Last-mile delivery: a look into UPS’s rolling laboratory
As city planners and mobility companies give more and more thought to urban quality of life, and as the e-commerce market worldwide is expected to grow from around $3 trillion in 2018 to nearly $5 trillion in 2021, the interest in last-mile delivery is ramping up. Consumer-facing goods-delivery companies such as UPS have been thinking, deploying and testing solutions to solve last-mile delivery challenges, one neighbourhood at a time. “There is no perfect delivery solution,” UPS Director of urban innovation and mobility Tom Madrecki said in a recent interview. From exciting pilot projects to concrete views on data-sharing to some predictions regarding the future of the last-mile delivery, here’s what he shared with us.
Cycle logistics and electric trucks in pilot projects
Over 30 cities in Europe, Canada and the U.S. are involved in last-mile or last-50-feet delivery pilot projects with UPS, most of them centered on cycle logistics: package delivery to the consumer door in a cycle-powered vehicle. “We want to figure out how to best deploy cycle logistics in cities,” says Tom. “It’s a sustainable, human-scale delivery mode that might achieve the same level of efficiency as the regular truck model, if deployed in the right neighbourhood.” And efficiency, for a large-scale delivery company such as UPS, is not a word used lightly. Because a pilot project or new technology deployment and testing often requires a staging area in a downtown space, these projects are usually driven by strong partnerships.
“Every day,” says Tom, “we are looking to learn what works where, because there’s no single solution in the last mile.” Enter the electric, medium-sized delivery truck – like the ones developed with Thor and currently deployed in L.A. – and the whole infrastructure that comes with it. Again, the need for partnerships is front and centre. UPS is aiming to collaborate with cities to drive vehicle electrification at scale, opening the door to unique new partnerships with benefits both for cities and the company. “We’re starting those conversations now with different cities,” adds Tom. “There’s a lot of brainstorming and ideation about what could happen in the future.” Many interconnected pieces need to be taken into account in order to make the move and change the traditional trucks for EV or alternative fuels vehicles: “In the context of electrification, traffic crises and curbside management issues, what is the role of switching to electric trucks?” asks Tom. “Does it give you better access to the curb? Are there other incentives that could be in pla? It’s a nuanced way of dealing with congestion, which might involve better curb access to companies that made the switch to a lower-emissions vehicle.”
Collaboration and data-sharing can’t be rushed
The same way you wouldn’t propose to someone on a first date, you can’t approach a new partner and say “let’s share all of our data, always,” right off the bat. According to Tom, a successful data-sharing arrangement is a relationship, one made of trust-building and small victories. Companies are often concerned about how their data is being used, and it could be because they were burned before. “A city might approach a company today to share data because it wants to better understand traffic,” explains Tom, “but maybe five years ago, the same city wanted to know where the company’s vehicles were in order to give out more tickets.” So trust needs to be built up or even rebuilt.
Tom outlines three factors of success for a good data-sharing relationship. It should be:
- Based on trust
- Limited in scope
- Handled by a third party (a business or a university) that anonymizes the data and shields the parties in some way
“There’s a growing number of companies that see third-party data-sharing as a market opportunity,” says Tom. Businesses like Remix bridge the data-gap between the city of L.A. and Lime bikes, and they make sure the sharing doesn’t exceed the scope that has been agreed upon.
The scope limit also helps define the problem partners hope to solve. Reducing traffic in an entire city can’t be tackled as a single task because it’s too vague, and the amount of data that could be collected is simply too large. Tom suggests the partners “start with a couple of routes that everybody agrees are congested, and test to see if the data that exists can be used, with the help of the third party.”
What the near future holds for last-mile delivery
We asked Tom to predict what consumers might see driving on their streets or ringing their doorbells in the next two to five years. Here’s what he answered:
- Truly autonomous pizza delivery. Companies that handle one-off deliveries such as food or pharmacy supplies could deploy delivery robots transported in autonomous vehicles. “Though it’s in the back of people’s minds, not a lot of people have encountered it so far face-to-face.”
- More and more market entrants. Due to the increase of e-commerce, companies such as Uber are starting to deliver packages, not all in the most efficient way. You could see five vehicles on your curb delivering a total of 10 packages, while UPS trucks – and others in the industry – can carry 300+ packages each, with as many stops. “In the best case scenario, e-commerce reduced personal vehicle trips. But a culture of whatever you want, whenever you want it also could open the door to more vehicles competing at the curb.”
- Cities showing greater interest in goods delivery. Right now, no city takes pride in its awesome delivery system like they would for their bikepath infrastructure. But as cities like London turn some downtown neighbourhoods into pedestrian-only zones, they will have to rethink delivery, with the help of partners. “The goods movement in the London city centre will soon look very different than it does today, so that puts them on the leading edge. Research is happening now, so we’ll be seeing changes in the near future.”
Tom Madrecki, Director of urban innovation and mobility at UPS, spoke on a panel at the Movin’On Summit 2018. To make sure you don’t miss any content from the Movin’On Summit, sign up for our newsletter.