Four approaches to everyday deliveries that could make life better in cities

Smart Mobility

Urban delivery vehicle congestion and smart last-mile solutions

E-commerce is booming—but the surge in deliveries is straining city streets. Rethinking how goods reach us could ease congestion and improve urban life.

There's no denying the convenience of e-commerce. With just a few clicks, we can have anything from groceries to gadgets delivered right to our doorstep. By 2027, e-commerce retail sales are expected to surge by 39%, reaching over $8 trillion annually. As e-commerce keeps growing, shaped by consumer demands and behaviours, technological advancements, social media influence and subscription-based businesses, so does the number of delivery vehicles on our streets.

Concurrently, logistics providers and postal operators face ever increasing cost and competitive headwinds and must get more efficient in the who, where and how e-commerce deliveries are made. Postal companies transforming into parcel businesses are increasingly having to expand capabilities to handle, process and deliver an ever-evolving set of parcel characteristics. Changing sizes, weights and packaging materials require adjustments to sorting and transport. For example, companies such as the Royal Mail in the UK are becoming more involved in delivering larger, bulky items that customers previously purchased in traditional stores and transported themselves. These factors present an opportunity to disrupt the last mile—rethink how deliveries are performed and who may be best positioned in the e-commerce ecosystem to make them.

Research behind our new white paper, published with the World Economic Forum, shows the growth in e-commerce could lead to a 60% increase in delivery vehicles in cities by 2030. This would add up to five minutes to every daily commute and increase emissions from last-mile deliveries by the same percentage. Many cities have embarked upon an urban transformation that focuses on liveability—from allocating road space to public transport, cyclists and pedestrians, to focusing on creating walkable communities to improve interaction with retail, leisure and services as well as overall quality of life. Our report proposes four innovative approaches to last-mile deliveries with the aim of alleviating congestion and improving safety and citizen experience in urban areas.

Rethinking delivery destinations: Pick-Up and Drop-Off networks

One way to reduce the number of delivery vehicles on the road is to rethink where packages are delivered. Instead of delivering to individual homes, Pick-Up and Drop-Off (PUDO) networks use parcel shops and lockers as centralized delivery points. This approach helps reduce failed home deliveries, eliminating the need for couriers to make multiple trips to the same address. At the same time, it allows collection flexibility for consumers who aren't home during the day. Our research shows that PUDO points can reduce the number of delivery trips by up to 15% and reduce congestion by up to 2%, even when considering trips made by customers to collect their items. They can also reduce the cost of deliveries by up to 15%.

PUDO networks have already proven successful in some cities. In New York City, a network of smart lockers has been installed in residential buildings, allowing couriers to deliver packages to a secure location that residents can access at their convenience.

Consolidating and localising: White label deliveries

Another approach is to combine post and parcel deliveries through white label services. Instead of multiple retailers dispatching their own vehicles to the same area, micro-hubs can consolidate deliveries in specific neighbourhoods or street networks. A single operator then serves that neighbourhood, with other delivery companies handing off their consignments to this operator.

This approach helps sidestep typical replication, where multiple couriers could visit a single home on the same day. In London, a delivery service called Parcelly lets local businesses collect parcels. This reduces the number of delivery vans on the road and helps local shops at the same time.

Transforming the fleet: Autonomous vehicles

Autonomous vehicles, ground-based and aerial drones and mobile mini-warehouses, also present opportunities to free up busy streets. While the adoption of autonomous vehicles and drones is slowed by the need to develop frameworks for their operation in cities, this innovative approach could unlock capacity in the sky and elsewhere. In Reykjavik, Iceland, the company Flytrex is using drones to deliver food and other goods, reducing the number of cars on the road and cutting delivery times.

Drones and smaller zero emissions vehicles combined with micromobility fleets like bikes, can reduce emissions by up to 93% and, with a smaller physical footprint, can help use public spaces more efficiently. They can also be used off-road and in pedestrianized areas to improve access and delivery speed.

Making the most of street space: Smart kerbsides

Delivery vehicles spend an average of 30 seconds per delivery looking for parking spaces. Kerbside space—critical for loading and unloading goods, parking, cycling, and even creating public spaces for an on-street café culture—is often an under-valued resource. While new infrastructure can be costly and require permits, reusing existing infrastructure can mitigate these costs. By deploying smart kerbside management with technology that dynamically allocates certain uses at different times, cities can improve traffic flow and reduce congestion by 3%. It also helps mitigate issues such as double parking by delivery vehicles—reducing its impact for local residents.

In San Francisco, the city has implemented a program called SFpark, which uses sensors and data analytics to adjust parking prices and availability in real-time, reducing the time drivers spend circling for a spot.

The path forward: Collaboration and innovation

These four approaches offer promising solutions to the challenges posed by the growth of e-commerce and logistics necessary to sustain it. But they're just the beginning. As our report concludes, approaching urban delivery transformation will require close collaboration between public and private stakeholders. City governments should take an active role, but each player in the ecosystem needs to play its part. Governments need to provide clear regulatory frameworks to allow for innovation, while protecting the interests of their citizens—for example by incentivising more sustainable and efficient delivery methods. They also need to find ways to encourage the involved, often directly competing, players to collaborate. Based on that foundation, private-sector players ranging from last-mile couriers to retailers must explore new operational models and commit to strategic investment to reduce impact on public infrastructure.

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