Last-mile suppliers are not investing in their last-mile efforts because they need the right tools. Here are the challenges you should consider when considering last-mile delivery technology.
Last-mile suppliers are not investing in their last-mile efforts because they need the right tools. Here are the challenges you should consider when considering last-mile delivery technology.
The last-mile should be the shipper's first concern in 2023. The last-mile accounts for 50% of a company's total costs, and the price is continually increasing. And let's face it, carriers are not truly investing in the last-mile because they don’t have the right tools to evaluate their last-mile costs. Most of the shippers today are deploying third-party logistics without a proper understanding of the total cost of their last-mile. In addition, companies are also trying to determine which carrier can complete their last mile in an optimized manner. And in turn, these companies are evaluating carriers against each other.
To understand the complexities of last-mile logistics, we must first understand how companies interact with the last-mile.
Last-mile delivery challenges
Looking back, we can see that last-mile delivery challenges were limited to three major carriers: USPS, UPS, and FedEx.
Today, we can add one more carrier to the list: Amazon.
Choosing the right quote
Traditionally, when companies evaluate carriers to complete their last mile, it comes down to price. Businesses pick the best quote without understanding last-mile challenges such as inaccurate geocodes, no real-time visibility, and inherent inefficiencies. Another problem was that their choice of carriers was severely limited; Now, there is a lot more competition- high-quality regional carriers— some that cater to just a handful of zip codes. As a result, shippers and retailers now have more options to choose from and ship their packages. But what they still lack is a complete understanding of last-mile challenges.
Solution: Look for last-mile delivery technology that enables new drivers to run routes as quickly and efficiently as veterans with the help of advanced route planning and an optimization engine.
The rise of B2C delivery
There is also a steadily rising trend of change in deliveries; carriers are delivering higher volumes in the B2C space. Until a few years back, most deliveries were going to businesses. B2C interactions were limited. For example, food deliveries from your local pizza shop were more commonplace in residential areas. Now, B2B and B2C parcels are increasing in residential areas. With the increasing volume of B2C shipments, last-mile has suffered significant strain mainly because migration to an eCommerce mindset is slow.
Solution: Fast food establishments and restaurants should strive to gain a more considerable market share by adapting to the food eCommerce boom. Many restaurants find that food delivery is costly, inefficient, and challenging to manage without restaurant delivery management software. These brick-and-mortars should consider looking for last-mile delivery technologies that offer options to allocate food orders to the best delivery driver and automatically take into account the restaurant’s proximity to the customer and turnaround time.
Decreases to your bottom line
Another change to consider this year is the bottom line. When you’re delivering to businesses (conducting B2B transactions), drivers can deliver 300-400 packages and complete their route. But with residential deliveries, delivering 400 packages is impossible. Perhaps, at most, drivers can deliver 120 packages during their shift; This means that a business's cost in the last-mile increases.
Solution: Look for companies that offer last-mile technologies that will help you optimize your routes–saving you time and money.
As retailers experience an explosion in growth, so will consumers. Major retailers are shutting down their brick-and-mortar locations and migrating to e-commerce transactions. As this trend continues, so will a rise in B2C deliveries. That’s why shippers and retailers must intimately understand the cost of their last-mile.
Understanding last-mile delivery challenges are the first step to optimizing last-mile logistics. The second step is to learn how technology can impact last-mile logistics now and in the future.
Next Steps
The other aspect of last-mile that shippers and retailers need to consider is technology. The last-mile is where the biggest dam in the industry is. So let’s look ahead towards the future to understand how we can embrace the inevitably of optimized delivery straight to your front door.