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AI, The next wave of disruption in last mile logistics

Artificial Intelligence: The next wave of disruption in last-mile logistics?

The logistics industry is in for a major disruption. The old way of doing business is out-competed by the new way, and it’s not just because of artificial intelligence. Logistics companies are experiencing exponential growth in demand to deliver goods while keeping costs low, all while maintaining safety standards. The adoption of AI into logistics was bound to happen, but it also offers extensive benefits even in the shipment delivery process that will make this transition easier for customers and more profitable for companies. This article explores how AI has already changed the game when it comes to last-mile delivery and what’s next.

Is an increase in urban population putting pressure on the last-mile logistics?

As the world's population continues to grow, the amount of traffic on roads has also increased. It is estimated that with 40% of the world's population will be living in urban centers by 2050, there will be additional billions of people commuting daily. Last-mile delivery companies are feeling the pressure as they continue to grow; with trucks spending more time on the road and subsequently burning more fuel at a higher cost, last-mile delivery companies are looking for ways to optimize routes and reduce costs.

It’s not just in terms of efficiency and costs, the last mile is one of the areas where most of the occurring deliveries are often considered to be vulnerable, with about 30% of all accidents happening in this area. This is why last-mile delivery companies are even pushing for innovations that can improve safety and efficiency on these final mile deliveries while also reducing their operational costs.

Artificial intelligence (AI) has a huge potential to disrupt this field. While AI is not completely new, improvements in recent technology have made machines more intelligent and able to handle tasks on their own. This has opened up new possibilities for many sectors including last-mile logistics. Although AI is still evolving, it has the potential to completely change business models and consumer experiences for organizations that are worried about the last mile.

AI in the last mile was one of the most significant industry trends during this pandemic's disruptive period. Whether big or small, supply chain businesses will need to use AI technology to enhance last-mile operations in the future. We've all heard of instances where deliveries have been late. This puts pressure on logistics organizations to correct the situation.

Let's talk about how Amazon is using AI-equipped cameras in delivery vans to redesign their last-mile delivery process. This was implemented to monitor contracted delivery drivers while they’re on the job, with the aim of improving safety standards in the last mile process. This allowed Amazon to expand their last-mile deliveries, as cameras are equipped with artificial intelligence software that can now identify multiple distinct safety concerns, including distracted driving, harsh braking, whether the driver is not wearing a seatbelt, and more.

What is artificial intelligence and how is it all set to redefine the last-mile logistics?

Artificial intelligence to put in the simplest terms is the simulation of human intelligence in machines. AI also refers to systems that mimic or take on “cognitive” tasks that humans need. The use of AI in logistics can offer numerous benefits for companies looking to optimize their last-mile delivery processes, improve safety and efficiency when on the road, and reduce costs.

One of the most significant benefits is that artificial intelligence can predict drivers' destinations before they go there by analyzing traffic data, weather alerts, sensors in their car, and other variables. By predicting where a driver will be instead of where they are at any given moment (and not only the route) allows logistics companies to determine which routes are best for certain types of deliveries. This has many implications. For instance, if a driver is going to make several stops in an area that experiences bad traffic congestion, they could be rerouted to avoid it. Putting drivers on the best route can reduce their fuel consumption and the overall mileage of the routes they are driving on within a day. This can also extend to truck fleets which can save tens of thousands of dollars for logistics companies in terms of final mile costs.

The use of artificial intelligence in the last mile logistics industry can also reduce costs for companies. AI technology is a lot cheaper than purchasing new vehicles and fleets as well as hiring more staff to route vehicles on certain days, in specific areas, or times of the day. It takes less time to train an algorithm than it does to train a human driver.

In last-mile deliveries, incorrect address exceptions are one of the common issues that drivers face. In a past Deloitte report, it was found that “up to 25% of all phone numbers and email addresses stored in digital contact applications were no longer in use”. Large scale enterprises, employ a large team of data experts for their customer data cleanup activities. But trained AI models can use natural language processing to perform these checks continuously on customer address information to ensure completeness, correctness, and consistency with global and regional address formats.

As per surveys, more than 90% of consumers today want to be more informed about their orders' location throughout the delivery process. This places pressure on organizations to gain last-mile visibility from in-transit status through to product final delivery. Last-mile visibility is enhanced with AI and machine learning, allowing for real-time parcel monitoring and tracking, as well as identifying problems in the process so that businesses can take proactive action to avoid customer experience related issues. Not just in visibility but delivering curated the last mile customer experiences have become quite easy with AI, current customer service portals may include chatbots, email bots, etc., which provides the required details to the customers on a real-time basis and also notify the customers on any exceptions. This personalized experience helps companies take an added advantage in this competitive market of evolving last mile processes.

AI is set to disrupt last-mile delivery processes by changing the way we transport goods. A recent report from McKinsey & Company predicts that autonomous trucks will be able to deliver freight more easily and cheaply, freeing up drivers for other duties. The cost of consumer goods is currently calculated in billions. Autonomous trucks (ATs) will alter the pricing structure and usage of trucking, which will eventually impact the cost of consumer items. In just the US, it was predicted that with full autonomy, operating costs would fall by around 45%, saving the US for-hire trucking industry between $85 billion and $125 billion.

In conclusion AI technology promises huge benefits for businesses looking at ways to make their supply chains faster and cheaper while still retaining quality control during transportation of goods across long distances.

Are you in the process of evaluating your last mile for a more digitalized setup? Our logistics technology experts might be able to help you. Schedule a demo with us and get to know more about our Highway 905 Last-Mile Delivery Solution – to ensure an optimized delivery execution plan powered by real-time last-mile delivery tracking, delivery management (dispatcher portal and driver app), proof of delivery capture, and more.

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About the author :

Srini Vaidy

President and CEO, Highway 905

Srini Vaidy is the President and CEO of the award-winning, cloud-based logistics technology provider Highway 905. He is an established innovator in the Supply Chain & Logistics space, with an ever-dying passion for coding and technology. For more than 30 years he has been ideating customer-centric and efficiency-driven supply chain execution solutions for the Fortune 500 to help them optimize their logistics costs and strengthen their competitive market position. With one eye on technological trends and the other on the happenings in the logistics space, he likes providing readers with an interesting perspective on the future of logistics industry.

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