'Last mile' adds up to €70bn in global cost of delivery
INCREASED growth in online shopping has set new delivery challenges not alone for retailers but also for other property occupiers.
Specialist John Carrigan, of Cushman & Wakefield says the global cost of 'last mile delivery' of parcels and goods is as high as €70bn, and expected to grow by between 7pc and 10pc in the next five years. In Ireland the number of people shopping online has risen from 21pc to 41pc in the 10 years to 2016, and is expected to continue to grow.
This last mile presents major delivery challenges for retailers seeking to reduce drive time distances between their warehouse depots and the end user. One of their difficulties is competition from other users for land located within a 30-minute drive from inner cities as higher and better uses can generate better returns than those from logistics.
Carrigan also points to the widening gap between required urban space and actual space for urban logistics. "Based on 2016 eCommerce volumes, the estimated required urban logistics space for Dublin stands at 40,881 sq m, and it is anticipated to increase by 43pc by 2021," he adds.
Addressing the barriers to supply is key to narrowing this gap. Those barriers include limited supply of stock, land constraints, competing land value uses and opposition from stakeholders to logistics use in urban areas.
In response, some occupiers modernise old warehouses while retail shops are beginning to portion their stores to provide for 'click and collect'. In the case of IKEA, the success of its Ballymun store has been complemented by its opening of an 'Order-and-Collection Point' at Carrickmines in south Dublin.
To reduce time and costs, some retailers have introduced last-mile depots and inner city collection points. Although the preference is for home deliveries, failed first attempt deliveries are currently as high as 60pc, which result in additional costs to retailers.