Last-Mile logistics with on-premises parcel Lockers: Who are the real Beneficiaries?

•This paper models and estimates the benefits of on-premises parcel lockers (OPLs) for carriers and local governments.•The benefits are in terms of operational and external cost savings for carriers and local governments, respectively.•Values are derived analytically, using simulation to calculate the delivery time for buildings both with and without OPLs.•A case study in the City of Melbourne is used to test the model and estimate the benefits.•OPLs installed in Melbourne buildings with over 100 dwellings save A$7.5m for carriers & A$0.5m for local government, pa. Researchers have investigated various planning aspects of public Parcel Lockers (PLs), but little is known about the wider benefits of on-premises parcel lockers (OPLs). More recently OPLs have received attention as a solution to address the problem of failed deliveries, as well as to provide a safe and secure delivery experience to customers. Although OPLs provide enhanced convenience for residents, a major impediment towards their adoption is the high capital and ongoing costs. Currently, suppliers of OPLs require individual buildings to fully cover the costs, leading to low uptake among building managers and residents. This study is the first to ruminate that the benefits of such systems expand beyond residents, with carriers and local governments being key beneficiaries. Using a real-world case study and in-field observations, this study provides analytical estimates of the value of OPLs for buildings, as well as carriers and local governments in terms of operational and external cost savings. A probabilistic algorithm is developed to simulate the delivery time components to buildings and measure the benefits for individual stakeholders. We further applied the model to a case study in the City of Melbourne, to evaluate how a carrier’s market share, and building size and practices for managing failed delivery could determine the value of OPLs. The simulation results reveal that the direct benefits of OPLs are first characterized for the buildings, followed by carriers and local governments. We further describe how appropriate funding and pricing mechanisms, involving both carriers and buildings, could further facilitate commercial viability of OPLs for smaller buildings.