machine in real time, enabling security and ongoing optimization through detailed configuration of the sorting process and control management. For another organization, a fully automated switch sorter with a loop layout allows parcels to recirculate, minimizing manual interventions for tracking lost parcels or parcels where data does not scan properly on the first read. The automated system also optimizes the facility space, with bidirectional sorting allowing both outbound and inbound parcels to be processed on the same line.
Each last-mile depot is different, with unique operational requirements, delivery strategies, and even operational windows. Take, for example, a hypothetical express parcel plane that lands in the morning in a densely populated city. Parcels with local destinations may be distributed nearly immediately. But others need to cover greater distances and are transported by a truck that reaches a depot in another region that afternoon. The urban depot must handle packages as soon as they arrive that morning, while facilities elsewhere may need to operate at peak capacity during a later window.
Modularity Is Critical
Automated solutions must fit the requirements of each individual depot, without forgetting that the depot is still one of many within the larger network. To fit this dual requirement, a modular approach to automation is the answer. Whereas an automated system that is entirely custom can be costly and time-consuming to design, implement and maintain, modularity allows operations to meet their specific requirements, using relatively few elements that are common with those used elsewhere within the network. Few is an operative word here – if we imagine modularity in terms of Lego bricks, operations should strive for the kits with only a few unique kinds of blocks. This blend of flexibility and standardization allows modular systems to be quickly deployed and easier and more cost-efficient to scale, service, and repurpose if the depot needs to change or relocate.
While last-mile depots have been the last leg of logistics networks to adopt automation, it’s clear that they can’t be the last priority for parcel operations. As our running buddy would remind us, although the speed required might make distribution feel like a sprint, it’s a marathon. And a strong finish in the last mile doesn’t just determine that split. It influences the results of the entire race.
Antonio Amadasi is VP, Operations – Last Mile Solution Center, FORTNA.
This article originally was published in the November/December, 2023 issue.