Last Mile Logistics
Updated: Jul 12
Last-mile shipping, or final-mile shipping, can be one of the most challenging parts of the supply chain. According to Investopedia, "'The last mile' is used to describe the short geographical segment of delivery of communication and media services or delivery of products to customers located in dense areas. Last-mile logistics tend to be complicated and costly to providers of goods and services who deliver to these areas."
So, why is it essential for an e-commerce business to fully understand last-mile logistics? It's no secret that we now live in an instant gratification society. Our society wants everything yesterday, which can make order delivery both costly and confusing.
What is the last mile problem?
According to Business Insider, 53% of overall shipping costs are tied up in the last mile. Customers are less likely to pay for shipping, with 72% of customers wanting free shipping. The last-mile problem becomes apparent in rural areas; the delivery points are miles apart, with packages only being delivered one or two at a time. Now, in cities, even though delivery points are closer together and have the probability that carriers will drop off more than one package at a location (i.e., an apartment building), the congestion of traffic delays the last mile just as much. With the rise in e-commerce in the US, a dramatically increased number of parcels delivered each day, including increased customer expectations.
Though much last-mile shipping is associated with small parcels, larger packages come with their problems. Large products might require assembly and skilled unpacking upon delivery, so shippers struggle to ensure that the final product is accurate according to the marketed offer. Last-mile carriers are in the thousands, but most do not offer assembly, which can be an added cost. Traditionally, customers purchased more oversized items in stores, and now online consumers expect just as much speed with the delivery of these items as with small parcels.
The solution to the problem
According to McKinsey and Company, parcel shipment is valued at more than $83 billion and is projected to double within the next ten years. Carriers of all sizes have identified last-mile logistics as the cornerstone to driving growth and profitability.
The development of modern shipping means that there is an expectation of visibility. Traditionally USPS has taken over the last-mile delivery, with carriers like FedEx and UPS outsourcing these deliveries. Consumer expectations of their delivery services force carriers to regain responsibility for their last-mile shipping. Transportation management systems (TMS) are an asset to companies that focus on e-commerce. A modern TMS can help shippers manage last-mile delivery through automated asset tracking and alerts received by both shippers and consumers. These alerts improve visibility and reduce risk.
Not sure if a TMS is a right fit for your company?
Here are some other possible ways to overcome the last-mile:
Companies, such as Amazon, have been offering delivery lockers to make picking up their package and the carriers easier. You can drop off 20 boxes in one place for 20 different people, saving you a ton of time and resources.
Many companies use contracted delivery services such as Uber, Lyft, Shipt, and GrubHub to ship their last-mile deliveries. These services might not work for every company. Still, for some companies such as Target, these services can help take inventory from their stores and deliver it directly to their customers' doors. This contracted partnership is a form of drop shipping. With a rise in home deliveries due to the Covid-19 pandemic, companies have turned to nontraditional delivery forms to get orders to their customers, which has ended up being quite smart to solve the last mile problem.
Drones and Robots
These are not quite ready for prime time, but they are coming up. Get ready and stay involved in what is up and coming.
Route Optimization Technologies
Like TMS, e-commerce is growing fast, that newer and smarter technologies are coming to help businesses save money. Keep an eye out for new ways to pivot and navigate consumer needs and trends.
#ShipTip: Shippers could also offer better incentives to truckers looking for career opportunities and positions with fewer regulations and rules.
Last-mile shipping could be considered one of the most important parts of shipping. More than anything, consumers want companies to meet their expectations. Companies potentially spend millions of dollars trying to figure out what those expectations are, and they can also waste both time and money if they get wrong. Whether one mile or one hundred miles, the last-mile is how the consumers get their orders. Do not leave this last bit of the supply chain up to chance. By taking the time to understand it fully, an e-commerce business can successfully save time and money while delivering products to customers, no matter their location.