Some of the key themes that defined the evolution of last-mile logistics, setting the stage for a dynamic 2024 are:
1. Speed and customer experience: A quantum leap
The year 2023 witnessed a quantum leap in the speed and customer experience realm, as same day and next day delivery models took centre stage, especially for Direct-to-Consumer (D2C) commerce companies. Higher delivery speed has always led to improved revenue realisation due to a higher percentage of successful deliveries but typically have had the burden of a very high cost of logistics. This year however, the race for efficiency saw emergence of cost-efficient speed models challenging industry giants like Amazon. In hyperlocal as well, quick commerce, less than 15-minute delivery models settled down and now appear to be here to stay with last mile efficiencies seeing huge benefit in metros due to high densities. What truly makes this game-changing is that you now do not need to spend millions into building such a capability from scratch – several players from the third-party logistics industry have made giant strides in providing best in class speeds at very competitive costs.
Given above, we can expect adoption to these models grow multifold in the coming year, eventually reshaping the competitive landscape in 2024. The end consumer is sure to have a lot to look forward to.
2. Artificial intelligence redefining last-mile dynamics
Last year, artificial intelligence transitioned from a mere experiment to a driving force in last-mile logistics. Innovations in AI found practical applications, particularly in customer address intelligence and fraud detection. In the current landscape, numerous leading logistics players utilise in-house address correction algorithms, highlighting how precise customer addresses significantly enhance delivery success rates. We’ve moved beyond the era when shipments would mistakenly reach the wrong destination due to address or pin code errors – today, we can predict the correct address and rectify it at the source, saving not only time and money but, most importantly, enhancing the overall customer experience. Commerce companies that recognised and acted on this trend early have reaped substantial benefits, directly impacting their bottom line.As the industry continues to leverage the power of AI, the year 2024 holds promise for further innovations, poised to elevate the precision and efficiency of last-mile logistics.3. Electric revolution gains momentum
After years of trials and tests, 2023 witnessed the electric revolution gaining substantial momentum, with electric vehicles (EVs) securing over 20% market share in last-mile delivery. Last-mile delivery partners in India embraced this transformative shift, acknowledging the economic and environmental benefits associated with transitioning to electric. The impact was especially pronounced in metropolitan areas, where it became noticeably easier to spot delivery partners operating electric two-wheelers compared to previous years. This shift aligns seamlessly with the Government of India’s vision of achieving 100% electric last-mile logistics by 2030, a goal that not only seems plausible but also imminent. State governments such as Delhi, actively contributed to this movement through initiatives such as the ‘Delhi Motor Vehicle Aggregator and Delivery Service Provider Scheme,’ which outlines firm timelines to achieve 100% electric vehicles in the city.
The steadfast commitment to sustainable practices is fostering positive change within the industry, setting the stage for a greener and more efficient future.
Anticipating strides in drone delivery and gender diversity
As we look forward to 2024, two areas with significant potential are drone delivery and the increased involvement of women in last-mile logistics. Advancements in technology are making the feasibility of drone delivery systems more apparent, promising quicker and more cost-effective deliveries. This is particularly evident in remote areas, where the delivery of critical goods, such as medicine, stands out as a prime use case. As practical tests continue to succeed, we anticipate drone technology gradually integrating into various stages of the supply chain – especially at legs where it is easier to control both the source and destination dynamics. Moreover, fostering gender diversity in the industry is not just a social imperative but also a strategic move. It allows tapping into a broader talent pool, thereby enhancing overall efficiency and inclusivity in last-mile logistics. We firmly believe that this will play a pivotal role in facilitating the expansion of supply chain capacity in India.
As we celebrate the successes and innovations of 2023, the future of last-mile logistics in India looks promising. The momentum gained this year sets the stage for continued advancements, creating a more efficient, sustainable, democratised, and inclusive last-mile delivery ecosystem.
The writer is Co-Founder and Chief Business Officer at Shadowfax.
