Last Mile Delivery Explained: Problems, Solutions, Trends & Software

Last mile delivery connects businesses to customers and represents the final and most critical stage in the supply chain. It affects customer satisfaction, operational costs, and brand loyalty.

According to Statista, last mile delivery accounts for 53% of total shipping costs. This makes it a primary focus for logistics optimization.

E-commerce growth, over the last years, has increased pressure on logistics providers. Companies face challenges like traffic congestion, failed deliveries, and rising fuel costs. To address these, businesses adopt various technology solutions.

This article explores the problems, solutions, trends, and software related to last mile delivery.

Last mile delivery is a logistics concept that refers to the final stage of the supply chain. Simply put, the distribution center delivers goods directly to the customer’s doorstep.

The term "last mile" take their roots in the telecommunications industry. Connecting individual homes to the broader network posed significant challenges. This process mirrored the logistical complexities seen in transportation today.

Last mile delivery has become a key area of focus with the rise of B2C services. Especially in e-commerce and ride-sharing industries.

Last mile delivery service refers to the process of transporting goods from a local distribution center to the end customer. Its primary goal is to ensure products arrive quickly, accurately, and efficiently.

This process involves several sequential steps. It typically begins with order processing, route optimization, package sorting, and loading. The final stages include delivery attempt protocols, customer communication touchpoints, and proof-of-delivery documentation. If necessary, - return processing.

Last mile delivery works through a structured process. The goal is to deliver packages quickly, accurately, and at minimal cost. The process involves several key steps:

The retailer or logistics provider receives and verifies the customer’s order. The system checks inventory and assigns the nearest fulfillment center for dispatch.

At the distribution center, packages are sorted based on delivery routes and destinations. Advanced systems use AI and barcode scanning to speed up this process.

Delivery management software plans the most efficient routes. The software takes into account traffic, distance, weather, and delivery windows. Optimized routes reduce fuel consumption and delivery times.

4. Dispatch and Loading.

Packages are loaded onto delivery vehicles, such as vans, bikes, or electric vehicles. In urban areas, bicycles or drones may be used for quicker access to congested zones.

Drivers follow optimized routes to deliver packages. Customers receive real-time tracking updates and estimated arrival times (ETAs). Typically through mobile apps or notifications.

Upon arrival, drivers collect proof of delivery. Usually via digital signatures or QR code scans. This ensures accountability and provides delivery confirmation.

Some services gather customer feedback to improve future deliveries. AI systems analyze data to refine routes and predict delivery patterns.

Let's take as an example . Imagine a customer orders a large sofa from an online furniture retailer.

The process begins when the order is confirmed. The system identifies the nearest warehouse with the sofa in stock. Then schedules the delivery based on the customer’s preferred date and time. Coordination is essential, especially for large items requiring specialized transport.

The last mile delivery process starts when the sofa leaves the warehouse. On delivery day, the warehouse team packages the sofa to prevent damage. The item is loaded onto a truck designed for oversized goods.

Before departure, the delivery management software calculates the most efficient route. It considers traffic, road restrictions, and delivery time windows. This helps ensure on-time delivery while reducing fuel costs and emissions.

As the driver follows the optimized route, the customer receives tracking updates and an estimated arrival time. By the way, in Ulan Software we have hands-on experience with last-mile logistics solutions. We built .

Upon arrival, the delivery team unloads the sofa.

After successful delivery, the customer digitally signs to confirm receipt. The system then updates the retailer’s records, provides proof of delivery, and completes the transaction.

Last mile delivery time varies based on various factors. These are distance, location, order volume, and delivery method. In urban areas, it usually takes.

In rural areas, delivery may take to due to logistical issues and longer travel distances.

Retailers offer to meet rising consumer demands. For example, Amazon Prime provides same-day delivery in select cities.

The grocery and food delivery services often complete orders within.

Several factors influence delivery speed:

Order Volume: Peak seasons (e.g., holidays) may lead to longer delivery windows.

Generally, delivery time depends on the logistics capabilities and the customer’s location.

Last mile delivery takes various forms. This depends on the industry, customer needs, and logistics infrastructure. Different types cater to factors like delivery speed, package size, and location. Here are the most common types:

Standard Delivery. Standard delivery is the most common option, taking 2 to 5 days. Suitable for non-urgent shipments like clothing, books, and household items.
Same-Day Delivery. Often used in e-commerce and grocery deliveries, where buyers demand faster service.
Next-Day Delivery. Businesses use it to improve customer satisfaction while controlling logistics expenses. It's common for electronics, fashion, and healthcare products.
On-Demand Delivery. Focuses on immediate, real-time deliveries, usually completed within 1 to 3 hours. It’s popular for food delivery, pharmaceuticals, and ride-sharing services.
White-Glove Delivery. White-glove delivery includes value-added services like in-home setup, assembly, and packaging removal. It’s used for furniture, appliances, and high-value electronics.
Parcel Locker Delivery. Customers to pick up packages from secure locker locations. Companies like Amazon Hub and InPost use this system to streamline deliveries.
Crowdsourced Delivery. Businesses engage independent contractors for last mile deliveries. Typically using platforms like Postmates or Roadie.
Drone and Autonomous Vehicle Delivery. Emerging technologies, like drones and self-driving vehicles, offer fast, contactless delivery. It is especially useful for hard-to-reach or congested areas.

Last mile delivery faces several challenges. They are driven by urbanization, environmental concerns, operational inefficiencies, and evolving customer expectations. These issues increase costs, delay deliveries, and strain logistics infrastructures. Below we define four major last mile delivery problems.

Rapid urbanization and the surge in e-commerce are reshaping logistics. By 2050, an estimated will live in cities. Ecommerce continues to grow at double-digit rates. As a result, parcel volumes to urban centers are increasing. This demand exceeds the capacity of traditional delivery infrastructures. In essence, it causes congestion, longer delivery times, and rising operational costs.

Delivery vehicles contribute to urban traffic, higher emissions and safety risks today. From an economic perspective, overloaded logistics networks increase costs. From a social perspective, citizens face increased noise and traffic congestion.

Logistics companies are trying to mitigate these impacts. Many of them are exploring new solutions. For example, decentralized microhubs or alternative transportation methods (such as cargo bikes).

The environmental footprint of last-mile delivery is growing as parcel volumes increase. More delivery vans on congested streets increase carbon emissions, air pollution and noise levels. All that impacts public health.

Cities around the world are responding with stricter environmental regulations. They are pushing logistics companies to adopt greener solutions.

While electric vehicles (EVs) and sustainable packaging reduce emissions, regulations also encourage innovation. For example, British Columbia allows EVs on high-traffic lanes. This speeds up the delivery and reduces environmental impact. Sustainability is no longer optional. It’s both an ethical responsibility and a competitive advantage in modern logistics.

High operational costs make last mile delivery an economic challenge. Traditional delivery models using vans face various inefficiencies. For example, traffic delays, parking difficulties, or first-time delivery failure rates.

By the way, the last one ranges from 20% to 30% depending on the region and service quality (). This leads to wasted budgets and rising delivery costs.

Rising costs could impact profit margins and lead to higher consumer prices. Potentially it can slow e-commerce growth. To fix this, companies explore alternative solutions. For example automated delivery, parcel lockers, and customer pickup options. These solutions reduce delivery attempts and improve overall efficiency. This results in sustainable operations while maintaining customer satisfaction.

Increasing consumer expectations for same-day and next-day delivery put enormous pressure on logistics. Peak periods like Mondays or seasonal sales add even more pressure to deadlines. They require flexible that can scale faster. Failure to deliver on time can damage brand reputation and reduce customer trust.

"Time pressure" drives investments in three key areas. Companies focus on advanced route optimization, real-time tracking, and flexible staffing models. Companies must balance speed with reliability. Any operational error risks delays, customer dissatisfaction, and lost revenue.

Last mile delivery remains one of the most complex and cost-intensive segments of the logistics chain. Companies address these challenges through advanced technologies, data-driven innovations, and sustainable delivery models.

The goal is to improve efficiency, and customer satisfaction while navigating operational complexities.

Nowadays, traditional static routing methods are no longer efficient. Route optimization software uses different technologies to improve delivery routes.

These are machine learning, and real-time data. It adjusts routes based on changing conditions for greater efficiency. These systems consider multi-variable constraints such as:

By adopting these tools, companies can reduce fuel consumption and delivery times by up to 20% (). Enhanced routing cuts operational costs and improves first-attempt delivery success rates.

Crowdsourced delivery leverages gig economy workers to fulfill last mile deliveries. Platforms like DoorDash connect businesses with independent drivers, allowing for flexible, on-demand service.

This model expands delivery coverage, especially during peak times or in remote areas. It doesn't require companies to maintain a large fleet. Crowdsourced delivery improves scalability while reducing overhead costs. It is an ideal match for food delivery, e-commerce, and same-day shipping.

Electric vehicles (EVs) offer a sustainable alternative to traditional fuel-powered delivery trucks. They produce zero emissions and help companies reduce their carbon footprint. This follows strict environmental regulations.

Retailers like Amazon and IKEA are integrating EVs into their delivery fleets. In order to lower emissions and improve operational efficiency. Another advantage is lower maintenance costs and access to designated lanes in certain cities.

Parcel Lockers and Click-and-Collect

Parcel lockers and click-and-collect services provide convenient alternatives to home deliveries. Customers pick up packages at secure locker locations or designated stores at their convenience. This reduces reliance on direct delivery.

These types of solutions consolidate multiple orders to centralized points. As a result, failed delivery rates decreased by up to 30% ().

Technologies like drones and autonomous vehicles offer innovative approach. Drones can bypass traffic congestion, delivering packages to hard-to-reach areas within minutes. Meanwhile, autonomous ground vehicles navigate urban streets to complete contactless deliveries.

Companies like Wing and Starship Technologies are pioneering these technologies. This reduce human dependency, lower labor costs, and improve delivery speeds.

The main trend to save costs is about implementing several technologies. They are:

This is how it works:

--> AI-powered real-time rerouting avoids congested roads, reducing fuel consumption by 10-20%.

--> Fewer miles driven = lower fuel costs and maintenance expenses.

--> Optimized dispatching minimizes driver idle time, reducing hourly wages.

This is how it works:

--> Drones and delivery robots replace human couriers, eliminating salaries, insurance, and vehicle maintenance.

--> 5G-enabled edge computing speeds up AI inference, lowering reliance on expensive cloud processing.

--> Reduced fuel costs by shifting to electric-powered bots.

How It Works:

--> Predictive analytics models analyze historical order patterns, seasonality, and external factors.

--> AI pre-positions inventory in local micro-fulfillment centers before demand spikes.

--> Reduces overstocking and last-minute express shipping costs.

Last-mile delivery is evolving fast. Same-day deliveries are becoming the norm, not a luxury. Customers expect speed, and companies are racing to meet demand.

AI-powered tracking is making deliveries more precise. Real-time updates tell customers exactly where their package is. No more guessing or long wait times.

Urban warehousing and micro-fulfillment centers are cutting delivery times. Companies place inventory closer to customers, reducing delays and costs.

Big data is the game-changer. It predicts demand, optimizes routes, and prevents delivery failures. Smart logistics means fewer wasted miles and faster shipments.

The future?

Last Mile Delivery Explained: Problems, Solutions, Trends & Software

What is Last-Mile Delivery?

What is Last Mile Delivery Service?

How Does Last-Mile Delivery Work?

2. Package Sorting and Allocation.

3. Route Optimization.

5. Delivery Process.

6. Proof of Delivery (POD).

7. Post-Delivery Feedback.

Last Mile Delivery Example

How Long Does Last Mile Delivery Take?

Types of Last Mile Delivery

What are Common Last Mile Delivery Problems?

Urbanization and Ecommerce Growth

Environmental and Regulatory Challenges

Economic and Operational Challenges

Issues with Service-Level

What Are Effective Last Mile Delivery Solutions?

Route Optimization Systems

Crowdsourced Delivery

Electric Vehicles (EVs)

Drones and Autonomous Vehicles

What is the Trend in Last Mile Delivery in Order to Save Costs?

Future of Last-Mile Delivery

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Last Mile Delivery Explained: Problems, Solutions, Trends & Software