LAST MILE DELIVERY MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)

Last Mile Delivery Market Size and Trends

The global last mile delivery market is estimated to be valued at US$ 174.62 Bn in 2024 and is expected to reach US$ 312.04 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 8.6% from 2024 to 2031.

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The last mile delivery process involves the transportation of goods from local distribution centers to the final delivery destination. It aims to deliver shipments as fast as possible using various modes of transportation like roadways and airways. This can be attributed to the rising demand for faster delivery options driven by booming e-commerce sales. Additionally, improvements in route optimization and adoption of new technologies like drones, autonomous vehicles and IoT is making last mile logistics more efficient and cost-effective. Key players are focused on offering value-added services and innovative delivery solutions to consumers.

Market Driver - Rapid growth of e-commerce and online shopping

The digital revolution has undoubtedly transformed the way people shop in this modern era. With the proliferation of smartphones and high-speed internet connectivity, online shopping has now become a very convenient option for consumers across the world. They can browse through a wide array of products sitting in the comfort of their homes and get them delivered right at their doorstep. This shift towards e-commerce has drastically increased the demand for last mile delivery services.

As people now heavily rely on online platforms for various goods ranging from grocery to electronics to apparel, e-tailers have witnessed tremendous growth in their business year-over-year. They often partner with logistics providers to ensure seamless delivery experience for customers. Various demographic and economic factors such as rising incomes, growing middle class, increasing digital literacy in developing markets, 24x7 connectivity etc have all fuelled the boom in online shopping. The trends clearly indicate that share of e-commerce in total retail sales will continue rising significantly over the coming years.

This rapid growth of e-commerce sector has put tremendous pressure on delivery players to scale up their last mile operations. They need to invest heavily in delivery fleets, warehouse infrastructure, tracking technologies to fulfill the unprecedented volume of deliveries emerging from the online orders. While metropolitan cities have highly optimized delivery networks, tier 2 and tier 3 areas still lack strong capabilities. Logistics providers are working toward expanding their reach and focus on same-day or instant deliveries as customers now expect lightning fast fulfillment. The dynamics of this industry are also evolving with new delivery models based on drones, lockers coming into play.

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Increasing consumer demand for quick and efficient delivery

With Amazon setting the benchmark of delivering packages within a day or same day, customer expectations around delivery speeds have risen manifold over the past few years. Consumers now want their online orders delivered to them without any unnecessary delays, especially for urgent or time-sensitive purchases. In fast-paced urban lifestyles, people have little patience or time to wait for packages to arrive. Same-day or instant deliveries within few hours of orders are gaining tremendous popularity.

Moreover, COVID-19 related restrictions during the pandemic have further ingrained the need for contactless and efficient deliveries among customers. As fear of virus transmission looms large, customers prefer getting their packages delivered at their doorsteps at the earliest rather than visiting stores. Ensuring safety and hygiene standards has also become a top priority for delivery workers and fleets.

This demand from customers to receive orders instantly is a big challenge for last mile service providers to address. Their entire operation from warehousing to routing needs to be designed for quick turnarounds. Adopting technologies like IoT, machine learning for optimized logistics planning and vehicle routing is crucial. Companies are experimenting with micro-fulfilment centers, smaller vehicles for last mile connectivity. Partnerships between retailers, logistics firms will help establish an ecosystem for seamless convenient deliveries. With consumer focus firmly on speed, flexibility and visibility, last mile industry needs continuous innovation and upgrades.

For instance, In October 2023, DPDgroup , Europe's  largest parcel delivery network, announced its merger with a local delivery service  to strengthen its market position. This strategic move aims to enhance DPD's service offerings and expand its capabilities in the rapidly growing same-day delivery segment, further solidifying its leadership in the logistics industry. The merger is expected to provide customers with improved access to a wider range of delivery solutions, reflecting the increasing demand for efficient logistics services.