Spending on the last mile in e-commerce is typically disproportionate to total logistics costs. So says the report 'Last Link, Quantifying the Cost' by Cushman & Wakefield. Inefficiencies in the last mile, such as failed delivery attempts and non-optimal delivery routes, increase costs by up to 50 per cent of the total. Distribution hubs on the outskirts of cities can turn that tide, according to the real estate consultant.
Cushman & Wakefield developed a tool with P3 Urban Logisticsthat allows developers, investors and users to calculate total last mile costs based on property type. An analysis of markets in London, Paris, Madrid and Milan shows that last-mile costs go down as the so-called STEM distance (the distance to and from a distribution point) gets shorter.
'High rents are recouped'
This means, according to Cushman & Wakefield, that a logistics hub on the outskirts of a city is more cost-efficient than an out-of-town distribution centre. The higher rents users pay in the city are quickly recouped. Indeed, city hubs reduce delivery workers' labour costs, fuel costs and more efficient use of transport modes. A 20-minute reduction in travel time in the last mile would generate annual savings of EUR 2 million. In Paris, those annual savings amount to as much as 4 million euros.
Consumer interaction
According to Menno van Boxtel, Head of Industrial & Logistics at Cushman & Wakefield, optimising the last mile is not only important because of the cost tag. "It is precisely in this part of the chain that the actual interaction with consumers takes place and the difference can be made." By organising logistics close to the consumer, companies can trump the competition, and it is also easier to attract suitable staff in cities, Van Boxtel said.
