What is Last Mile Delivery?

Consumer buying behaviour has been rapidly adjusting, and the change was only accelerated by the COVID-19 pandemic. The shift to online shopping has erupted in these most recent years, and nowadays, consumers operate under the assumption that their online purchases will come with fast and free delivery.

But why? With the click of a button, customers are able to buy almost anything from the comfort of their own homes. Yet the downside of instantaneous purchasing is that it comes with the expectation of immediate delivery. The desire for instant gratification often leads to disappointment when products are met with shipping difficulties and delays.

Unfortunately, no matter how much businesses try to expedite deliveries to make their customers happy, they all end up facing one of the biggest challenges in the shipping procedure, last mile delivery.

What is Last Mile Delivery?

In the shipping process, the last leg of the operation is referred to as last mile delivery, last mile carrier, or last mile logistics. Last mile delivery service moves the cargo from its distribution centre to its final destination, either a brick and mortar retail store, or oftentimes the door of the customer who purchased the product. The goal of last mile delivery is to keep customers happy and loyal, and deliver parcels to their final destination as quickly and efficiently as possible.

Surprisingly, last mile delivery is the most time-consuming and expensive part of the shipping journey, and makes up 53% of the total cost of shipping. Between labour costs, warehousing, and resource optimization, the funds needed for a last mile carrier are substantial. And with more and more supply chain delays, shipping costs are only increasing.

What Are the Challenges of Last Mile Delivery?

  1. The Biggest Problem: Inefficiency 
    One of the biggest challenges that last mile delivery service faces is inefficiency. Unlike large-scale shipments, the delivery process involves low shipment sizes that need to be dropped off at multiple different stops. Sometimes, delivery destinations along a route are several miles apart and involve complex routes, leading to a lot of idle time on the road. And with the dramatic increase in eCommerce sales, the number of parcels that need to be delivered every day has only increased as well.

  2. Disappointment in Transparency 
    Online shoppers are becoming more and more impatient to receive their purchases as soon as possible, and buyers are hungry for the knowledge of where their packages are, and the expected delivery time. Shipment visibility is incredibly important, and while most businesses offer a trackable ID, a lot of customers aren’t completely satisfied with the status updates, and wish to know the exact location of where their parcels are. With the rise of delivery apps such as Uber and Postmates, it’s no wonder customers wish to have a GPS tracking system attached to their online purchases.

  1. High Cost of Execution 
    How do retail companies provide affordable products and free shipping services at the same time? Oftentimes consumers will turn to different providers if free shipping is not available, or if they deem the shipping costs to be too expensive. Retailers and third-party logistics providers then have to foot the shipping costs themselves in order to keep their customers, and around 28% of the delivery cost comes from last mile delivery. Not to mention, the costs need to include the price of fuel, long routes, driver salaries, and more, which all contribute to high execution costs for last mile delivery services.

  2. Uncontrollable Elements
    Unsafe weather conditions and traffic issues are just some more challenges that the last mile carrier may face. These delays occur at an unpredictable rate, are completely out of human control, and lead to late deliveries. Logistics companies can only adapt accordingly and map out alternative routes in an effort to continue dropping off parcels. The fight against nature has no perfect solution, but having contingency plans in place is better than having none.

What Is the Importance of Last Mile Delivery?

The name “last mile delivery” implies that its part in the supply chain is minuscule, but it is actually an essential cog in the shipping process. As it deals directly with consumers, last mile delivery influences a myriad of factors like customer satisfaction, convenience, and like mentioned above, delivery time and cost.

Of course, its prevalence and importance have only increased in recent years. Big corporate retailers like Amazon and eBay have been reliant on last mile delivery to fulfill their orders, but with the pandemic directly changing the way people spend their money, many more companies turned to last mile delivery services to keep their businesses afloat. The race for speedy and satisfactory delivery has made last mile delivery even more important than ever, and it doesn’t look like that importance is fading away anytime soon.

Need Any Assistance? SFI Can Help!

If you need any assistance regarding freight forwarding, contact SFI today, and we’ll take care of your shipping needs. We have professionals ready to help smooth over any shipping problems you may have. Email us at info@sfi.com or call us at (909) 594-3400.