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The Last Mile Challenge: Overcoming the Greatest Obstacle in Logistics
The last-mile is a term used in logistics that generally means the transit from the final hub to the delivery destination of products (What is last, 2018a). While this is in many cases the shortest part of a trip, the costs of this trip often runs between 28-29% of the entire transportation costs associated with the movement of goods (Lopez, 2017; The last mile, 2017). This high cost is known as the “last-mile problem” (Overcoming last mile, 2016, para. 2). While it has become more prevalent in recent years, this challenge is nothing new, and it appears unlikely to completely vanish anytime soon.
Causes of the Last-Mile Challenge
Like anything else, there are always reason for problems within an industry. The problems due to the last-mile challenge are based on various factors. Such factors include local and federal regulations, roadway systems and traffic, the rise in e-commerce, and insufficient hub locations (Overcoming last mile, 2016).
Federal and Local Regulations
Many deliveries occur in cities or townships where there are limitations to the overall weight of a vehicle passing through a certain area. There are also limits to the noise pollution that a vehicle can generate (Rutter, Bierling, Lee, Morgan, Warner, 2017). These particular regulations may also limit the financial responsibility that an interstate driver is able to assume, meaning that a few high-ticket items could severely impact the number of delivery drivers needed in one area on a given day (Rutter et al, 2017). However, many of these regulations are not present for smaller express service vehicles, which are costlier and thus further driving up the prices related to last-mile services.
Roadway Systems and Traffic
Most township and city roadways are not built for large vehicles. Typically, if there are vehicles that are larger than a Class B vehicle, they will be unable to move through residential areas (which might be their shortest pathway), and they will experience even more difficulty by spending more fuel (and less time) to go around these areas whenever possible (Rutter et al, 2017). However, there are instances where these areas are the target delivery area, in which case the carrier service would be back to using express services to easily navigate these roadways, further driving the price upward.
Rise of e-Commerce
There definitely has been a paradigm shift in shopping habits – between 2009 and 2014 alone e-commerce orders have grown by over 47% (What is last, 2018b). This has caused more traffic on delivering goods, and congestion along the roadway systems, further slowing each driver. This, of course, results in the need for more drivers and more vehicles in each area, which leads to the next point.
Insufficient Hubs
The issue with the number of hub facilities becomes complex – if a carrier does not have a hub that is able to get to the target last-mile location within 45 minutes, modern analysis of supply chains tells us that this is too much of a distance (Overcoming last mile, 2016). However, more facilities increase maintenance costs even though it lowers transportation costs and time. The main reason to maintain more facilities is to maintain customer satisfaction – 62% of people will not purchase from a vendor again if the final delivery is delayed by more than 2 days (Overcoming last mile, 2016). This would obviously decrease sales, leading to results a business would rather not face.
The Potential Solution
There are problems that must be thought of with last-mile service, that much cannot be disputed. However, there are businesses and entities that have gone out of their way to ensure that the last-mile problem does not have to be the age-old dilemma that has been seen throughout the past few decades. While there have been innovations involving drones or pickup lockers, these are either not convenient for all parties, or they have proven to be impractical at this stage. Results have proven that utilizing 4PL industries assist in reducing costs with the last-mile (Van Hull, 2018). Factually, 55% of businesses that have seen a decrease in their last-mile expenses are partnering with 3PL or 4PL firms.
Allyn International as a Last-Mile Solution
Using Allyn International as a provider for 4PL needs is an intelligent solution, as we partner with a large number of carriers that guarantee to reduce your delivery costs for last mile. Most of our clients see a savings of 10% in the first year alone, which is almost a third of the last-mile delivery cost. If reducing last-mile costs and increasing service reliability appeals to your business, then please contact us for more information.
Contributer: Stephen Hull
About Allyn International
Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North America, Europe and Asia and Allyn regional headquarters are strategically located in Fort Myers FL USA, Shanghai P.R. CHINA and Prague, CZECH REPUBLIC. For more information, log on to www.allynintl.com.
References:
Lopez, E. (2017). Why is the last mile so inefficient?: Highly customized service, complex routes and various stakeholders make perfecting the last mile a challenge. Supplychaindive.
Overcoming last mile logistics challenges. (2016). Mitchell’s NY Logistics.
Rutter, A., Bierling, D., Lee, D., Morgan, C., Warner, J. (2017). How will e-commerce growth impact our transportation network? Texas A&M Transportation Institute.
The last mile — the term, the problem and the odd solutions. (2017). Stigo.
Vaast, M. (2017). How does the last mile delivery impact your e-commerce? ECN.com.
Van Hull, P. (2018). Partnerships increasingly help to manage challenges around transportation, physical assets and last mile delivery. SCM World: A Gartner Community.
What is last mile delivery? part 1: How omnichannel retail is affecting transportation & logistics. (2018). Datex.
What is last mile delivery? part 2: Adapting to retail and e-commerce order fulfillment. (2018). Datex.