The last mile remains the most expensive and least efficient part of the retail supply chain. For mid-market retailers, the cost of delivering parcels to customers has risen sharply, driven by fuel prices, labour shortages, and rising customer expectations for fast, free delivery. In response, a growing number of these retailers are exploring a collaborative approach: shared logistics control towers.
A logistics control tower is a centralised dashboard that provides end-to-end visibility of supply chain operations. Traditionally, large enterprises have used them to monitor their own logistics networks. Now, mid-market retailers are pooling their last-mile data into shared control towers, operated by third-party logistics providers or technology platforms. This allows them to aggregate volumes, benchmark performance, and negotiate better rates with carriers.
What Is a Shared Logistics Control Tower?
A shared logistics control tower is a multi-tenant platform where multiple retailers contribute their last-mile data—such as delivery volumes, routes, carrier performance, and customer delivery preferences—into a common system. The platform aggregates this data to provide insights that benefit all participants. For example, it can identify underutilised delivery capacity, optimise route planning across multiple retailers, and enable collective bargaining with carriers.
The concept is not entirely new. Freight consolidation has existed for decades, but the digital control tower adds a layer of real-time data analytics and visibility that was previously unavailable to mid-market players. By sharing data, retailers can achieve economies of scale that were once the preserve of large enterprises.
Why Mid-Market Retailers Are Turning to This Model
Mid-market retailers face a particular challenge. They lack the volume to command the lowest carrier rates, yet they must compete with larger rivals that offer free or low-cost delivery. Their margins are thin, and any increase in delivery costs directly hits profitability.
Shared control towers offer a way to reduce these costs without requiring massive capital investment. By pooling data, retailers can:
- Negotiate better rates: Aggregated volumes give them more leverage with carriers.
- Optimise routes: Shared data can reveal opportunities for cross-retailer route optimisation, reducing empty miles and fuel costs.
- Improve carrier selection: Benchmarking carrier performance across the group helps retailers choose the most reliable and cost-effective options.
- Enhance customer experience: Better data can lead to more accurate delivery windows and fewer failed deliveries, which are costly.
How the Model Works in Practice
A typical shared control tower is operated by a third-party logistics provider or a technology company. Retailers integrate their order management and transport management systems with the platform, feeding in data on shipments, delivery addresses, and carrier performance. The platform then provides a unified view of all last-mile operations.
For example, a group of retailers in the same region might share a network of delivery vans. Instead of each retailer sending a van to the same neighbourhood, they consolidate deliveries into a single vehicle, reducing total miles and cost. The control tower coordinates this by analysing delivery data from all participants and suggesting optimal consolidation opportunities.
Data privacy is a key consideration. Retailers are understandably cautious about sharing sensitive commercial data. However, the platform can anonymise and aggregate data so that individual retailers’ volumes and customer details are not exposed. This allows participants to benefit from collective insights without revealing proprietary information.
Commercial Impact
The commercial impact of shared control towers can be significant. According to industry estimates, last-mile delivery accounts for over 50% of total shipping costs. Even a 10% reduction in last-mile costs can have a meaningful impact on a mid-market retailer’s bottom line.
By pooling data, retailers can also reduce the cost of technology. Building a proprietary control tower is expensive, but sharing the cost across multiple participants makes it affordable. This is particularly attractive for mid-market players that cannot justify the investment on their own.
Moreover, the model can improve sustainability. Consolidated deliveries mean fewer vehicles on the road, reducing carbon emissions. This aligns with growing consumer and regulatory pressure for greener logistics.
Risks and Unknowns
Despite the potential benefits, there are risks and unknowns. Data sharing raises concerns about competitive sensitivity. Retailers may be reluctant to share data that could reveal their pricing strategies or customer behaviour. While anonymisation helps, there is still a risk of data leakage or misuse.
Another risk is dependency on the platform provider. If the provider fails or changes its pricing model, retailers could be left exposed. There is also the question of governance: who decides how the data is used, and how are conflicts resolved?
Finally, the model’s success depends on the willingness of retailers to collaborate. In a competitive market, trust is a scarce commodity. If participants do not fully commit to sharing data, the benefits will be limited.
Why It Matters
For mid-market retailers, the ability to reduce delivery costs without sacrificing service quality is critical. Shared logistics control towers offer a practical path to achieving this. They enable smaller players to access the same kind of data-driven logistics optimisation that large enterprises use, but at a fraction of the cost.
This model also has broader implications for the logistics industry. As more retailers adopt shared control towers, we may see a shift towards more collaborative, asset-light logistics networks. This could disrupt traditional carrier relationships and create new opportunities for technology providers.
FY Outlook
The adoption of shared logistics control towers is likely to accelerate over the next few years. As technology matures and trust builds, more mid-market retailers will join existing platforms or form new consortia. We expect to see:
- Increased platform consolidation: A few dominant platforms will emerge, offering standardised solutions.
- Expansion into other areas: The model could extend beyond last-mile to include first-mile and middle-mile logistics.
- Integration with autonomous vehicles: As autonomous delivery becomes viable, shared control towers will be essential for coordinating fleets across multiple retailers.
However, the pace of adoption will depend on addressing data privacy concerns and demonstrating clear ROI. Early adopters will need to share their success stories to convince others.
Conclusion
Shared logistics control towers represent a pragmatic response to the cost pressures facing mid-market retailers. By pooling last-mile data, these retailers can achieve economies of scale, reduce delivery costs, and improve service levels. The model is not without risks, but for many, the potential benefits outweigh the challenges.
As the retail landscape becomes more competitive, collaboration may become a key differentiator. Those who embrace shared data platforms could gain a significant advantage over those who go it alone.
Source Notes
- Editorial note: This article is based on industry trends and general knowledge. Specific figures on cost savings are illustrative and should be verified with primary sources.
- Editorial note: For further reading, see reports from logistics consultancies such as Armstrong & Associates or McKinsey on last-mile costs and control towers.
- Editorial note: No live sources were used in the preparation of this article; all claims are framed as general industry observations.
