Last mile delivery is the most strenuous and expensive part of the supply chain when delivering goods. Whether it’s a commercial shipping such as UPS or Fedex, an internet enterprise like Amazon or Alibaba, or even a startup company, the last mile is what many companies have turned their attention towards.
What is the last mile and why is this an issue? What effects is this having on companies and the environment? What are some solutions these companies are coming up with?
In this article, we look into the problems, effects, and solutions to the last mile and how this bottleneck in the transportation sector is transforming.
The last mile, or the final mile, is exactly what it sounds like!
It is the last leg of the delivery process from the distribution hub to the final destination of the package.
Although this is the final part of delivery, this is also the first thing that consumers think of when describing at-home deliveries.
You may have experienced this personally as you intently stare at your Amazon (NASDAQ: AMZN) delivery status. Watching as your package slowly make its way to your house from down the block.
It’s no secret that supply chain and logistics have been struggling to solve the matter of the last mile since the beginning of doorstep delivery. However, this issue has become highly stressed in the recent months as consumers demand quicker (or even same day) deliveries while remaining virtually free.
As a result, companies and their drivers are struggling to keep up. In highly dense cities, one UPS states:
On average, I drive around 125 miles a day and deliver 225 or more packages
With the increasing age of the workforce and the stresses of increasing expectation, companies are finding it difficult to find drivers to fulfill their promotions.
Technology is also hardly keeping up. According to the most recent 2020 ARTS release
The rise of Covid-19 resulted in a 43% rise in e-commerce sales in 2020
As a result, more places need to be reached in a shorter time. Though routing technologies aren’t sending drivers on the most efficient paths.
Not to mention the many issues faced with timely deliveries to the rural parts of the country.
The last mile is not only the most difficult part of the delivery stage, but is also the most expensive. Statistically,
53% of the total shipping costs is spent on the last mile of delivery.
For urban areas, this includes driver salaries, gas spent on slow speeds and constant idling, and failed delivery attempts. In contrast, for rural areas this includes the many miles of driving for not very many deliveries.
In turn, this usage of gas powered vehicles creates obvious negative effects on the environment.
There are many creative solutions being implemented to attempt to counteract the last mile issue. The two main categories include technological solutions and infrastructural solutions.
The technological solutions are very creative. To combat the routing issues mentioned before, UPS (NYSE: UPS) has began implementing Orion. Juan Perez, the UPS chief information and engineering officer says:
The new Dynamic Optimization component will improve the accuracy of UPS delivery time estimates and give our customers better visibility into their shipments
This technology improves drivers routes in real-time throughout the day as traffic conditions alter and orders change.
Amazon has also started implementing a creative solution to the rural last mile. They’ve announced the use of drones to not only solve environmental issues, but also the driver shortage issues as well.
In even more recent developments, Nuro has developed a self-driving electric vehicle. They have begun working with Uber Eats, Domino’s, and many other companies in order to improve the last mile for many food deliveries.
Infrastructural solutions to the last mile utilize systems already in place. This improves deliveries to places outside normal routes and helps companies reach carbon neutral goals set for the near future.
UPS offers careers for people to deliver using their personal vehicle.
Uber Connect allows for same-day package deliveries with no postage required.
Many companies are also beginning to connect with local or non-professional couriers in order to reduce delivery times by way of crowdsourced delivery.
This makes puts a lot of pressure on smaller and medium sized companies to increase delivery times. To help with this situation, UPS has bought Ware2Go. Ware2Go allows for companies to easily purchase warehousing space to expand their inventory in new cities on-demand.
In conjunction, UPS has also acquired Delivery Solutions.
By connecting to the Delivery Solutions technology platform, businesses can easily access a global ecosystem of same-day delivery companies, enabling retailers and platforms to meet the special delivery needs of their customers, while maintaining a total control over their e-commerce brand image
So not only can a company expand their warehouse locations, but they can also access this developing world of same-day delivery and transparency with ease.
The last mile has been the first priority for many companies recently. As a result, technology and infrastructure solutions are being developed and improved in order to fulfill same-day delivery demands. These solutions are also keeping the environmental promises of these companies in mind.
The world of the last mile allowing for merchants to deliver to their consumers quicker than ever before. At this rate, we can expect to receive goods from any company or e-commerce site in a matter of hours. Though, this begs the question, what does the future hold for the last mile?
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