The discussion on how to improve last-mile delivery is one that has been tossed around for the last several years among retailers, logistics providers, and transportation drivers. The last mile of the delivery process, which is the leg from the warehouse to the final destination is usually the hardest and most expensive part of the shipping transaction. With traffic congestion in urban areas to combat, and bridging the distance in remote areas, carriers have to account for the time and cost that are added to the total spend. Currently, the last-mile segment accounts for about 55% of a shipment’s total cost. The growing number of delivery options has resulted in retailers trying to figure out how to best handle their customers’ shipments. 

The Elusive Last Mile

The last mile is the final step of the shipping process to get the item from the warehouse to the end-user, which is usually a personal residence. For traditional brick and mortar retailers who later formulated an online presence, this presents a challenge as their business model was based on an in-person transaction. Online shoppers now have the choice of two-day shipping, over-night, same-day pickups, etc.  Retailers have to juggle all of these options to keep up with customers’ expectations while creating a high level of satisfaction. Customers are looking for shipping that is:

• Fast
• Free
• Addressed Properly
• Transparent
• Secure

The success of the last mile of delivery is not entirely dependent on the trip from the shipping dock to the front door, however. It can be traced back to the fulfillment of the order, distribution and actual shipping. If these parts of the process are not set up correctly, the last mile is sure to fail. The streamlining of operations from order processing to picking order has helped find more cost-effective ways of handling last-mile delivery. 

Demand Keeps Growing

The COVID-19 pandemic has forced many consumers to go online as opposed to buying in the store. Older generations that may not have previously shopped online, are now turning to it as their main source of obtaining goods. Data from Forbes indicates that total online sales for June 2020 were a record of $73.2 billion, which is a 76% increase from the year prior.

According to the Supply Chain Game Changer, the growing expectation to get items to the consumer as quickly as possible has “created quite a flurry in the world of last-mile logistics.  To address this problem, many startups and technology companies have been attempting to deliver ‘magic’ solutions for retailers, logistics companies, and restaurants alike.”  Retailers are feeling the pressure that comes with these types of demands and those that cannot adapt will no longer be able to survive. 

Distribution

In order to meet the demand, retailers are creating new distribution models from traditional ones. Larger retailers are now changing their distribution strategies and using space in their retail stores for distribution. Many are using fulfillment center models with localized operations to better meet demand. This type of model uses locations in lower-cost areas that can transfer and deliver shipments. More retailers will turn to air freight for shipments as opposed to rail transportation, which is slower or use a multimodal approach in order to save cost. 

Technology

Rising demand has forced retailers to utilize advances in technology to get the job done.  Advances such as mobile computing, sensor technology and real-time visibility have been employed to try to reduce time in transit.  Businesses will need to incorporate technology into the complex last-mile delivery model to be able to optimize their operations and ensures scalability as the market moves. 

The changing expectations of consumers have turned the last mile upside down. The demand for faster shipping at a more competitive price has made companies find different ways to guarantee a good customer experience. The use of technological advances and expert guidance is the only way for businesses to be able to keep up. In order to achieve success for the final mile, some companies are looking for 3PL’s to maximize their network to create a reliable shipping partnership.