The “Last Mile” in Freight Distribution

The "Last Mile" (or "Last Kilometer") is a common distribution problem. Although it was initially conceived for the telecommunication sector (e.g. phone and cable services), it applies particularly well for freight distribution. Long distance transportation tends to be well serviced by high capacity modes and terminals and is prone to economies of scale (massification). As we get closer to the final customer, economies of scale are increasingly difficult to apply as the size of batches tends to diminish (atomization). It would be rare, for instance, for a single customer to be the consignee of a whole containership. For an international shipment, the global shipping network offers very high capacity levels and, depending on the routes, a reasonable frequency of services (for instance, one port call every two days). Hinterland transportation, which links gateways to inland terminals often using rail or barge services, is of lower capacity but of higher frequency. Once freight consignments arrive at an inland terminal they are collected and brought to distribution centers through regional segments, mostly by truck. The "Last Mile", notably for retailing, often consists of truck deliveries taking place over short distances, but likely in a congested urban setting. It is often one of the most complex element of the commodity chain to organize as it reconciles many customers, a variety of shipments and reliability difficulties related to congestion. The "Last Mile" concept also applies to the "First Mile", albeit in reverse, which involves consolidation to a nearby transport terminal of the output of potentially several producers.

The containerization process is thus confronted with a growing tension between a massification at sea and an atomization on land. Growing vessel size has led to the massification of unit cargo at sea. On terminals and at the landside, massification makes place for an atomization process whereby each individual container has to find its way to its final destination. A major challenge consists in extending the massification concept as far inland as possible. Postponing the atomization of container batches shifts the container sorting function to the inland and as such eases the pressure on port terminals. High-volume rail and barge corridors including inland terminals play a crucial role in this process.