According to Gartner, the deployment of drones in retail deliveries is anticipated to exceed a million units by 2026
The concept of last-mile logistics may seem simple, but it is a critical and complex component of the supply chain. The “last-mile” refers to the final leg of a product’s journey, from the distribution centre to the final delivery destination. It is a stage where customer satisfaction and loyalty are won or lost as it directly influences the customer’s perspective of a brand or business. To be precise, timely and error-free deliveries can result in satisfied customers, while delays or mistakes can lead to dissatisfaction. Thus, last-mile delivery has the power to shape perceptions, profitability, and success of businesses in an increasingly consumer-centric marketplace.
The last-mile intricacy also arises from diverse challenges, such as navigating congested urban areas, managing dynamic delivery routes, and addressing the environmental impact of transportation. According to an assessment, 74% of Indian businesses struggle with last-mile logistics. Therefore, logistics companies are engaging in various automation solutions such as route optimization software, and drone deliveries to overcome these hurdles and redefine last-mile logistics.
In line with this, the India logistics automation market is expected to grow at a CAGR of 16.2% during 2023-2028. This growth can be attributed to the surge in logistics and warehousing companies in India, aimed at enhancing operational speed and efficiency. Subsequently, the rising consumer awareness around the benefits associated with logistics automation, such as reducing overhead costs, streamlining the supply chain, and minimising manual errors, is a driving force behind the market growth. The introduction of express delivery services by numerous e-commerce entities is also amplifying the necessity for automated logistics solutions within the sector. Therefore, in a world where convenience and speed are paramount, last-mile logistics has evolved into a dynamic field, offering technology-led, custom-made solutions to businesses.
AUTOMATION RESHAPING LAST-MILE LOGISTICS
Automation technologies are spearheading a revolution in last-mile operations, offering innovative solutions to address longstanding challenges. Here are some of the key technologies reshaping last-mile logistics:
Advanced Route Optimisation
One of the key areas where automation technologies are making a significant impact is in route optimization. Traditional, manual route planning is often inefficient and prone to errors. However, with the advent of sophisticated route optimization software and the integration of GPS tracking systems, companies can analyze data in real-time to identify the most efficient delivery routes. These algorithms consider factors such as traffic patterns, delivery windows, and vehicle capacity to ensure that deliveries are made in the most cost-effective and timely manner. GPS tracking, in particular, plays a crucial role in allowing route optimization systems to make dynamic adjustments, reroute vehicles, and ensure that deliveries are on track and on time. This integration enhances the precision and efficiency of last-mile deliveries, benefiting businesses and end users.
Robotics and Automation in Warehouses
Efficiency in last-mile logistics commences at the heart of the supply chain — within distribution centres and warehouses. Robotic arms, conveyor systems, and automated guided vehicles (AGVs) deployed in these facilities have the potential to significantly increase order fulfillment speed. Therefore, Indian warehouses are increasingly embracing the use of robots, recognizing their capacity to enhance operational efficiency. However, it is imperative to assess the feasibility of incorporating such advanced automation technologies within the Indian context. Factors like existing infrastructure, cost implications, and the adaptability of the workforce to robotics need careful consideration. Overall, the successful integration of robotic systems could be transformative, ensuring precision and reliability in last-mile logistics. As the Indian logistics landscape evolves, striking a balance between technological innovation and practical feasibility will be crucial to maximising the benefits of robotics in warehouse operations.
Drone Deliveries
The use of drones for last-mile deliveries in India has been gaining momentum since the pandemic as the Ministry of Civil Aviation and the DGCA relaxed restrictions, allowing conditional exemptions for the use of drones by government organisations. Furthermore, the government’s ‘Drone Liberalization Policy,’ introduced in 2021, aimed to accelerate the commercial and industrial utilisation of drones, supported by the production-linked incentive (PLI) scheme for domestic drone manufacturing. This shift has led to a surge in drone production within India, positively impacting logistics firms seeking to enhance their operational efficiency.
However, in the current scenario, delivery partners will continue to remain the primary delivery method, and drones will be utilised to expedite the delivery process in specific areas and needs. Their suitability extends to areas that are inaccessible by roads, thanks to the Vertical Takeoff and Landing (VTOL) and accurate GPS technology. According to Gartner, the deployment of drones in retail deliveries is anticipated to exceed a million units by 2026.
Despite the promising trajectory, challenges persist in the widespread adoption of drones in India. Regulatory hurdles, safety concerns, and the need for robust air traffic management systems hinder seamless integration. The import ban on drones, while encouraging domestic manufacturing, poses supply chain challenges. Additionally, public acceptance and privacy issues also remain areas of concern, indicating that drone deliveries have a long way to go.
NAVIGATING CHALLENGES
The integration of automation technologies in last-mile logistics, while promising transformative benefits, is not without its challenges. One of the primary concerns is the substantial initial investment required for implementing automation systems and equipment. Furthermore, regulatory hurdles and safety concerns surrounding autonomous vehicles and drones can hinder their widespread adoption. Human involvement remains essential, especially for handling exceptions, customer interactions, and maintenance of automation equipment. Moreover, last-mile operations often involve complex variables, such as unpredictable traffic conditions and varying delivery requirements, which demand sophisticated real-time decision-making. Balancing the need for efficiency with sustainability is another critical consideration, as it is imperative to reduce the environmental impact of vehicles used in logistics.
BREAKING BARRIERS: OVERCOMING OBSTACLES
To address these obstacles and mitigate the financial burden, various logistics companies are forming strategic partnerships to share costs. Regulatory bodies are also working on adapting to the changing landscape, revising rules and safety standards to accommodate drones. Hybrid models, which combine automation with human oversight, are being adopted to ensure smoother exception handling and maintain the human touch in customer interactions. Advanced data analytics and AI-driven solutions are enhancing the adaptability of automation systems to cope with real-time complexities, allowing for more flexible and efficient last-mile operations. Sustainability concerns are being tackled through the adoption of eco-friendly delivery options, such as electric vehicles and environmentally conscious route planning, aligning automation with environmental responsibility.
Moreover, government initiatives such as Unified Logistics Integration Platform under the National Logistics Policy (NLP) and PM Gati Shakti National Master Plan, among others, mark a substantial shift towards digitalisation. They leverage various technologies such as Radio Frequency Identification (RFID), Artificial Intelligence (AI), and machine learning to foster a coordinated approach. This digital transformation lays a foundation for seamless integration with automation technologies, enhancing the overall efficiency and effectiveness of logistics operations.
FUTURE TRENDS AND INNOVATIONS
The logistics sector is on the cusp of a transformative era, with future trends and innovations poised to redefine last-mile delivery. Autonomous vehicles (AVs), characterised by self-driving trucks and delivery vans, promise to revolutionise the industry by enhancing efficiency and reducing labor costs. These vehicles can navigate urban streets and congested areas with remarkable precision, ensuring timely and error-free deliveries. Recently, Nuro.AI, part of Google’s self-driving project Waymo was showcased globally. With a high range and a speed of 60 km/h, the delivery van is adept at transporting food items, with remote control intervention reserved for operational issues only.
Aligning with the global trends, various startups in India are actively working towards the realisation of self-driving trucks, reflecting a notable level of market confidence in AVs. Along with the overall advantages around efficiency and cost, the country’s acute shortage of 2.2 million truck drivers provides a compelling business incentive for the adoption of automated trucks that can operate around the clock with minimal rest stops. Subsequently, India is also laying plans for green expressways, which will further contribute to the increasing trials of these vehicles.
While AVs hold immense potential, they bring forth significant challenges too. The transition raises questions about the impact on employment, especially in a nation where the truck industry is one of the major employers for lower and rural socioeconomic classes. Additionally, India has an uncertain regulatory landscape around AVs, which further adds to the reliability and security concerns of autonomous deliveries.
To cater to these challenges, a comprehensive roll-out plan for autonomous vehicles, encompassing different phases from assisted driving to remote control to true autonomy, needs to be collectively devised by industry experts and the government. Additionally, block chain technology is introducing transparency, traceability, and security into the logistics sector. It enables real-time tracking and verification of shipments, reducing the risk of theft or fraud and enhancing customer trust. Together, these innovations are poised to redefine last-mile delivery, making it more efficient, cost-effective, and secure, while meeting the ever-increasing demand of a customer-centric market.
Overall, the world of last-mile logistics is in the midst of a significant transformation driven by automation. As technology continues to evolve and address the challenges and considerations, we can expect even more dynamic, cost-effective, and environment-friendly logistics systems. The future holds exciting possibilities for the logistics industry, and automation is at the forefront of this revolution.
(This article is authored by Akshat Pushp, Head – 3PL, Strategy and Digital Transformation at Apollo Supply Chain)
