The “Last Mile” in Inland Freight Distribution

The “Last Mile” in Inland Freight Distribution

Freight distribution can be represented as a flow chain supported by a transport chain. The flow chain is illustrative of the frequency and unit volume of each segment, from maritime shipping (high volume, low frequency) to local deliveries (low volume, high frequency). Long-distance transportation tends to be well serviced by high capacity modes and terminals and is prone to economies of scale (massification). The global shipping network offers very high volumes per unit and, depending on the routes, a reasonable frequency of services (for instance, one port call every two days). As we get closer to the final customer, economies of scale are increasingly difficult to apply as load size tends to diminish (atomization). It would be rare, for instance, for a single customer to be the consignee of the cargo of a whole containership.

The “Last Mile”, notably for retailing, often consists of truck deliveries taking place over short distances, but likely in a congested urban setting and less than full truckload (LTL). It is often one of the most complex elements of the supply chain to organize as it reconciles many customers, a variety of shipments, and reliability challenges related to congestion. The “Last Mile” concept also applies to the “First Mile”, albeit in reverse, which involves the consolidation of the cargo of several producers to a nearby transport terminal. For inland freight distribution there are two types of last-mile logistics:

  • Gateway-based where the cargo is either bound to a local (or regional if long-distance trucking is involved) consignee or transloaded into a domestic container and brought back to an intermodal terminal for inland shipping. Since gateways are generally large urban areas, these operations are commonly involving congestion. There is also a large gap between the capacity of the maritime segment and the drayage segment, which usually involves delays at terminal gates.
  • Hinterland-based, which links gateways to inland terminals using rail or barge services, is of lower volume but higher frequency. Once freight consignments arrive at an inland terminal, they are collected and brought to distribution centers through truck drayage.

Containerization is thus confronted with a growing tension between massification at sea and atomization on land. Growing vessel size has led to the massification of unit cargo at sea. On terminals and at the landside, massification makes place for an atomization process whereby each individual container has to find its way to its final destination. A major challenge consists in extending massification inland. Postponing the atomization of flows shifts the container sorting function inland and, as such, eases the pressure on port terminals. High-volume rail and barge corridors, including inland terminals, play a crucial role in this process.