Last-mile Delivery: Regional Trends in 2024

A look at key trends in the last mile across regions around the globe:

• The U.S.

• Europe

• Africa

• Asia Pacific (APAC)

• Australia

We may not have said it last year, but the global economy is poised for growth in 2024. Global GDP is forecasted to grow by 2.6% in 2024, driven by large gains in China and India and more modest gains in the United States and Europe.

This will have positive effects on the retail and logistics industries, and goods will increasingly move from warehouse shelves to doorsteps around the world. Good news for business but perhaps concerning news for the world’s growing sustainability initiatives. The retail industry overall accounts for over 25% of global emissions when accounting for scope three emissions.

The last mile of the supply chain, where goods reach their final destination, is the most costly and complex part of the supply chain. Retail and logistics organizations will increase efforts next year to reduce costs, minimize emissions and enhance customer delivery experiences.

Here are some last-mile delivery trends from regions around the world we can expect in 2024. 
 

We will see continued carrier diversification in 2024, prompted by carrier shipping rate increases and stiff competition from e-commerce behemoth Amazon. Retailers will look to expand delivery networks with alternative carriers - or those not named UPS, FedEx or the USPS - largely driven by incumbent rate increases and greater access to smaller, regional carriers.

FedEx and UPS announced a 5.9% average rate increase on their various shipping services that will both be in effect by January of next year. However, these are only averages. Premium services will see even higher rate increases. For Fedex, Priority Overnight services will increase by 7.88%, while UPS’s Next Day Air service will increase by 7.91%.

The problem here is that the parcel market is heavily dominated in the U.S. by these few large players, giving them tremendous market and pricing power. UPS, FedEx and the USPS make up over 75% of the parcel market by volume in the U.S.

Meanwhile, Amazon is delivering faster than ever before. In the second quarter of 2023, the e-commerce behemoth averaged 1.5 days between online purchase and delivery, while other retailers averaged 5.2 days. This difference in delivery experiences will prompt shippers to continue to look for more efficient delivery options. Alternative carriers may have the answer.

More carriers are entering last-mile delivery space, with many regional carriers increasing capacity where shippers need it and the incumbents cannot efficiently serve. Nearly 18,000 new carriers were authorized in the U.S. in the second quarter of 2023, 64% higher than the quarterly average in the years leading up to the pandemic - 2018-2019. These new carriers are providing valuable capacity and cheaper alternative delivery options that shippers will use to bolster their delivery networks.

We’ll also see a greater focus on sustainability in the U.S. in 2024. Although no official federal regulations have been passed regarding carbon emissions for logistics vehicles, both shippers and carriers will invest in electric vehicles, prompted by the looming possibility of government regulation, demands from consumers and a push for overall energy efficiency in their supply chains. Amazon already has 10,000 electric vans in its U.S. fleet, and has nearly 100,000 more on order. Introducing electric vehicles can be challenging, however, as high capital investment, limited battery range and a lack of charging infrastructure can be hard to justify. We’ll see increased EV adoption in 2024 but don’t expect anything drastic just yet.

Crossing the pond to Europe, we encounter a slightly nuanced logistics environment that has historically been more fractured and has recently had a stronger regulatory focus on sustainability. These forces will continue to push the logistics industry towards greater connectivity and efficiency, where technology will enable processes such as pick-up/drop-off (PUDO), real-time visibility and carbon emission reporting to gain traction.

PUDO networks are revolutionizing delivery systems across Europe. These alternatives for out-of-home delivery are enhancing the efficiency, cost-effectiveness, and environmental sustainability of both e-commerce and re-commerce. Industry specialists from Last Mile Experts (LME) suggest that an effective delivery network should maintain a minimum of one PUDO point for every 10,000 people to achieve cost efficiency. Remarkably, Poland has surpassed the Czech Republic and Denmark, leading in PUDO point concentration in Europe with nearly 40 locations per 10,000 residents. LME’s study indicates a significant rise in the relevance of out-of-home delivery in numerous European markets. In regions like the Nordics, France, Germany, the Baltics, the Czech Republic, and Poland, out-of-home delivery is now estimated to account for more than half of all parcel deliveries.

We’ll also see further growth in real-time visibility, as shippers and carriers invest in technologies that can provide this critical information for both employees (such as drivers and logistics managers) and customers. According to Gartner, a technology advisory firm, over 75% of last-mile deliveries to end consumers in Europe will have near-real-time visibility with delivery windows and ETAs by 2027. Real-time visibility can boost the efficiency of delivery networks, allowing shippers and carriers to monitor and make adjustments on-the-fly. Further, they can enhance customer delivery experiences with more accurate ETA alerts and tracking information. But most importantly is the data that shippers and carriers can generate from real-time tracking technology. And with AI and machine learning today, they can then use this data to further develop, expand and improve their delivery networks to maximize their efficiency.

Electric trucks will hit the roads in Europe. It is estimated that the total fleet of zero-emission trucks will have to expand to 400,000 trucks by 2030, from less than 4,000 now, in order to meet European carbon emission targets. This means the current electric truck sales in Europe, which make up less than 2% of total truck sales, will quickly have to reach a double-digit market share. Expect to see more electric trucks will be out on the European roads in 2024, a trend that will likely continue for a long time.

Reporting carbon emissions in the European Union (EU) will now become mandatory for many companies. Under the EU’s Corporate Sustainability Reporting Directive (CSRD), nearly 50,000 European companies, along with over 10,000 non-EU companies and their European subsidiaries, will be mandated to disclose their greenhouse gas emissions starting in 2025. This directive, along with the European Sustainability Reporting Standards (ESRS), will necessitate an unprecedented level of detailed, data-heavy reporting from these companies. Consequently, 2024 is expected to see a surge in investments in carbon emission reporting technologies, particularly by organizations involved in last-mile delivery. These technologies will enable not just the reporting of delivery-related emissions per the mandated regulations, but also provide analysis of carbon emission patterns and vulnerabilities within delivery networks. The insights gained will empower organizations to develop more efficient and sustainable delivery systems.

An economically growing region, driven by strong population growth, increased technology adoption and greater integrations with the global economy. The African last-mile delivery sector is experiencing remarkable growth, with an impressive forecasted annual compound growth rate (CAGR) of 8.45% from 2022 to 2030.

To realize this growth, there are challenges that will need to be overcome. The cost of logistics in Africa is three to four times higher than the world average. Such costs can add 75% to the price of goods. To put this in perspective, it costs $2,000 to ship a container from China to Mozambique but an additional $5,000 to ship it just 500 km inland.

On a continent where nearly 90% of freight travels by road, there is a lucrative opportunity to overcome logistics challenges such as: lengthy cross-border logistics processes, poor visibility and information sharing, and security and reliability concerns. These will continue to be addressed, primarily with technology, as the economies on the African continent grow in 2024.

Demographically, the region is young, populations are growing and incomes are on the rise. This is fuelling massive demand. This demand coupled with the expansion of urban areas present significant opportunities in the retail sector.

For example, in Nigeria, the wholesale and retail sector ranks as the third-largest contributor to the nation's GDP. In Kenya, there has been a remarkable 54% increase in store count over the past five years. Meanwhile, South Africa boasts nearly 2,000 shopping malls, encompassing an area exceeding 24 million square meters.

But the real growth opportunities in 2024 lie in e-commerce. Many retailers are expanding their e-commerce delivery offerings and investing in their fulfillment and delivery networks as a result. Consumers in Africa, like other regions, are increasingly expecting faster delivery times. Previously, they’ve waited 5-6 days on average for many e-commerce deliveries.

Many parts of Africa will be playing catchup with the rest of the world as logistics and infrastructure continue to improve. Stronger investment in technology will pave the way for even stronger last-mile deliveries.

Asia is the fastest growing region of the world economy, and is estimated to account for 90% of the growth in global online shopping between 2021 and 2026. And recently, Asia has been a pioneer of retail technology and e-commerce. In a reversal of trends, Western retailers have looked to their Asian counterparts as a source of inspiration. Social commerce, livestream shopping and hyperlocal delivery, more prominent in Asia, have proven to be successful and are just now gaining momentum in the West.

In Indonesia, for example, a budding and populous economy, 10% of e-commerce sales are made via TikTok, a social media platform. This trend is growing in the region and will continue to grow in 2024. Sales on TikTok’s app are fulfilled by Tokopedia, the e-commerce division of GoTo, an Indonesian tech conglomerate. More of such partnerships are likely to occur in the region, as social media and logistics continue to merge. But governments are weary of foreign social media platforms and the consumer data that they capture. Expect challenges in this growing opportunity.

India became the world’s most populous country in 2023. And its parcel volumes increased drastically, increasing by 18% to 3.2 billion parcels in 2022. But although India may be the most populous country, it is China that had the highest parcel volumes in the region, clocking in 111 billion parcels in 2022. Logistics technology advancements in China are likely to continue in 2024 as its economy grows, albeit more slowly than economists had predicted. Economic trade restrictions may hamper technological advancement in the country, however.

Across the APAC region as a whole, 45% of logistics firms are employing asset tracking and shipment monitoring software with manual inputs for managing assets, shipments, and cargo. The primary motivations for adopting these technologies include enhancing customer satisfaction and identifying network efficiencies. Adoption of these technologies is anticipated to grow further in 2024. Additionally, logistics providers in the APAC region express a readiness to invest in advanced technologies, with significant investments being planned in drones, robotics, and artificial intelligence.

The e-commerce sector in the Land Down Under is experiencing strong growth, forecasted to expand at a compound annual growth rate (CAGR) of 10.4% over the next four years. This surge is largely driven by increasing consumerism and higher disposable incomes. As online retailing grows, there's a corresponding need for more effective logistics solutions, leading to heightened demand for third-party logistics (3PL) services.

Australia Post, commanding nearly 50% of the parcel volume, is a major player in this landscape. Its dominance, especially in rural areas not served by other carriers, may lead to monopolistic pricing pressures for shippers and presents opportunities for new carriers to gain a foothold in regional, rural markets. However, breaking into these markets remains a challenging task. Moreover, Australia Post's share is expected to continue its upward trajectory in 2024.

In parallel, the Australian healthcare sector is also contributing to a growing 3PL market. With the government's escalating investment in healthcare infrastructure, there's a rising need for 3PL services to efficiently transport healthcare products. This is particularly crucial for specialized, controlled, and secure transport environments, where 3PL providers offer cost-effective and reliable solutions.

Like many of the previous regions we’ve covered, there is an increasing consumer and business demand for sustainable delivery options in Australia. Both segments are actively seeking partners to help minimize their carbon footprint. Consequently, the last mile delivery segment is innovating with automated methods, such as drones and delivery robots, though challenges like weatherproofing these technologies and addressing data privacy concerns remain to be resolved.