In the past few years, consumers have switched to online shopping at an unprecedented scale. U.S. U.S. e-commerce sales will reach over $1.1 trillion in sales in 2023. Prior to the pandemic, e-commerce wasn’t expected to reach this milestone until 2024. This rapid acceleration has created new challenges and opportunities for a wide swath of transportation and logistics businesses that specialize in last mile delivery, from regional delivery fleets to UPS and FedEx.
In this article, we’ll examine last mile transportation—what it is and what makes it so challenging. Then, we’ll discuss how the latest technology and last mile trends are helping fleets revolutionize delivery operations to keep costs low and stay competitive.
What is Last Mile Delivery?
As products travel through the supply chain, they are passed between multiple carriers. During the first mile and middle mile, products travel from the manufacturer and then through customs, port, or hub storage. Finally, they enter the last mile where they’re sent out from a local warehouse or fulfillment center for delivery to a customer’s doorstep.
This journey is not actually the last mile of the way or the last delivery. The phrase is shorthand for describing the last leg of a product’s journey, which can be as short as a couple blocks or as long as 100 miles or more. Notably, it’s the most critical to customer satisfaction. If tracking information is wrong or a product arrives late or damaged, then a customer may choose to shop with a competitor in the future. Now let’s take a look at how last mile delivery works.
Challenges of the Final Mile
Every delivery is not equal. Last mile delivery poses numerous challenges to carriers along the way. Here are just a few:
- Poor route optimization. Sometimes a journey is relatively easy, involving major highways and roads. Frequently, however, deliveries require drivers to navigate dense traffic on busy city streets or spend hours traveling long distances on narrow rural roads.
- Inadequate tracking. Some fleets don’t have the technology to enable managers and consumers to access real-time updates on package’s location or delivery status. This lack of visibility contributes to poor customer satisfaction and missed deliveries.
- Lack of technical skills for installation and/or assembly. Some shippers need last mile drivers to provide white glove services, like unpacking and assembly. This requires delivery drivers to have a range of skills that vary wide from electronics to appliances and furniture.
Beyond these issues, final mile deliveries can be complicated by a number of other logistical challenges, like package signature requirements, inclement weather, routing errors, narrow product installation delivery windows, and more.
Fleet Management Technology Drives Last Mile Efficiency
Last mile delivery is the most time-consuming and expensive aspect of the delivery process, accounting for approximately 53 percent of a product’s total shipping costs. By using fleet management technology, last mile carriers can maximize their logistics efficiency to lower costs while meeting customer expectations. This technology ensures fleets reduce last mile costs by:
- Optimizing routes. To minimize total delivery time, fleet management solutions can map the best routes and adjust them based on real-time traffic and weather updates. Drivers receive automated route updates on their mobile phones.
- Reducing vehicle downtime. Featuring built-in vehicle health monitoring technology, fleets telematics systems ensure fleets can be proactive with vehicle maintenance. Drivers receive alerts when it’s time for preventative maintenance services, like oil changes and tune-ups, to ensure vehicles are always road-ready.
- Maximizing fuel efficiency. Not only do fleet telematics systems help optimize routes to reduce fuel costs, they also incorporate vehicle sensors that track driver behavior, like speeding, that contribute to excess fuel consumption. By reducing the variables that contribute to fuel waste, fleet management software helps drivers modify behavior to lower the total cost of deliveries.
- Promoting better driving habits. Advanced fleet telematics systems include in-cab dash cameras, which provide transparency and insight into dangerous driver behaviors, like distracted driving. Fleet managers can use this data to provide individualized coaching that not only keeps drivers safer but also boosts productivity.
- Providing critical business data. Integrated reports and analytics provide key performance indicators (KPIs) to fleet leaders, like on-time rates, customer feedback scores, distances traveled, and service times. With these reports, leaders can identify weaknesses and bottlenecks to make data-driven decisions about improving last mile operations.
Innovations for Improving Last Mile Delivery
New technology promises to help fleets deliver packages to customers more quickly and cost-effectively. Right now, automation is spreading across industries, and it’s likely that in the not-so-distant future the transportation sector will see a range of delivery robots, drones, and self-driving vehicles begin making last mile deliveries.
Fleets are also currently experimenting with other trends, like using crowdsourced non-professional couriers who use their own transportation for deliveries, as well as solutions that reduce delivery route complexity, like micro-fulfillment centers in urban centers and local storage locker pick-up locations.
Final Thoughts
Last mile delivery is critical to customer satisfaction. As ecommerce grows more popular, fleets that specialize in last mile delivery need to improve their operations to meet rising consumer expectations while also keeping costs low. With a fleet management solution, like Netradyne, last mile carriers can optimize vehicle routes, maximize fuel efficiency, get critical business data, and more.
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