The Last-Mile Delivery Challenge: How Per-Packet Delivery is Rewriting the Rules of Logistics.

The Last-Mile Delivery Challenge: How Per-Packet Delivery is Rewriting the Rules of Logistics

By Akhilesh Sharma, Director, Adamant HR

Introduction:

As the e-commerce industry continues to boom, last-mile delivery has emerged as one of the most critical—and challenging—aspects of the logistics chain. From getting packages to consumers' doorsteps to managing costs, last-mile delivery is where businesses face the greatest hurdles. A key factor complicating this process is the rise of "per-packet" delivery, where individual orders are delivered directly to customers rather than in bulk. While this model meets the demands of today’s consumer, it presents significant logistical challenges. In this article, we’ll examine how per-packet delivery impacts last-mile logistics, explore the primary challenges it creates, and review data-backed solutions for businesses to stay competitive.

What is Per-Packet Delivery?

Per-packet delivery refers to the practice of delivering individual orders to customers, typically in the context of e-commerce. Unlike traditional bulk shipping—where goods are delivered in larger quantities to a centralized location, such as a store or distribution hub—per-packet delivery requires drivers to make multiple stops to deliver small packages directly to consumers. Each stop represents its own logistical process, making it the most complex and expensive part of the delivery chain.

The Impact of Per-Packet Delivery on Last-Mile Logistics:

1. The Rising Cost of Last-Mile Delivery: The individual nature of per-packet delivery significantly increases the cost of last-mile delivery. In fact, research by Capgemini indicates that last-mile delivery can account for up to 53% of total shipping costs . The shift toward individual deliveries, driven by consumer demand for same-day or next-day shipping, adds further strain.

According to Business Insider, the cost of last-mile delivery increases exponentially due to the low density of deliveries, meaning fewer packages per stop and higher operational expenses per delivery . This has led companies to explore ways to reduce costs, but with customers expecting fast and free shipping, businesses are often caught in a bind.

2. Route Inefficiencies: Per-packet delivery also creates inefficiencies in route planning. Traditionally, delivery drivers could make bulk deliveries in a single route, minimizing time on the road. However, the individualized nature of per-packet delivery forces drivers to travel longer distances between stops. According to McKinsey, urban drivers can spend up to 40% of their time navigating between stops, reducing productivity and driving up fuel costs .

This low drop density makes it difficult to optimize routes effectively, particularly in urban areas where traffic congestion adds another layer of complexity. With each packet representing its own stop, companies must invest heavily in route optimization technology, dynamic routing systems, and real-time traffic data to ensure efficiency.

3. Environmental Concerns: The environmental impact of last-mile delivery is another growing concern. The World Economic Forum (WEF) estimates that, by 2030, urban last-mile delivery will increase by 36%, contributing to a 32% rise in delivery-related CO2 emissions . Per-packet delivery, in particular, exacerbates this issue by increasing the number of vehicles on the road, as each delivery requires a separate trip. This leads to higher emissions, more congestion, and greater environmental strain, especially in major metropolitan areas.

To combat this, some companies have turned to sustainable solutions, such as electric delivery vehicles and bike couriers. However, implementing these green technologies at scale presents its own set of challenges, from regulatory hurdles to high upfront costs.

4. Failed Deliveries and the Redelivery Dilemma: Failed deliveries represent a significant cost driver for per-packet last-mile logistics. According to MetaPack, nearly 12% of all deliveries fail on the first attempt, leading to costly redelivery efforts. When deliveries are made per packet, the consequences of failed delivery attempts are magnified, as each failed delivery necessitates another individualized trip, further increasing costs.

Consumers expect flexibility in how and when they receive packages, and without precise tracking and customer communication, last-mile delivery companies often face multiple failed attempts. This inefficiency leads to poor customer experiences, and in a competitive e-commerce market, it can result in lost customer loyalty.

Consumer Expectations: The Demand for Speed

In today’s marketplace, consumer expectations are a driving force behind the growth of per-packet delivery. According to a report by PwC, 88% of consumers are willing to pay for same-day delivery, and 72% expect this option to be available as standard . Meeting this demand requires businesses to maintain a robust delivery network capable of managing frequent, time-sensitive, individualized deliveries.

However, the speed at which customers expect their packages comes at a cost. The PwC study found that delivery speed directly correlates with increased operational expenses, particularly for companies trying to balance fast shipping with per-packet delivery’s inherent inefficiencies.

Solutions to the Per-Packet Delivery Challenge:

1. Route Optimization Technologies: One of the most effective ways to address the inefficiencies of per-packet delivery is through the use of advanced route optimization tools. Powered by AI and machine learning, these technologies allow logistics companies to analyze traffic data, delivery windows, and customer preferences in real time. According to a study by Gartner, companies using AI-powered route optimization systems have seen a 15% reduction in fuel costs and a 20% improvement in delivery times . Such solutions enable drivers to take the most efficient routes, minimizing time on the road and improving productivity.

2. Micro-Fulfillment Centers (MFCs): To shorten delivery times and improve efficiency, companies are turning to micro-fulfillment centers (MFCs). These smaller, localized warehouses are strategically located close to high-density consumer areas, allowing for faster delivery. According to a report by Deloitte, MFCs have the potential to reduce last-mile delivery costs by up to 25% by improving drop density and reducing the distance between deliveries .

Retail giants like Amazon and Walmart are investing heavily in MFCs to get closer to consumers and streamline the per-packet delivery process. For smaller businesses, partnering with third-party logistics providers (3PLs) that offer MFC capabilities is becoming an increasingly viable option.

3. Alternative Delivery Solutions: To alleviate the environmental and cost pressures of per-packet delivery, companies are exploring alternative delivery models such as smart lockers and consolidated pickup points. These options allow customers to retrieve their packages from centralized locations at their convenience, reducing the need for door-to-door delivery. Research from InPost suggests that smart lockers can reduce last-mile delivery costs by up to 30% while significantly cutting down on emissions from delivery vehicles .

Furthermore, the use of electric vehicles (EVs) and drones is becoming more common in urban areas. Although regulatory challenges remain, the widespread adoption of EVs could cut last-mile delivery costs by 40%, according to a study by McKinsey .

Conclusion:

Per-packet delivery, while essential to meeting modern consumer expectations, presents significant challenges for logistics companies—most notably in cost management, route efficiency, and environmental sustainability. As e-commerce continues to grow, the pressure to balance fast delivery with sustainable, cost-effective operations will only increase. Businesses must invest in innovative technologies, optimize their logistics networks, and explore alternative delivery models to remain competitive.

At Adamant HR, we believe that overcoming last-mile delivery challenges requires a multi-faceted approach, combining technological innovation with sustainable practices. As the demands of per-packet delivery evolve, companies that can successfully navigate these complexities will be well-positioned to lead the future of logistics.