Recipient-Dependent Deliveries in Last-Mile Logistics

Abstract

Last-mile deliveries contribute to a drastic 28% of the total cost of shipping. Recent technological advancements enable recipients to participate in these deliveries, relieving the cost of this final leg of the supply chain. We present a stylized model to analyze recipient-dependent routing policies in last-mile logistics. The policies are based on scenarios where recipients pick up from a (i) central depot themselves, (ii) hub located by the logistics firm close to them (hybrid), and (iii) hub and deliver to other nearby recipients (crowdsourcing). These policies are partially motivated by the future applications of autonomous vehicles in smart cities and their role in enabling recipient-dependent deliveries as they relinquish the need for drivers. We compare these policies with status quo truck delivery and identify the most cost-effective policy in a dominance space. Our analysis shows a distinct dominance space pattern that is robust against key operational parameters. Using this space we show that (i) status quo truck routing is the currently preferred delivery policy, (ii) the dominance space of the hybrid and crowdsourcing policies is sandwiched by the dominance space of other policies, and (iii) recipient-dependent routing policies dominate the status quo truck policy as the number recipients increases. We validate the insights from the stylized model with a case study of Walmart in Toronto.

Keywords: Vehicle routing; location; freight-materials handling; autonomous vehicles