E-commerce has changed expectations dramatically. When shoppers make decisions, they often ask two questions: Is it available right now, and how soon can I get it? For the freight industry and supply-chain planners, this means finding a way to satisfy a market that seems to want it all.
In a project sponsored by the Minnesota Freight Advisory Committee (MFAC), U of M researcher Frank Douma studied these trends, their implications, and how the industry is responding. His white paper focuses on activities that most experts feel are likely to be of the highest impact: what it takes to get customers’ orders the “last mile” to their doors.
“In the ongoing effort by MFAC to better understand freight movement, the committee chose this topic to explore how consumer demand—in this case, e-commerce—is driving change in freight movements,” says Ron Dvorak, MFAC chair. “The shifting market expectation is creating a new paradigm with major infrastructure implications, and this paper provides the committee a lens to better focus planning guidance.”
The last mile is the final step of the delivery process and can actually range from several blocks to several miles, says Douma, the director of the Humphrey School’s State and Local Policy Program. The “first mile,” from the shipper to warehouses or distribution centers, can raise similar issues, especially in states like Minnesota where manufacturers can be spread widely across small towns or rural areas.
The exact nature of the issues and challenges can vary. “For example, while a transportation planner may be concerned about possible congestion impacts resulting from increases in delivery vehicle traffic, a small carrier may be concerned about its very existence: whether and how it should try to compete against, or collaborate with, a company like Amazon as it moves toward the use of drones,” Douma says.
A number of emerging innovations and technologies are driving this changing landscape, including vehicle automation. “Traditionally, humans have covered this last mile, whether they were professional delivery drivers or consumers bringing home the goods,” he says. “Now, technology is emerging that can substitute for both methods.”
This technology can come in many different forms: automated vehicles, small drones delivering individual packages from a larger vehicle, or smaller self-driving boxes that are able to safely maneuver in dense environments. Such advances are still five to ten years out, Douma says, and considerable opportunity remains for existing lower-tech solutions.
In the meantime, “Changes at distribution centers and warehouses are likely even more central to the greater and faster deliveries the market is calling for,” Douma says. New robotic and other technologies are making it possible for parcels to be sorted, shipped, and tracked to their destination faster and at lower cost.
Many of these changes in freight transportation are taking place outside of Minnesota, but changes are happening in this state as well, offering significant opportunities.
“A limitation, however, concerns our rural broadband and highways,” he says. “The sensors, robots, and all of the other technologies will rely, to some extent, on the growth of the internet of things and other connectivity. To the extent that this connectivity does not exist, particularly in smaller towns and rural areas, potential benefits and competitive advantages could be lost.”