With the booming of e-commerce and consumers wanting their things ASAP and delivered to their home, last mile delivery has become a more and more crucial part for any delivery service.
By definition, last mile delivery, also called final mile delivery, is the movement of products from the transportation hub to its final destination which, in this case, would be your home. Its main goal is to be able to deliver goods to customers at a specific time (or as fast as possible).
The demand for last mile deliveries has increased since the rise of e-commerce – the rise of online shopping. This demand has somehow affected logistics companies’ supply chain as it has required them to make some changes in terms of scaling and technology to be able to meet customers’ needs. In short, last mile delivery is changing the delivery process and how delivery services of LTL’s operate. Here’s all you need to know about this trend and how it might impact the trucking delivery market.
1# It’s getting bigger
When we say it’s getting bigger, it’s literally getting bigger – bigger in the number of last mile deliveries and bigger in terms of the size of the parcels delivered. In the household appliances segment alone, 49% of the total market revenue is expected to be generated online by the year 2023. What does this data show us? It only goes to show that we are not just ordering gadgets or requesting food delivery, or other small items to be delivered to our homes; we, somehow, took it to the next level and are now ordering bigger, heavier items such as washing machines, refrigerators, and other appliances.
Delivering larger items to residential urban areas can be a challenge, though, because you may need to maneuver your huge rig through small, children infested roads, and then drag that huge parcel across the garden up to the entrance. And because it is such a huge package, you would need somebody to be there to receive and sign the receipt.
It would require lots of consideration, and it would also consume a long time when delivering big, heavy parcels. But despite that, some LTL’s still jump into last mile logistics considering that they have created a technology for the sole purpose of last mile delivery.
Which brings me to my next point…
2# It’s not for everyone
Because of all those complications that come with final mile deliveries, NOT ALL LTL services are interested in providing this type of service because they’re fully aware that without the proper operation system, the job can be inefficient. One LTL delivery service, Central Freight Lines, actually noticed that it takes an average of 22 minutes more for their Texas-based drivers to deliver to residential urban areas compared to doing business deliveries, which is more than double the time! This is the reason why the company does not want to quickly jump on the last mile delivery wagon, even if the demand is very high.
However, there are some LTL’s that got into last mile logistics, either because they have developed a plan and technology for them to be able to deliver, or have invested in specific equipment and training. Some also look at last mile problems as an opportunity for them to partner with other companies that are already into it, which can be very helpful especially for smaller carriers to at least have an edge with larger shippers.
3# Extra services that come with last mile delivery – White gloves services
Consumers are expecting more and more from delivery services as the mentality has shifted from a “do-it-yourself” approach to a “do-it-for-me” one. Therefore, drivers now have to come with an extra set of skills to be able to provide extra services for their customers. Remember partnering with other companies that are already involved in last mile delivery? This move is especially important in terms of extra service called “white glove” service. White glove service is when you do not just deliver the product, but also set it up or install it for the customer.
Other LTL’s don’t partner with other companies – they do it on their own. One LTL company trained their drivers how to install various medical equipment such as an MRI machine so they can deliver AND provide white glove service like installation at the same time. Traditional LTL carriers and big shippers cannot provide this as it may require a specific set of skills, but for some who have already tried, this can be a huge opportunity to get a place in the market.
4# A need for new technologies
Like what we mentioned earlier, those companies that have jumped into the final mile delivery wagon may have already developed a technology for the purpose of it. It was actually a step ahead back then if an LTL company had a scanning solution. Now, technology such as Data Processing is one of the keys to the success of final mile logistics. This type of technology gives customers accurate and reliable information on where his/her parcel is.
Being able to collect and treat the data is crucial for other aspects of the business as well. For example, pricing can be determined by the customer or the day of the week or month. This is where back-end technology comes in. With back-end technology, the carrier can determine if there is more demand in certain areas so they can easily adjust the delivery price and make it cheaper in those places as service will be more efficient – they’re not moving to deliver 2 pairs of shoes.
Not all companies would develop their own technology, though. Luckily, third-party software companies are popping up and are offering various software technologies to LTL services that do not have their own technology, which can greatly help with their operation.
5# The new way of delivering – drones
Although we’re not there yet, because of the high demand of last mile delivery, bigger logistics companies have been testing drones to be used for delivery. In fact, because Amazon Prime provides its users access to free 2-day delivery, they announced back in 2015 that they were working on a project of starting to deliver parcels via Unmanned Aerial Vehicles (UAVs), creating a hype around it. While it has already been over 2 years since this announcement, it hasn’t really taken off yet. However, a lot of startups are working on finding a solution to make these types of last mile deliveries possible in bigger cities.
There is still a lot of skepticism surrounding drone deliveries, but the concept has opened a gateway for new ideas that took inspiration from this initial intention. Starship Technologies, for example, is combining drone delivery with the self-driving car technology and is developing self-driving delivery robots. The robots aren’t airborne which allows them to go around a ton of regulations that are currently the main reason the drone project hasn’t started yet.
The e-commerce boom is both a headache and opportunity for logistics companies, whether big or small, as this required so many changes when it comes to deliveries and meeting customers’ expectations. However, with technologies such as robots and drones, as well as computer software technologies, not to mention white-glove services which are not only to deliver parcels but to set up and install the product as well, pains of final mile delivery has rapidly decreased and has attracted smaller logistics companies.