The last mile. It's a short phrase, but one that carries a lot of baggage.

In the unglamorous world of transport, the last mile is the final bit of ground which a parcel covers to reach its destination. It could be a lot longer than a mile - 1609m - or a lot shorter. For decades, the last mile has often been the postie's lot. In the future, it could be left to drones.

The issue with the last mile is that it can be the most expensive part of the journey a piece of freight takes, from the moment it is collected by a courier, to its final destination. This final leg of the supply chain can account for as much as 28 per cent of the total cost of moving goods.

And it is the last mile where some of the world's smartest firms are investing millions to get the jump on competitors.


It is part of a global transport turf war, where carmakers are waging intense battles to stay in touch with the trends transforming the industry. Cars and trucks are getting smarter and inching towards a driverless future, and producers are shifting away from fossil fuels. Digitisation and e-commerce are other ingredients in this disruptive stew.

Volvo has declared its hand with a pledge to produce only electric or hybrid vehicles after 2019. France has announced it will ban sales of petrol and diesel vehicles by 2040.

Electricity and lightweight batteries are integral to these remorseless trends. Immense investment is being sunk into electric vehicles because that is where the future lies.

Whichever way you look, pressure is mounting on the transport industry.

The Paris climate accord amounted to a global call to arms to limit temperature rise.

Firms are coming under compulsion to be up-front about their climate mitigation strategies. The G20 group of nations is nudging companies to require directors to account for carbon, in the way they already manage conventional book-keeping. As carbon risks surface in company accounts, then investors will be better informed about the real, long term state of the books.

The transport sector is one of those most exposed by the shift, given that road transport accounts for 42 per cent of total world oil consumption, says the International Energy Agency.

It is no surprise, then, that the big players are plugged into electricity, to move both people and freight, and to cover the last mile.

One of those giants is Mercedes, which is looking at drones, robots and super-sleek delivery trucks - it has created what it calls the Vision Van - to crack the problem. The vision is not cheap: the German carmaker has sunk a reported €500 million ($780m) into drone start-up Matternet to create a future where fleets of vans would deliver parcels.

The project is at a pilot stage, but Mercedes is making sure its van gets noticed by transport operators.

The space is filling up. The US parcel service UPS - the world's largest package delivery operation - is getting in on the drone act, too. In February it unveiled an electric package truck which, like the Vision Van, is effectively a drone mothership, with robot flyers taking packages the last mile from the truck to the intended address.

Mercedes had its immaculate Vision Van on show at the International Transport Summit in Leipzig, Germany. Even though the showstopping vehicle was parked beneath a soaring glass roof, the company was unable to put the unit through its paces. But Mercedes did show brief videos of the way it imagines parcel deliveries could be made in future, using a mix of electric-powered vans and delivery drones.

From the driving station to the robot sorter in the cargo bay, nothing quite prepares you for the futuristic machine. The cab resembles a cockpit with a seat that seems more at home on a flight deck. Instead of a steering wheel, the van has a joystick not much bigger than a game console. The cab itself is like a small office, with enough room for the driver to collect parcels presented by a robot arm through a window connecting the cab to the cargo.

The whizz-bang stuff is in the cargo compartment. The space is filled with a racking system sorted by a robot arm, which tells the driver which parcel needs to go to which address. That helps resolve a problem for van drivers, who typically spend half an hour a shift sorting their load.

The Vision Van's crowning glory is perched on its roof: a hungry drone waiting for a parcel to be pushed up from the cargo bay into its grasp.

Matternet's autonomous drone, the M2, can fly up to 20km on a single charge with 2kg parcels attached to its belly. Its drones have been field tested in Europe through a project between the company and Swiss Post, the government-owned postal service.

It is easy to see why drones have appeal in mountainous Switzerland - in the Swiss Alps, villagers get their mail by sled in winter.

With the M2, the drone does the work - a solution that's bound to appeal to van drivers, who in big cities can cover up to 2km an hour dropping off parcels from their vehicle.

The M2 can change its battery without human help, uses cloud technology to navigate and deploys a parachute if it gets into trouble. Its smart payload box can transmit data about the parcel and its destination - meaning you can get a message on your phone that the package you're expecting is winging its way towards you.

Current US regulations would crimp the Mercedes Vision Van, as Federal Aviation Administration rules restrict commercial operations and insist that a drone has to remain in the line of sight of its human pilot. Europe is trying to be flexible, with rules that would identify drones and their owners, and "geo-fence" areas such as prisons, airports and military bases where the machines would be banned.

Matternet has already carried blood and laboratory specimens with its machine. The samples arrived in good condition.

The Mercedes van and its aerial fleet is all about parcels and online commerce.

Swedish truck maker Scania and German train behemoth Siemens have a project that is all about moving the heavy stuff in a sustainable way, as part of what the industry calls the decarbonising of transport. In other words, finding innovative and economic ways of curbing truck pollution.

Transport remains the elephant in the fossil fuel room, and any steps which restrain its appetite for fuel could be a big step towards reaching global climate goals. Projections show road freight traffic will more than double from this year to 2050, regardless of the growth of rail networks.

Mains electricity is touted as a cut-through solution for freight transport, especially as some of the alternatives, such as batteries and fuel cell technology, have not passed muster in terms of economic efficiency.

Siemens' proposed game-changer is what it calls the eHighway, which cleverly ties together railway hardware and the flexibility of road transport. In the European - and possibly New Zealand - future, trucks run on electrified roads, drawing power from overhead cables through a "pantograph" mounted on the cab roof. Further down the track, rigs could get their electric fix from cables buried in the road itself.

The eHighway is best suited to busy routes, where the investment can be recovered rapidly. According to Siemens, trucks hooked up to overhead wires send 80 to 85 per cent of electrical energy directly to their wheels, twice as much as conventional diesel engines deliver. What's more, the electric system lets brakes store energy onboard or feed power back into the grid.

Siemens has put its idea into practice on a test highway in Sweden, and is rolling out another demo stretch in southern California, near the ports of Los Angeles and Long Beach, the two largest ports in the United States.

The world's first eHighway can be found on a 2km stretch of road north of Stockholm, where Scania runs hybrid drive rigs which can switch to a biofuel-powered motor when overtaking. It has passed the proof of concept stage and is at the point where lorries take cargo for paying customers.

To solve a problem which clouds its future, the industry is running with a tried and true idea from the past.

Two wheels good

There's money in bikes. Big money.

One of the most comprehensive studies of its kind has shed light on the size of the European cycle economy. Prepared for the European Cyclists' Federation, the study found the benefits of cycling in the EU were €513 billion ($806b) a year.

The federation cast its net wide to reach its estimate, including items which might seem a long way from two wheels. For example, the study put a figure on cycling's capacity to "connect neighbourhoods" from different cultures and social backgrounds, and to add resilience by ensuring transport is available in times of natural disaster or terrorist attack. That was worth €10b a year, the study found.

The big-ticket items were the calculations for health benefits - €191b - and €131b from "time and space" savings.

The health benefits are easy to identify: cycling can deliver longer, healthier lives, improved mental health (a Dutch study found cycling improved brain connectivity in patients with schizophrenia) and significant benefits to child health.

Time and space savings flow from the money saved shopping by bike, which was put at €111b. Another solid contributor to the cycle account ought to ring handlebar bells in New Zealand: cycle tourism's value in Europe is €44b a year.

The report was part of the federation's push to place cycling firmly within EU transport policymaking.

Saskia Kluit, head of the Dutch Cycling Embassy, which connects Holland's bicycle interest groups, says there are compelling arguments to include cycling in sustainable transport policy.

Kluit, who will be in New Zealand in October for the Asia-Pacific Cycle Congress in Christchurch, said cycling took off in Holland in the past three decades after cities became congested, polluted and unsafe for bikes and pedestrians.

Cars and bikes were separated - Holland has 29,000km of cycleways - speed limits cut, parking fees increased and car access reduced in cities. The upshot has been cleaner and safer cities for road users. The Netherlands' 16 million people own 18 million bikes.

The Dutch royal family cycle, as do 40 per cent of primary school pupils.

Kluit said cycleways made bike use safe, encouraging people to get riding.

That is in line with NZ Transport Agency cycling studies, which have found perceptions that cycling is unsafe. Statistics support that view: NZ's cyclist fatality rate is nearly three times that of the Netherlands, and nearly twice that of Denmark and Germany.

New Zealand is investing $333 million over three years to create more than 250km of urban cycleways - well short of Holland's network.

But Kluit says you have to start somewhere. "The aim is to build a system where the vulnerable road user is king."