The Challenge of the Last Mile

Last week, driving through Manhattan, I saw a huge truck that was unusually active. It looked like this image from the NY Times:

The activity turned out to be remarkably similar to my 1980s flights from New York to Peoria, Illinois.

Hub and Spoke

Airlines

As the year that airline deregulation began, 1978 was revolutionary. Instead of the federal government saying how much to charge and who could fly where, the market decided. As a result, instead of a direct flight from NYC to Peoria, Illinois, I had to fly though St. Louis’s Lambert International Airport and then connect with a local plane to Peoria. The system was called hub and spoke. Lambert was a TWA hub where many of the airline’s flights landed. With a hub, TWA (acquired by American in 2001) could fill its planes, consolidate maintenance, and dominate fares. Then, reflecting the “spoke” half of the system, smaller flights departed to multiple destinations. (Today we have a mixture of hub and spoke and point to point flights.)

Amazon

Early most mornings, large trucks pull up to curbs in Manhattan. After the back doors roll up, delivery crews sort hundreds of packages, and place them on hand trucks or rolling dollies. From there, the crews “fan out” for deliveries until all of the packages are gone. Because many of the trucks are subcontractors, managing the deliveries, Amazon calls them “fulfillment partners.” In a May 2023 article, Curbed tells us that Amazon’s fulfillment partners divided the city into 40-block zones. It’s an Amazon “mini-hub” and spoke solution to the problem of delivering the 2.4 million packages that it sends to New Yorkers every weekday.

Our Bottom Line: The Last Mile

Whether it’s an airline or Amazon, still, the “last mile” can be a problem.

Reputedly representing a hefty slice of their supply chain costs, the last mile for e-commerce deliveries has traffic jams and potholes. There are bridges needing repairs and severe weather. In rural areas homes don’t have addresses, in the city it’s tough to park. UPS (United Parcel) calculated that they have to choose among 6.7 x 10¹⁴³ different last mile routes for many of their drivers. They also saved considerable money by discouraging left turns.

For Amazon, in NYC, the last mile is the “spoke.”

My sources and more: Thanks to Todd for inspiring today’s post. For more on the airlines’ hub and spoke and deregulation strategies, this article has the details. Correspondingly, I was delighted to have found this Curbed report on Amazon’s “hurbs” and the Forbes discussion of the last mile.