Last-Mile Delivery in the Motor-Carrier Industry: A Panel Data Investigation Using Discrete Time Event History Analysis

Abstract:Industry analysts have noted that the rise of e-commerce has increased the demand for last-mile delivery services, defined as the last-mile transportation of large, bulky items (e.g., furniture) that cannot be shipped by parcel carriers to consumers’ locations. Although last-mile delivery has become crucial for retail logistics, no research has examined which carriers are more likely to diversify into last-mile delivery. As such decisions require large investments, motor carriers have an interest in understanding their peers’ behaviors in this domain. Drawing on resource orchestration theory and Penrose’s theory of firm growth, we devise middle-range theory that explains why carriers’ provision of less-than-truckload (LTL) or expedite services will increase their likelihood of subsequently offering last-mile delivery services. Our theory further explains why these services will serve as substitutes such that the marginal effect of providing LTL services on subsequently offering last-mile delivery will be less when a carrier also offers expedite services, and vice versa. To test our theory, we assemble an archival panel dataset from Inbound Logistics, a premier industry publication, that summarizes carriers’ various delivery services. Results from discrete time event history models corroborate our theorized predictions.