Last Mile Logistic Challenges Increase as Online Sales Soar

Stephen DeAngelis

December 17, 2020

Last mile logistics are going to be a big story this holiday season. Caila Schwartz (@CailaSchwartz) , a senior industry strategist at Salesforce Commerce Cloud, reports, “All the traditional last-mile delivery carriers [like FedEx, UPS and DHL] will run out of capacity at some point in the season. So we anticipate that 700 million packages are actually at risk of being delayed this year.”[1] Journalist Paul Ziobro (@pziobro) reports, “The outlook has sent retailers on the hunt for alternatives with little luck.”[2] He adds, “Smaller carriers in the U.S. like LaserShip Inc. and DHL eCommerce Solutions said they booked up their capacity for the holidays months earlier than usual and aren’t taking new customers until next year. The final safety valve is the U.S. Postal Service, whose finances and network have been stretched during the coronavirus pandemic and could come under more pressure if shippers dump their overflow orders into the agency’s network.” Journalist Shira Ovide (@ShiraOvide) calls the perfect storm of increased e-commerce and full capacity carriers “shipageddon.”[3] She explains, “The combination of our reliance on online shopping during a pandemic and our eagerness for online shopping during the holidays has made some e-commerce experts predict a ‘shipageddon’ in the United States — delays and chaos as parcel companies already stretched thin also tackle a surge in holiday packages.”

 

Last-mile logistics are always challenging

 

“One of the most difficult and expensive aspects of the supply chain,” writes Chris Cunnane (@ccunnane), Research Director, Supply Chain Management, at ARC Advisory Group, “is last mile and home delivery.”[4] One reason last-mile logistics are so expensive is because they are inefficient. Patrick Burnson, Executive Editor of Supply Chain Management Review, reports, a study commissioned earlier this year by SOTI in partnership with Arlington Research, concluded, “Last-mile delivery is the most inefficient process of the entire supply chain.”[5] Shash Anand (@shashanand), Vice President of Product Strategy at SOTI, told Burnson, “It’s clear [logistics providers] can no longer afford to operate as they did 5 or 10 years ago — they must modernize and adapt in order to remain competitive in today’s current climate. Consumer expectations are also changing rapidly all over North America. They now require rapid, often same-day updates and deliveries. Failure to cater to these rapidly changing expectations and drive efficiency in operations can result in devastating losses.”

 

Sian Hopwood (@sianehopwood), Senior Vice President for B2B Operations at BluJay Solutions, agrees with Anand that customer expectations are increasing the pressure on last-mile logistics providers. She explains, “Value-added services like delivery notifications and package tracking are no longer the reserve of urgent or important deliveries but a minimum requirement in both the consumer and business world. Facing global competition, logistics managers face the double challenge of reducing delivery costs while improving customer service. The increasing commonality of penalties for delays, as used by Walmart in the US, is adding further pressure to smaller providers. This situation is putting the pressure on supply chains to operate at greater and greater scale in order to effect efficiencies.”[6]

 

Both Anand and Hopwood suggest that mobile technologies can improve both the efficiency and effectiveness of last-mile logistics. Anand insists, “Mobile-first strategies have never been more important. … A mobile-first strategy for last-mile delivery can transform business operations. In fact, 74% in the U.S. and 80% in Canada agree that their organization would benefit, or have already benefited, from an effective mobile-first strategy for last-mile delivery.” According to Anand, “A mobile-first strategy is defined as viewing smartphones, tablets and task-specific apps as the primary tools for getting work done.” Hopwood adds, “Almost every industry and aspect of society is becoming increasingly mobilized, and the supply chain is no different. Mobile platforms have the potential to enhance user efficiencies and the customer experience, all while helping to streamline daily processes and manage shipping spikes across multiple sectors. In order to keep up with such a dynamic business, supply chain managers are wise to consider a mobile solution in the hands of carriers and drivers that is flexible, easy-to-deploy, and manages the last-mile delivery experience with real-time updates for all stakeholders.”

 

The last-mile future

 

Although Anand and Hopwood make it sound like logistics providers are just coming out of the dark ages, the truth is that many logistics providers have been using advanced technologies for some time. The staff at Locus notes, “AI-powered route planning and optimization solutions help in planning hundreds and thousands of delivery routes accurately, considering real-world constraints such as traffic congestion, rider knowledge, etc. Route optimization allows businesses to plan heavy volume dispatches effectively, while saving fuel costs and manual working hours dramatically.”[7] Both mobile-first strategies and AI-powered optimization solutions rely heavily on obtaining the right data. Hopwood insists that connected data provides greater visibility. As a result of improved visibility, she notes, “Item tracking and shipment consolidation can now be performed in near-real time, meaning customers and shippers can receive information on their items round the clock.”

 

In addition to mobile apps and AI-powered optimization, other technologies and services are being explored to improve last-mile logistics. Hopwood observes that rural areas are often underserved when it comes to last-mile delivery. She adds, “Some hope that soon rural delivery routes will be simplified by drones which use a van or truck as aircraft carriers, taking them the long distances while the last mile drop is automated. Traditionally, suburban and rural parts of the country are slow to receive services like same-day delivery or super-fast broadband. But using drones is actually much more feasible outside of cities, as collision avoidance will be a somewhat less complex challenge for the devices than in built-up urban areas. Amazon, UPS and DHL have both trialed drone delivery concepts, which introduces the (still hypothetical but highly achievable) prospect of 30-minute fulfilment times from order placement to delivery.” In addition to drones, autonomous delivery vehicles experiments are being conducted. You’ve probably seen commercials touting small sidewalk-based delivery vehicles climbing the steps of a house to deliver a package.

 

Walmart is considering using driverless, renewable-energy vehicles to make last-mile deliveries. Michael Browne (@mbtravel), Executive Editor of Supermarket News, reports, “Beginning in 2021, Walmart will launch a pilot in Scottsdale, Ariz., with self-driving car company Cruise to operate an entire fleet of all-electric delivery vehicles powered with 100% renewable energy. The project will support the retail giant’s initiative to reach zero emissions by 2040. As part of the pilot, customers can place an order from their local store and have it delivered, contact-free, via one of Cruise’s all-electric self-driving cars.”[8] The point to be made is that logistics providers are actively exploring ways to improve the last mile.

 

Concluding thoughts

 

Although the last leg of logistics process is called the “last mile,” journalist Deborah Abrams Kaplan (@kaplanink) reminds us that consumers only care about the last yard. She explains, “If the last mile is the final delivery leg of a shipment to a business or consumer, the last yard takes the item to where the end user will use it.”[9] As an example, she uses the case of “the delivery of fresh fruits and vegetables to a residence.” She writes, “No one is there to receive them. They sit on the porch roasting in the day’s heat, or getting frost burn from the frigid weather. If the delivery person could put them inside the house — and even in the refrigerator — they would be where the consumer needed them. That is the essence of last yard delivery — the delivery is brought to the customer’s point of use.” Although some people might find it risky or creepy to have people putting their food away or placing a package inside their house, Amazon is coming close.

 

Russell Redman, Senior Editor at Supermarket News, reports, “Amazon is expanding its contactless Key In-Garage Delivery service to more than 4,000 U.S. cities and adding grocery to the mix.”[10] According to Redman, “Key In-Garage Delivery enables Prime members with a Chamberlain Group myQ smart garage door opener to receive packages in their garage. After linking their myQ app with Key, customers click on ‘Free In-Garage Delivery’ at checkout on Amazon.com. Packages are brought by a delivery service professional, and customers can use the Key by Amazon app or Amazon mobile shopping app to get an alert when their package is delivered. The customer also can view videos of the delivery by using a compatible Ring smart home camera with their Ring Protect Plan or a LiftMaster Smart Garage Camera powered by myQ with a myQ Video Storage Subscription.” Most brands and merchants understand the importance of last-mile delivery. It’s the last chance they have to impress customers. When it goes wrong, their reputation is adversely affected. That’s why this holiday season is predicted to be a real challenge for all stakeholders.

 

Footnotes
[1] Jennifer A. Kingson, “The pandemic is reshaping the holiday shopping season,” Axios, 8 September 2020.
[2] Paul Ziobro, “Holiday Crunch Starts Early With More Packages Than Means to Deliver Them,” The Wall Street Journal, 19 October 2020.
[3] Shira Ovide, “Brace for Holiday ‘Shipageddon’,” The New York Times, 16 October 2020.
[4] Chris Cunnane, “Maximizing Last Mile Deliveries,” Logistics Viewpoints, 26 August 2020.
[5] Patrick Burnson, “Last-Mile Delivery is the Most Inefficient Process for More Than Half of North American Companies,” Supply Chain Management Review, 8 July 2020.
[6] Sian Hopwood, “Getting smart on the last mile,” Supply Chain Digital, 4 January 2020.
[7] Locus, “Are you ready for this peak season’s last-mile operations?” Supply Chain Dive, 14 September 2020.
[8] Michael Browne, “Walmart to pilot all-electric self-driving delivery in 2021,” Supermarket News, 10 November 2020.
[9] Deborah Abrams Kaplan, “The last yard: The final logistics frontier,” Supply Chain Dive, 30 May 2019.
[10] Russell Redman, “Amazon launches Key In-Garage Grocery Delivery service,” Supermarket News, 12 November 2020.