The economic value of Asia’s last mile delivery

The rise of e-commerce have put the spotlight on Asia’s last mile delivery and boosted the economic value of the said industry.

The rise of e-commerce and the advent of online shopping platforms have put the spotlight on Asia’s last mile delivery industry. According to Straits Research, the global last mile delivery market value can grow at a compound annual growth rate of 12.31% towards 2030 from its US$40.5 billion economic value in 2021.

Last mile delivery refers to the final stage of the delivery process, where a product is being moved from a distribution center to the end customer. Its main goal is to fast-track the sent products from every package receiving service hub within the logistics industry.

The delivery segment in logistics management plays a crucial role in the supply chain process. It can make or break the shopping experience.  As the last mile delivery market in Asia continues to grow, certain businesses have begun to optimize their delivery process by using new technologies and innovative delivery models. 

E-commerce in Asia

The growth of e-commerce has been a key driving force behind the expansion of the last mile delivery industry in Asia. The Research Institute for ASEAN and East Asia foresees that the e-commerce market in Asia may reach US$2.7 trillion within 2023, with China and India being the largest markets.

There are now more clients in Asia that are opting for online shopping. In turn, the demand for faster and more efficient last mile delivery services has increased significantly. This has led to new last mile delivery companies in the market. Some of these are J&T Express in Malaysia, AhaMove of Vietnam, Consegnia in the Philippines, and Ninja Van in the South Pacific.

As mentioned by Globe Newswire, expectations from these consumers create a silver lining in coming up with last mile delivery solutions. Many last mile delivery companies, in turn, are now hitting their engines to match the growing demands by solving every delivery problem.

The importance of last mile delivery

Often, the most expensive and time-consuming part of the delivery process is the last mile delivery. However, it is also the most critical stage because it directly impacts shopping experience.

A delayed or damaged delivery can lead to a negative review and harm the company’s reputation. Therefore, businesses invest in last mile delivery solutions to improve customer experience and gain a competitive advantage.

Innovative delivery models, such as same-day and instant delivery, are becoming increasingly popular in Asia. As reported by Yahoo, last mile delivery companies are now working towards technology integration for an automated supply chain.

Real-time tracking and predictive analytics boost accurate delivery times. Thus, they aid in ensuring a good shopping experience.

Utilization of technology

New technologies play significant roles in changing every last mile delivery service in Asia. Using drones, vehicles, and robotics is becoming more common, especially in countries with advanced infrastructure.

For example, Alibaba’s Cainiao Smart Logistics Network has robots. They transport every package delivery box in China, as reported by Alizilla.

“Autonomous driving technology is becoming a core technology in the digital era,”

said Officer Cheng Li, Alibaba’s Chief Technology Officer.

On the other hand, Singapore’s H3 Dynamics Holdings is using drones to deliver medical supplies to remote areas, according to PR Newswire.

“With accelerating digitization, the need for structural scans is also growing while pilot availability is limited,”

says Samuel Chauffaille, head of H3 Dynamics’ Robotics Systems Division.

These technologies can reduce delivery times, lower costs, and improve the efficiency of last mile delivery tracking services. However, their usage is still limited by high costs and regulations. Among these are safety concerns, privacy issues, and the need to create proper must-do’s and infrastructure.

In Singapore, for example, they did autonomous vehicle trials. However, the usage of these vehicles is still subject to regulatory approvals and safety assessments. Singapore’s Land Transport Authority (LTA) requires companies to show that their vehicles can safely go around the city’s traffic conditions and comply with traffic rules before they can operate on public roads.

In addition to the solution on handling the physical goods, big data and AI also can play a crucial role on route optimization and delivery times. This is often a challenge because the recipient may not be available to receive their goods.

Concierge and security booth services lack the trust as they will still rely on the manpower to manage their shipments. Big data and system AI could potentially populate the demographics of their recipient on the preferred delivery time to home or offices instead of incurring wait time for the couriers.

On top of that, in urban areas where it is a dense office tower or high rise condominiums there are security concerns that are blindsided during registration or checking if residents are home and they are just left waiting. All these can help prevent the biggest elements in the last mile delivery which are the timing changes incurred last minute or was never told to the logistic provider.

In urban areas in the European, Japanese, Korean, Chinese regions, they use of smart parcel lockers. Those let them determine when and where their package should go. Hence, any changes in schedule can be put into a plan.

Addressing challenges

Despite the growth opportunities in Asia’s last mile delivery industry, businesses face several hindrances. One of the main challenges is the lack of infrastructure, traffic, vehicle down time , accidents, hub mis-sort , and changes in recipient schedule.

In many parts of Asia, road networks have poor development. Also, traffic and poor road conditions can hinder the delivery process. After pandemic, with the presence of a hybrid working environment, traffic is getting erratic which does not follow back the pre-pandemic norm peak and trough times.

Moreover, the diverse cultures and languages in the region can create communication concerns for delivery personnel, leading to delays and other issues. Furthermore there are many islands within large areas which makes multi modal transportation an absolute necessity.

Another challenge is the high price of last mile delivery services. Businesses must invest in vehicles, fuel, and personnel to ensure timely deliveries. These can be costly, especially for small and medium-sized enterprises.

Since e-commerce is borderless and the management of last mile delivery services can be the focal point. Therefore, using new technologies and innovative delivery models could drive the growth of the logistics industry. Wherein, implementing technology that has a direct and relevant impact on the last mile environment does not have to be complex.
One example is getting shipment data information accurately from the e-commerce platform mapped right and efficiently to various address field requirements using AI and validation techniques.  Also, the said effort has an immediate positive impact. It’s not only on delivery quality but on the overall carbon footprint.

Furthermore, businesses must also focus on the challenges of cross-border delivery. Into which building relationships and knowing every country is key to creating efficient services across borders.

Business owners need to be aware of the custom regulation on the product that they are selling. Unfortunately, these often only become apparent when shipments are on-hold or in a stop from clearance which is too late.

Last mile delivery progression

New technologies and innovative delivery models will shape the future of last mile delivery. The use of drones, vehicles, and robotics could become more widespread, especially in countries with advanced infrastructure.
For example, among these countries is Japan which is a technology-driven country. Japan’s government has been planning to deregulate drone and aviation regulations. They are also preparing to launch more innovations in Japan’s logistics industry.

Overall, improving the customer experience is a continuous process. It compels businesses to offer faster, more convenient, and personalized delivery services. Hence, customer service is a key determinant in gauging economic value.

In addition, sustainability in last mile delivery service operations is a must. With increasing concerns about climate change and other environmental-related concerns, customers are becoming more aware of the impact of their shopping habits on the environment.

Therefore, businesses must adopt more sustainable delivery practices. These may include using electric vehicles or optimizing delivery routes to reduce fuel consumption and carbon emissions.

The economic value of Asia’s last mile delivery is noteworthy. It opens opportunities for more jobs and ensures a progressive supply chain. Wherein businesses that can adapt to changing customer needs and embrace new technologies will gain the upper hand. They will be positioned to succeed in Asia’s highly-dynamic last mile delivery industry.

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