If the shipping and transportation industry has learned one thing over the past few years, fast and reliable delivery expectations are now the norm. Residential and commercial consumers now expect personalized delivery options that meet their needs, especially when it comes to last mile delivery services. Overcoming residential and retail delivery problems is critical to ongoing growth and recovery today.
But what is last mile delivery anyway? Sometimes referred to as final mile or end mile delivery, this encompasses the last leg of commercial and residential delivery. Localized compared to the rest of the delivery process, last mile delivery focuses on services such as package drop off, delivery signing, and other final processes involved with securing a final delivery.
Of all the steps involved in standard and rush deliveries, final mile transportation is essential to customer satisfaction and such a necessary part of transportation service and disruption planning. As Marketing Week stated, “simply put, consumer behavior is shifting fundamentally during this pandemic, and we don’t think it will flip back.” However, innovative last mile delivery services can help soften this blow as the supply chain, shippers, and customers adjust to the ‘new normal.’
Today, embracing the idea of innovative hot shot final mile delivery and tech-driven transportation services is leading the way across the shipping and transportation industry. Overcoming bad delivery service is a daunting task. Avoiding issues in the first place offers a more practical option for keeping customer loyalty as high as possible.
Understanding Last Mile Delivery and Its Impact on LTL Shipping Rates
It is essential to understand how LTL shipping and delivery costs are connected. Less-than-truckload shipping or less than load is the transportation of an amount of cargo between individual parcels and full truckload orders. LTL freight can range from a couple of pallets to a nearly full trailer depending on the number of items and the weight.
As consumers continue to expect and demand custom delivery options, the costs associated with these deliveries increase. Fuel use, rising operational costs, shipping and delivery expenses, driver wage debates, capacity shortages, shipping crunches, and increasing fuel costs add to the complexity of last mile delivery. Everything from managing custom delivery expenses shippers is responsible for to scheduling hot shot final mile deliveries for local customers is part of keeping customers satisfied. Understanding both sides of the last mile delivery vs. courier delivery discussion is vital for continued growth and recovery within the market.
Last Mile Delivery Services and Shipping Rate Fluctuation
Last mile delivery services present a unique challenge in cost management and industry rates for many transportation service providers. According to a report by the Journal of Commerce Online, shippers point to the following as significant areas of concern for final mile drop off deliveries:
- Longer overall transit times (87.9 percent)
- LTL transit over two days (70.2 percent)
- LTL transit over three days (16.4 percent)
Additionally, almost half of the survey respondents reported over $1 billion in annual revenue and global transportation needs. Unavailability of trailers and equipment affected nearly half of the respondents, and over 47 percent said they were dealing with increases in lost, damaged, or rejected cargo at delivery.
Across the board, rates are increasing and becoming more burdensome for shipping companies. This is due to several factors contributing to higher shipping demands, impacting shipping rates and expenses. Insider Intelligence pointed out in 2022 that “As a share of the total cost of shipping, last mile delivery costs are substantial—comprising 53% overall. And with the growing ubiquitousness of “free shipping,” customers are less willing to foot a delivery fee, forcing retailers and logistics partners to shoulder the cost. As such, it’s become the first place they’re looking to implement new technologies and drive process improvements.” Fuel and operational expenses are among the most volatile financial concerns for last mile delivery.
And as rates increase, it leads to higher customer costs for these standard delivery modes:
- LTL final mile deliveries of bulk orders, oversized cargo, and specialty freight shipments.
- FT final mile drop-offs for local orders and partial deliveries along planned routes.
- Parcel final mile delivery to customer doorsteps and custom delivery locations.
- Forward final mile transportation for residential and commercial deliveries.
- Hotshot final mile delivery for rush orders and time-sensitive cargo shipments.
Last mile delivery ensures businesses can benefit from these current trends. However, it requires careful consideration of market rate fluctuations and a keen understanding of the inherent risks.
Risks Inherent in Last or Final Mile Contributing to Uncertainty
Last mile delivery service has inherent risks, especially for end mile delivery and drop off. The stakes are even more significant. There are no signs that increasing customer demands and the growing pressure on local delivery and supply chains will wane. Economic forecasts predict the volatility of LTL shipping rates, and the increased market demand will increase the risks associated with final mile delivery.
Warehouse Supply Issues
Whether managing full truckload shipments or coordinating LTL loads, issues with warehouse supply and inventory movement create unique last mile problems for shippers. Delays generate a ripple effect of disruption that carries throughout the supply chain. When warehouse services are delayed and ineffective, the entire supply chain also suffers.
Urban Transport Routes
Last mile delivery service providers face the challenges of navigating urban environments and dealing with obstacles. These include local traffic, parking access, drop-off locations, building layouts, and coordinating with customers. In addition, route management and route optimization must occur in real-time to respond to the current situation. Technology platforms for last mile delivery empower shippers to manage by exception and navigate these complex and highly variable delivery moves.
Delivery to Remote Areas
Hotshot final mile delivery options often involve remote areas other carriers cannot or do not service. Packages become harder to deliver when remote access over dirt roads, long drives, and out-of-the-way drop-offs are the norm rather than the exception. In addition, large-scale companies cannot often do remote access and delivery without local assistance.
Consumer Based Delays
Many issues and delays can result from consumer choices and actions. There comes the point where consumer-based delays and disruptions come to light. Changes to delivery timelines, altered drop-off locations, and missed delivery schedules cause significant delays with final mile KPIs and final delivery.
Supply Chain Disruptions
Last mile delivery services are closely tied to supply chain trends and disruptions. When local supply chains struggle to keep up with supply and demand balance, it spills over into last mile, TLT, and truckload transportation services. What happens on one side always affects the other, so this connection and balance need careful consideration when planning last mile handoffs.
Shipping Cost Increases
A risk that last mile and hotshot final mile transportation must contend with is the overall costs involved with these services. Rush orders, specialized handling, difficult delivery locations, and customized services add to the expenses shippers must offset for end-mile deliveries. The more risk involved, the higher the costs of shipping specific cargo or delivering to certain locations.
Loss or Damage of Cargo
Forward final mile delivery also comes with the added risk of lost or damaged cargo that cannot be delivered or rejected by the customer. Matching a reliable courier or carrier that can best serve each delivery is vital to keeping damage and loss to a minimum so last mile delivery can succeed. In the last few miles, damages and issues often arise and create problems for shippers.
Driver and Capacity Limits
Obstacles and challenges with last mile delivery services often tie back to issues of capacity access. Whether it is driver availability and space limits for containers and freight, limited availability can cause significant delays and increase risks associated with these services. But, again, working with local drivers and carriers can help reduce the risk.
Local Shipment Lane Delays
The final factor impacting the overall risk of rising LTL shipping rates for last mile delivery lies with local lane delays and disruptions that often fall well beyond the control of the shippers themselves. In addition, local factors such as severe weather, traffic congestion, construction delays, and other shipment lane obstacles add to the overall transportation expenses of final mile delivery.
Keeping these factors in mind can help shipping companies answer vital questions about shipping services and shed light on the last mile delivery vs. courier delivery question. Finding the last mile technologies that provide the services that customers expect while remaining affordable for shippers is an ongoing challenge that faces those specializing in final mile drop-off delivery.
Overcoming Last Mile Risks and Challenges With Innovative Technology
As highlighted by SupplyChainBrain in a 2022 article, “carriers struggling to overcome bottlenecks at ports and warehouses, along with shortages of the vehicles, containers, and chassis required to keep product moving. Equally important is the need to maintain the flow of information that accompanies those shipments. And that’s where technology comes to the forefront, as a means of helping retailers to negotiate the last mile.” Old, outdated methods that once worked are no longer viable in today’s digital age.
Businesses need tools and capabilities that can have a transformative impact on global supply chain sustainability, forward final mile delivery, and shipping performance, including:
- Systems are designed to make it easier for delivery personnel to acquire, manage, and apply actionable insights across multiple routes and services quickly and easily.
- Innovative tracking and monitoring methods to securely record and share data between suppliers, drivers, managers, customers, and third parties.
- The ability to control and manage multiple data streams and bring together disparate data from offline processes and numerous sources for easy review and distribution.
- Company-wide data analytics and collaboration opportunities utilize available tools and automation options to improve functionality and productivity.
While uncertainty and volatility remain, innovative technology is essential in reshaping last mile transportation tracking and last mile delivery services management to create an environmentally-friendly supply chain.
Improved Visibility, Transparency, Collaboration, and Scalability Help Improve Last Mile Delivery Success
Four key aspects of shipping and transportation have to be considered when deciding the last mile delivery vs. courier delivery option. Everything from hotshot final mile drop-offs to standard last mile deliveries can be improved by focusing on these four aspects of last mile delivery optimization.
A 2022 article from Logistics Management, highlighting the latest industry surveys, states that “many respondents are turning to technology. Approximately half (48%) are adding or upgrading their parcel/LTL transportation management system (TMS), while 36% are automating parcel sortation and/or utilizing software for rate shopping (32%) and parcel analytics (29%)….while fewer companies are leveraging consolidation (27%) and zone skipping (21%).” As a result, companies must find efficient and effective ways to improve routine operations and services within local supply chains, delivery lanes, and shipping service hubs.
When looking at the performance of last mile delivery services, shippers should ensure they receive:
- Real-time visibility throughout the entire delivery process, from loading to unloading.
- Transparency with team members, management, 3PLs, and customers alike.
- Collaboration between parties with a unified goal for successful delivery.
- The ability to grow and scale based on changes in trends and customer demands.
Like much of the shipping and transportation process, the first step creates a ripple effect in the supply chain. It starts in one place and is carried along with the entire network. Small changes made in one area affect overall delivery and customer interactions. However, the effort and resources needed to monitor first-level and upper-level options with last mile delivery services can be very costly and time-consuming. Focusing on these four essential points can help shippers and managers improve final mile services and manage LTL, TL, and rush order deliveries.
E-Commerce and Current Digital Trends Drive Last Mile and Hot Shot Final Mile Costs and Services
Due to the pressure on local supply chains and delivery lanes, thanks to the pandemic, e-commerce trends, and customer demands, the need for reliable delivery continues to rise, especially in this post-COVID-19 world. According to Forrester, the E-commerce market is currently at $370 billion with full truckload, less than truckload, and rush deliveries. Additionally, those sales classified as online commerce accounted for approximately 8.5% of total retail sales before the pandemic hit. Of course, the value and demand for e-commerce shipping grew to unprecedented levels during the pandemic. This demand is not expected to change as e-commerce sales are expected to make up more than 16% of the entire US retail distributor market in just a few years as it exceeds well over $1 trillion in value.
This rapid growth is transforming the way localized deliveries are approached and is increasing the need for fast and reliable shipping options. Delivery personnel needs to find drivers, trailers, and routes that can accommodate urgent rush orders and complicated last mile delivery services. As a result, things were more challenging than at the beginning, when the idea of customized delivery options and e-commerce shipping, in general, was a novel idea.
When the e-commerce experience was just beginning, customers were open to the idea of paying more for deliveries that could still take days or weeks to arrive. Online ordering was new and trendy and a convenience worth paying extra for such services. There was no precedent to live up to or measured against within the shipping industry. However, like many things in life, what was once seen as a commodity has become a requirement. E-commerce is a part of the American shopping experience and supply chain model as any brick-and-mortar approach. As shopping online has grown more commonplace, consumers have begun to demand more with the transportation of their online purchases. This shift has forever changed the future of last mile delivery.
E-commerce trends and services are growing at a startling rate, and transportation companies often find they struggle to keep up and adapt effectively. This has pushed logistics to heights beyond the traditional hub and spoke models and forced a renewed focus on hotshot final mile deliveries and other same or next-day delivery options. As a result, last mile logistics have become more innovative, modern, and tech-driven.
Improve Last Mile Deliveries for 2022 and Beyond by Partnering With OneRail Today
In the years of the global pandemic and the industry’s recovery period, shippers and transportation managers have learned one critical lesson- fast and reliable delivery options are more of a requirement than a commodity today. Personalized delivery options that meet their needs are now considered standard, especially with last mile delivery services. Therefore, managing the last mile courier and shipper relationship can make or break transportation companies.
Understanding how these services relate to shipping costs and overall full truckload and LTL shipping rates is essential for end-mile delivery. By maximizing last mile delivery services and ensuring optimal efficiency along the entire leg of the shipping journey, transportation service providers can effectively track, manage, and enhance delivery hand-offs. Having the right logistics partner can make all the difference.
Whether you are a new entrepreneur or a seasoned professional, understanding the state of last mile shipping and delivery in 2022 is essential for continued growth and success within the shipping and transportation industry. Prepare for disruptions and market volatility and discover new and effective ways to boost profits while reducing costs for your final mile delivery services. If your company is looking for last mile delivery efficiency contact OneRail today to request a demo.