Last mile delivery refers to the final phase of the shipping process, when goods are moved from a freight hub to their delivery destinations. Examples of last mile carriers are not limited to traditional delivery companies like UPS and FedEx, but can also include LTL carriers, niche market carriers and even technology companies.
Table of Contents
- What is last mile delivery and why has it recently become more of a problem for carriers?
- What kinds of companies do last mile delivery?
- What are some of the challenges inherent in last mile delivery?
- How can last mile delivery be improved?
In logistics lingo, the “last mile” refers to the last leg of a shipment’s journey, usually from a shipping hub to its final delivery address. While it’s often the shortest part of the shipping process, it can also be the most inefficient and expensive: a 2016 Honeywell study estimates the last mile makes up 50% of total logistics costs on any shipment. We’ll delve into the reasons why further down, but as demand for shipped goods increases along with the rapid rise of e-commerce, it’s recently created many challenges for carriers, many of whom are struggling to meet consumers’ expectations of rapid delivery.
Delivery companies like UPS, USPS, FedEx and DHL commonly come to mind when thinking of last mile carriers, but there are many more. Niche market delivery companies (such as Postmates, an on-demand carrier service) and LTL (which stands for “less than load” - specializing in small freight) also take last mile shipments. Finally, technology companies are also beginning to wade into this space, including specialized services like Instacart and TaskRabbit.
One of the most common problems last mile shippers encounter is recipients not being present to accept deliveries. While some items can be left unattended at a residence or business, others require a signature to confirm receipt or special handling (such as medications or food requiring immediate refrigeration). When carriers are unable to complete a delivery, they must then either return at another date or transport the goods to a central pick-up location, leading to additional fuel and labor costs, not to mention wasted time
Another reason why the last mile can be costly is it’s inherently inefficient: since consumers don’t receive packages daily (unlike mail), routes have to be tailored around their addresses. In a city, even if delivery addresses are close by, traffic and congestion can delay deliveries. In rural delivery zones, traffic might not be an issue but addresses are further spread out, taking more time to complete a route. What’s more, unlike long-haul shipments, last mile deliveries mean carriers generally make return trips back to their base with their trucks empty, which isn’t an efficient use of truck space or fuel.
As we’ve seen, the nature of last mile delivery means it’s rife with opportunities for inefficiency. While some things (like the location of delivery addresses) are out of carriers’ control, managers can take steps to optimize routes to make them as streamlined as possible. Increasingly, last mile delivery service providers are relying on software, web portals and mobile technology to make sure they’re seeing real-time data on their drivers’ whereabouts, and use GPS fleet tracking technology and up-to-the-minute traffic conditions to plan the best routes during peak times. This keeps cost and driving time to a minimum.
Teletrac Navman customers who use PTV Smartour (an integration with the DIRECTOR software) notice that it changes route planning from a time-consuming, multi-variable puzzle into a seamless process from planning to execution. The software also allows for flexibility for last-minute route changes due to equipment malfunctions or an ill driver, enabling dispatchers to simply re-optimize for the rest of the day.
Making last mile delivery as efficient as possible doesn’t just help the bottom line, it boosts customer service, too. Providing customers with more accurate delivery times and proactive communications about where their packages are increases satisfaction, showing how streamlined logistics can make customer sentiment more positive.