Does the Locker Alliance Network Improve Last Mile Delivery Efficiency?

The Locker Alliance Network (LAN), a cutting-edge initiative under Singapore’s Smart Nation vision, aims to revolutionize parcel pickup processes. This government-led project seeks to implement two major changes in Singapore’s urban logistics: (i) establishing an open-access facility for all logistic service providers (LSPs) and (ii) enhancing the last mile delivery efficiency of each LSP, thereby reducing its operational footprint. This research investigates the impact of locker network design on the delivery efficiency of individual LSPs and explores strategies for the government to construct an inclusive network for all LSPs. Our study explores two operational modes: the two-trip mode, in which home and locker deliveries are managed separately, and the mixed-trip mode, which consolidates both into one route. We extend the Beardwood–Halton–Hammersley theorem to estimate the delivery trip length to remaining home locations, assuming consumers can choose between locker pickup or home delivery. This enables us to explicitly formulate the LAN design problem as a nonlinear optimization model. Furthermore, our models for both operational modes reveal that optimal locker network design tends to expand in a nested manner relative to the market share of an LSP. This finding suggests that governments could design locker networks based on the profiles of the largest LSP, ensuring that the expansion of these networks aligns with the existing logistics infrastructure. Leveraging data from LAN’s pilot program in Singapore, our research underscores the pivotal role of network design in last mile delivery efficiency. A poorly designed locker network can inadvertently reduce productivity by increasing the length of delivery trips, thus negating the potential benefits of the system. In contrast, an optimized network can mitigate this negative impact on delivery efficiency. Beyond network design, low customer adoption emerges as another critical bottleneck. Our findings show that, as more customers shift to locker pickup, especially in mixed-trip modes, delivery efficiency improves. Therefore, network design and a higher adoption rate of locker pickup are key to LAN’s success. The government’s role in driving deeper customer engagement, alongside efforts to optimize network design and delivery operations, is vital to unlocking the full potential of this smart nation initiative. This paper was accepted by David Simchi-Levi, operations management. Funding: This work was supported by the National Natural Science Foundation of China [Grant 72422006], the Hong Kong Research Grants Council [Grants 16210720, 16500423], the 2019 Academic Research Fund Tier 3, the Ministry of Education, Singapore [Award MOE-2019-T3-1-010], and the Natural Science Foundation of Chongqing, China [Grant CSTB2022NSCQ-MSX1667]. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2024.04567 .