What Are Last Mile Logistics?
Despite what the name might convey, last mile (or sometimes called final mile) is not simply the final mile of the freight shipping route. Last mile delivery can range anywhere from a few blocks to 50 or even 100 miles. It all comes down to how far the package is traveling from the distribution center or facility to the end user – often your front door. As e-commerce sales are expected to reach $2.4 trillion by 2018 (source: Logistics Management), the growing market is becoming increasingly competitive. Online retailers race to perfect their last mile logistics and put them in the running race with online giants such as Amazon.
What Are the Unique Challenges of Last Mile Logistics?
With last mile logistics, come several unique challenges. Delivering parcel in urban communities can prove to be difficult with navigating both traffic and parking regulation.
Not only is there a shortage of freight truck drivers, but also last mile drivers. The capacity crunch and driver shortage are issues that are not going to disappear anytime soon, and shippers are constantly having to think of innovative ways to overcome these challenges in order to remain competitive in the market.
Not surprisingly, the top challenge remains that most retailers cannot get products to consumers at the same rates of Amazon – who offers free two-day shipping on select items for a $99 a year membership. Last mile logistics are seen as the least efficient leg of shipping and account for up to 20 percent of the total cost to ship a product (source: MitchellsNY.com).
Amazon has even gone on to offer next-day and same-day delivery on an expanding list of select products. To compete, retailers are beginning to offer deliver-from-store services and a variety of options for pick up in order to help reduce last mile costs.
Competitive Trends in Last Mile Logistics
- Faster Fulfillment
Consumers want faster fulfillment, with 30 percent saying they would pay a premium for faster delivery (source: McKinsey&Company). Shipments that previously required one hour to process are now being constrained into three-minute intervals, if not faster.
- Drivers Become Merchants
As the market becomes inundated with fast and better technology, and even driverless trucks, the role of truckers will begin to evolve. Drivers will become the merchant and sell items right from their truck, for the fastest fulfilment possible.
- Autonomous Vehicles and Trucks, Robotic Delivery, and Drones Become Increasingly Important
Self-driving vehicles or trucks will greatly impact last mile logistics and become key in increasing last mile delivery options, while still maintaining high reliability and same-day delivery. Due to existing regulations around the truck industry though, it’s unlikely that wide-scale implementation of driverless delivery options will be available within the next two years.
All theories for the future of final mile logistics point to faster, smarter deliveries where both the customer can have the fast service they’re seeking, and the shipper can lower the cost of final mile to a more manageable price point.
Interested in getting the most out of last mile logistics? Get a free, instant freight quote today and consult with an experienced Freight Agent.