Logistics and the Last Mile

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In supply chain management and transportation planning, the last mile is the last leg of the journey comprising the movement of people and goods from a transportation hub to a final destination.  As a practical matter, it is often a factor at both ends, as goods and people transit from diverse locations to a central terminal, airport, warehouse, etc., for movement to another terminal, and redistribution at the other end. 

The last mile was originally used in the telecommunications industry to describe the difficulty and cost of connecting end user’s homes and businesses to the main network. 

Perhaps the most visible example of last mile issues are the efforts of the major retailers and package delivery companies in their quest to provide cost effective, speedy delivery to multiple customers across the entire world.  This industry may become leaders in the world of automation.  Several companies are currently experimenting with drones and sidewalk robots in an effort to improve the process.  The packaging industry in particular, is also working to lower costs and improve efficiency in the terminal to terminal part of their network. 

Interestingly, it is quite possible that the first, wide-spread use of fully self-driving vehicles will be the long-haul truck.  Large, self-driving big rigs may be in general use, on specific routes and between designated terminals, as early as the end of next year.

Investors could correctly assume that the evolution of the package delivery industry might present attractive opportunities. However, it is important to recognize that technology is prone to rapid obsolescence.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA

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