One of the major drivers for the growth of the global last mile delivery market is the inflow of heavy investments from venture capitalists. Within a few years of its emergence, this market has witnessed a monumental increase in the number of start-ups, which are receiving funding from several venture capitalists, in order to expand their business. Due to these factors, the market is expected to grow, at a CAGR of 20.3% during the forecast period (2020–2030).
The last mile delivery market is classified into B2C and business-to-business (B2B), on the basis of service. Of these, the B2C bifurcation is expected to experience faster growth during the forecast period. The growth of B2C services is attributed to the changing consumer purchasing behavior, growth in the adoption of organized and omnichannel retailing, and increasing technical knowledge regarding the use of smartphone apps and online platforms. Moreover, with a continuous increase in the global middle-class population, coupled with the expanding internet penetration, e-commerce and logistics companies have witnessed an increase in the demand to deliver products, even to consumers in remote locations.
Further, the last mile delivery market, on the basis of application, is categorized into e-commerce, package delivery, and others. The e-commerce category dominated the market during the historical period (2014–2019). The dominance of the e-commerce category is attributed to the increasing customer base and changing customer buying behavior and rising expectations, with people now expecting fast and free shipping with competitive product pricing.
Globally, the Latin America, Middle East, & Africa (LAMEA) last mile delivery market is expected to witness the fastest growth during the forecast period. The market in the region is primarily driven by the rise in the gross domestic product (GDP) and increase in the disposable income of people in emerging economies, such as Brazil and Mexico, coupled with the rise in the use of omnichannel retailing and surging number of last mile food and grocery delivery start-ups.
Due to COVID-19, the last mile logistics industry across the globe is facing several challenges, such as a smaller workforce and government mandates for lockdowns. However, digitization and the growing internet penetration, coupled with the increasing number of orders, for various products, being placed online from homes, during the COVID-19 quarantine are expected to positively impact the last mile delivery market, thereby leading to the development of new, hybrid, omnichannel retail business models.
Players in the last mile delivery market are consistently focusing on strategic partnerships and business mergers to remain competitive. For example, in May 2020, FedEx Corporation and Microsoft Corporation entered into a collaboration to enhance commerce, by combining the global digital and logistics network of FedEx with Microsoft’s intelligent cloud. Through this collaboration, the companies would have greater control and insights about the movement of goods around the globe.
In March 2020, United Parcel Service of America Inc. announced that its subsidiary UPS Flight Forward (UPSFF) would collaborate with German drone-maker Wingcopter, to develop the next generation of package delivery drones for a variety of use cases, in the U.S. and internationally. This would broaden the companies’ capability to serve customers and extend their lead in the drone delivery niche.
In March 2020, XPO Logistics Inc. signed a partnership agreement with Mercedes-Benz Parts Logistics, to manage parts distribution in the U.K. through an integrated, digitally-managed transportation network. XPO Logistics Inc. would distribute automotive parts to Mercedes-Benz’s U.K.-based retail and commercial vehicle dealerships.
Some of the major players operating in the global last mile delivery market are United Parcel Service Inc., FedEx Corp., United States Postal Service, XPO Logistics Inc., DHL International GmbH, J.B. Hunt Transport Services Inc., ArcBest Corp., SEKO Worldwide LLC, CEVA Logistics AG, and DSV Panalpina A/S.