The “Last Mile” (or “Last Kilometer”) is a common distribution problem where near the destination a high capacity long distance transport system is facing high costs and complexity. This is mainly related to the need to break down the size of the transport unit (less economies of scale) and where congestion impairs reliability as well as capacity. Although the concept was initially conceived for the telecommunication sector (e.g. phone and cable services), it applies particularly well for freight distribution. Three major elements impact the effectiveness of last mile logistics:
- Terminal operations. Since a significant segment of freight flows are originating or bound to a terminal (maritime, rail or barge) the efficiency of terminal operations in terms of capacity, turnover and gate access, will impact last mile logistics. For instance, a terminal with gate congestion will imply additional delays and thus impacting local distribution.
- Drayage operations. The standard last mile problem for drayage (movement to and from a terminal) is congestion on local and regional roads, commonly due to a lack of capacity. This particularly takes place at bottlenecks such as highway interchanges, bridges and tolls. Since containers are carried on chassis, the management of these assets is a challenge.
- Warehousing. The level of efficiency and responsiveness of a distribution center is linked with the capabilities of performing deliveries on time. Near gateways an active transloading function has emerged, which involves additional movements between transloading warehouses and terminal facilities.
- Deliveries. Movements from a distribution center, often done in less-than-truckload fashion, are also a fundamental part of the process as they usually occur in a congested setting. Parking is one of the most common challenge for urban deliveries.
Consequently, last mile logistics concerns challenges that are both internal (e.g. terminal operations) and external (e.g. congestion) to freight distribution. Internal challenges can mostly be addressed by the industry through better synchronization and coordination of operations, as well as adapted modes, but external challenges require a concerted public policy effort.