Delivery of goods at the last mile represents more than half of the total cost of the supply chain, according to a report by Cushman & Wakefield, “Last link – Quantifying the Cost”. Shortening the last link would bring huge savings.
By the last link, the authors of the report understand the final stage of the e-commerce supply chain, which is carried out using a van or electric bicycle in urban or rural areas to the pick-up point or the recipient’s home.
According to Cushman & Wakefield experts, the last link has a significant impact on delivery time and cost by reducing the driving time between the urban depot and the delivery point, the so-called STEM distance.
An analysis of four major European markets (London, Paris, Madrid and Milan) shows that reducing the STEM distance always reduces the total cost of the last link. Shortening it by just 10 minutes would bring annual supply chain savings of €1 million. How can this be done? The consulting company suggests creating distribution centres in the most crowded cities. Urban depots, despite higher rents than in out-of-town centres, make it possible to reduce drivers’ driving times and wage costs, reduce fuel consumption and even optimise the use of vans.
The most important conclusion of the report is that lowering transport costs should be the main goal of any last link strategy in the supply chain, and the right choice of location has a much greater impact on the final cost level than the rent level,” comments Joanna Sinkiewicz, Partner, Head of Industrial & Logistics Department at Cushman & Wakefield.
“The conclusions of the report are reflected in the expansion of the city logistics concept by warehouse developers. One example is City Logistics Warsaw III, implemented by Panattoni, on the western part of the Express Warsaw Ring Road. The first tenant will be Trena, a company specializing in online sales of professional cosmetics,” adds Sinkiewicz.