UK Last Mile Delivery Market

UK Last Mile Delivery Market Outlook

The UK’s last mile delivery industry exceeded revenue of US$18.3 Bn in 2022 and is likely to reach the valuation of US$35.3 Bn toward the end of 2029. The UK last mile delivery market report closely examines it to uncover how the growth will unfold.

Market Analysis in Brief

Logistics typically involves complex processes all through the supply chains. However, the last mile or final mile can be the most complex, and most expensive leg of supply chains. Influenced by the various challenges, and drivers especially amid the transformed industry dynamics post-pandemic, last mile delivery is a multi-billion-dollar industry today. The UK represents one of the world’s most important and interesting markets for last mile delivery service providers. It thus becomes imperative to comprehend the dynamics of the same considering the various associated factors like the COVID-19 impact, evolving consumer attitudes, changes in food delivery logistics during mealtimes, e-Commerce penetration rate, brand perceptions, and top growth strategies of vendors amidst boosting market competition.

Key Report Findings

• The UK’s last mile delivery market is poised to demonstrate nearly 9.8% growth in revenue during 2022 – 2029
• B2C remains the largest services type segment generating demand for last mile delivery across the UK
• With 75.3% revenue share, Dry Goods continues to be the largest cargo type segment in the UK last mile delivery market
• FMCG leads the UK’s last mile delivery industry
• Royal Mail, DPD Group, Amazon, DHL, FedEx represent the top five

Growth Drivers

e-Commerce Expansion

The UK last mile delivery market reaps a massive benefit from the developments in e-Commerce. The recent ecommerceDB data refers to the UK as the 4^th largest e-Commerce market, followed by Germany, and the top industry contributors include fashion, electronics, personal care, food, furniture and appliances, and DIY. The consumer comfort with shopping online has seen dramatic increase recently, further driven by the pandemic, which points to the parallelly expanding logistics and delivery services industry. The UK last mile delivery market has gained substantially from the rapidly proliferating home delivery and takeaway culture, especially post-pandemic.

Spike in Parcel Shipment Volumes in 2021

The e-Commerce boom in the UK took overall parcel shipment volumes in the UK alone beyond 4 million in the year 2021. While this brought in an excellent growth opportunity for the retail world, as well as carriers, it also meant a substantial pressure on the UK’s last mile networks, and the overall supply chain networks. Moreover, amidst growing consumer urge for faster deliveries of goods, both the retailers and carriers found it important to first optimize their delivery systems to be able to cater to the demand upsurge and create elevated delivery experiences. The UK last mile delivery market thus is on an uptrend.

The Mushrooming Home Delivery and Takeaway Trends

Although restaurants reopened with a bang post-pandemic and foodservice outlets reopened their arms to welcome customers to dine in, the number of consumers now inclined toward safer options like home delivery and takeaway has reflected a significant rise since 2021. The sustained out-of-home food trend, further complemented by the thriving home delivery and takeaway trend, are collectively uplifting the growth of UK last mile delivery market.

New Business Models Emerge

There are estimations of remarkable growth in the number of delivery vehicles on the roads of the major cities of the UK in the next few years. And if the door-to-door delivery models remain popular as ever, this growth will most likely become one of the key reasons behind traffic congestion on the streets of the UK. Alternative delivery models are thus being worked on by brands.

Another strongly linked factor here is the sustainability concerns around the carbon emissions by expanding last mile delivery vehicle fleets all over the country. Several local players in the UK are successfully working with electric vans, and cargo bikes.

Delivery Management Platforms Trend

Given the struggles of e-Commerce companies that routinely deal with low or medium shipment volumes, seamless management of the entire last mile process is an uphill job. The UK last mile delivery market however witnesses soaring popularity of some delivery management platforms like Metapack, and Paazl that assist these companies to effectively manage multiple forwarders under one roof. These platforms allow the selection of the most suitable delivery partners and options for improved customer satisfaction.

Growth Challenges

Costing Pressure

Addressing the gap between the inability to considerably raise the delivery costs and pay higher to delivery staff has become one of the prime actions of delivery companies. While models like free delivery offers help brands bode well with the cost-conscious consumer clusters, it imposes measurable pressure on both the foodservice operators, and delivery partners.

Newer takeaway innovations are emerging, one of which also includes reassessed pay structures of delivery drivers as well as foodservice staff – without increasing the delivery pricing exorbitantly. This is likely to play out as an important factor shaping the UK last mile delivery market in the future.

Growth Opportunities Across the Cities

London Leads

The City of London ranks top in the list of last mile hotspots of the UK and the report attributes this key positioning to the notably grown internal migrations (within the UK) over the recent past. The other key locations strongly performing in the UK last mile delivery market include Westminster, Kensington and Chelsea, Leicester, Ashfield and Staffordshire, Elmbridge, South Bucks, Northampton, and Coventry.

Competition Landscape – UK Last Mile Delivery Market

Some of the prominent last mile delivery providing companies in the UK include Royal Mail, Amazon, DHL, FedEx, UPS, DPD Group, Yodel, CitySprint, and Deliveroo.

Brands have been keen on experimenting with different business models to remain cost-competitive, convenient, yet efficient. Some of the popularly trending ones include the use of autonomous delivery vehicles, drone delivery, and tailored delivery windows or time slot delivery.

Recent Notable Developments

• In 2022, Amazon announced to expand its fleet of cargo e-bikes, and walkers in the UK, leveraging the rampantly growing last mile delivery market across the nation
• In 2023, the UK's sustainable first and last mile delivery provider Zedify announced a £5m investment in expansion of its bike delivery network in the UK
• In 2023, DPD UK's acquisition of the last mile delivery brand Absolutely has accomplished, intending to add value to the former's same-day delivery capabilities
• In 2023, a UAE-based last mile specialist and e-mobility start-up ONE MOTO announced investment worth US$150 Mn toward scaling up its UK’s last mile delivery operations
• In 2023, the last mile logistics expert Stuart made an announcement of expanding its flagship Hub to Home service model throughout the UK. The company pioneers sustainable final mile logistics and operates with a 100% EV fleet

The UK Last Mile Delivery Market is Segmented as Below:

By Vehicle Type Coverage    

• Two Wheelers
• Light Commercial Vehicle
• Medium & Heavy Commercial Vehicle
• Drones

By Delivery Type Coverage  

• Regular
• Same Day / Fast

By Service Type Coverage    

• B2B
• B2C
• C2C

By Topography Coverage      

• Tier 1 Metros
• Tier 2
• Tier 3
• Rural

By Cargo Type           

• Dry Goods
• Postal Goods
• Liquid Goods

By End-user Industry 

• Chemical
• Pharma & Healthcare
• FMCG
• Hi-Tech Products
• Food & Beverages
• Misc.

Leading Companies   

• Amazon
• FedEx
• DPD Group
• UPS
• International Distributions Services plc
• Deutsche Post DHL
• Yodel
• Evri
• CitySprint (UK) Ltd.
• Kuehne + Nagel International AG
• USPS
• CEVA Logistics
• Deliveroo

Inside This Report You Will Find:

1. Executive Summary
2. Market Overview
3. UK Last Mile Delivery Market Outlook, 2018 - 2029
4. Competitive Landscape
5. Appendix

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