Last mile logistics – also sometimes called last mile supply chain or last mile delivery – tends to be misunderstood in our industry. Some people don’t view last mile logistics as very important, but the truth is that it can make up a large percentage of a shipment’s cost. Additionally, the growth of ecommerce is transforming how shippers’ manage last mile logistics. To better understand how last mile logistics can impact your organization, keep reading what our experts have to say about this critical supply chain element.
Last Mile Logistics Defined
Last mile logistics refers to the final step of the delivery process. As the name implies, this process involves the last steps of getting the shipment from the distribution center or facility to the end user. That “last mile” could range from a few miles to over 100 miles. Typically, last mile logistics involves the use of parcel or small package carriers to deliver items to customers. According to research from McKinsey and Company, parcel shipment is valued at more than $83 Billion, and the growing ecommerce market is on trend to be valued at twice its current size in a decade. Furthermore, shippers of all sizes are taking last mile logistics more seriously and understanding how this process can drive growth and profitability.
Why are Last Mile Logistics so Crucial?
Last mile logistics impact how shippers can get goods to consumers in a fast and cost effective manner. These concerns have become increasingly critical in an ecommerce driven world, where customers have gotten savvier and more choosy. In fact, research shows that customers are willing to pay a premium for better last mile delivery services (like same day or instant delivery services). Consumers have come to expect speed and visibility at every stage of their product shipments. In addition to companies like Amazon adjusting consumers’ overall expectations, other retailers are also offering deliver-from-store last mile logistics that allows them to get their chosen products much faster.
As ecommerce sales grow and reach into the trillions, the demand for more sophisticated last mile logistics options will grow. Some retail giants – such as Amazon – have nearly perfected last mile logistics, but there is still a lot of opportunity for small and mid-size companies to take advantage of this growing sector.
The Unique Challenges of Last Mile Logistics
Last mile logistics can make a huge difference in your organization, but that doesn’t mean it’s always easy to sort this part of the supply chain out. Some of the issues that can arise are:
- Difficulty navigating more urban areas, with increased traffic, parking regulations, etc.
- Global delivery challenges can significantly impact the cost of last mile delivery services
- Inability to compete with the “Amazon effect” where consumers have come to expect near instant shipping times
- The complexity of delivering large products or items that require assembly or special care
- Concerns around the current driver shortage and the outlook for future capacity
These challenges shouldn’t scare you away from further investing in last mile logistics. Like all aspects of business, there are complex areas to explore, but plenty of solutions. Some of the tactics that can help combat these concerns are implementing pick-up lockers in difficult-to-reach locations, such as Amazon has set up with storefront pickup locations, and investing in drones or robots that are sure to be part of the future of delivery. Additionally, better route optimization technologies can help deal with capacity and cut last mile costs. Shippers may also consider offering better incentives to truckers looking for career opportunities or implementing less regulations to attract more talent. There are plenty of ways to creatively address the concerns that last mile logistics can pose – and it’s essential to do so if you hope to compete in the future supply chain space.
If you need more advice – about last mile logistics or any aspect of supply chain excellence – reach out to us. We’re a fully integrated, third-party logistics provider specializing in wholesale, retail, and direct-to-consumer unit fulfillment.