ULI New York Blog

Recap: Executing the ‘Last Mile’ of Delivery

 

By: Krystyn Gatto

In today’s world, especially in New York City, waiting multiple days for a product to be delivered is becoming less and less acceptable. Companies like Amazon have conditioned many of us to be offended when something takes more than a day if not hours to show up. Heck, if it’s your lunch, you expect it to be at your office within minutes. Let’s admit it, almost everything you could need from clothing, to groceries, to furniture, to wine for a dinner party, are only a few clicks away.

Many of us surf through our various apps ordering a plethora of items from the palm of our hand without much thought as to how our purchases or rentals make it to us in no time at all. The reality is that there are significant tactical and logistical strategies necessary to provide this expedited service.

The “last mile” of deliveries like these is often the most difficult aspect of the online shopping process for vendors. Fulfillment centers need to be in and around the communities they serve to execute on rapid delivery. In large cities, finding the industrial space to store, process and dispatch products is no simple task. When we click ‘proceed to check out,’ most of us don’t think of the shelf the product we are purchasing is on, how it will get to the delivery vehicle, how many turns that vehicle will take to get from the packing facility to your door, or the size of the truck that needs to fit through the tight streets of your neighborhood.

ULI New York’s recent panel on “Executing the Last Mile of Delivery” enlightened attendees about these very logistical issues which are making modern industrial development one of the hottest sectors of real estate. The panel included moderator Benjamin Conwell (Senior Managing Director – Global Practice Leader at Cushman & Wakefield), Michael K. Bennett, LEED AP (Principal at Ware Malcomb), Walker Dieckmann (General Manager for the Northeast at Instacart) and Nick Kittredge (President East Region, United States at Prologis) who are all well versed in the logistical issues of delivery and working in their own way to combat them.

Both Michael and Nick spoke on designing new warehouse facilities or retrofitting older facilities to make them more functional and attractive to this growing sector of industrial tenants. These adaptive designs include multi floor facilities, drive isles that can accommodate new box truck dimensions, integrating parking and loading lanes in order to meet inner city zoning requirements, various ramping systems and modes of vertical transportation to name a few.

Walker Dieckmann of Instacart contributed his unique perspective to the subject as well. His company is able to provide a third-party service that connects grocery vendors with customers while utilizing a fleet of vehicles that are owned and operated by individual drivers (in the model of the ride app Uber). They are also constantly on the front line, contemplating new technologies and strategies to ensure efficient delivery to their customers in metropolitan areas.

A key element of this mode of delivery that was discussed is the cost. In some cases, the customer is taking on the expedited delivery cost, but many retailers are willing to share in this expenditure if it means they can do higher volume from an online warehouse, or more sales per square foot from an existing brick and mortar location. Although, all of the panelists noted that one area vendors are struggling to find a solution for is returns. Who pays for them, are they financially feasible, and what about reshipping the right item? In some cases for large online retailers, the cost to return and restock their goods is too cumbersome. Because of this, some may even opt to send a replacement and leave the consumer to deal with the unused, unsatisfactory item. These issues also lead to problems of excess waste and enhanced burdens on recycling and landfill facilities.

As one could easily surmise from the discussion, last mile delivery is not yet an exact science. There are plenty of innovators out there trying to create solutions, be it utilization of vehicles that are already on the road, new ground-based automobiles that are either human or machine controlled, creating accessible inner city fulfillment centers, or perhaps we will see shipping drones buzzing around above our heads in no time at all.

No one answer is certain, but Mr. Dieckmann may have said it best when he stated, “Tomorrow is not good enough anymore. Everyone is moving to same-day…customers want immediacy.”

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