5 Last Mile Transportation Trends To Be Aware Of
Last mile transportation is one of the most discussed topics among shippers. With ecommerce sales increasing year after year, this leg of the supply chain is also the fastest growing. In 2018, Business Insider reported that last-mile delivery accounted for 53% of distribution center to consumer costs.
As valuable as this portion of the supply chain is, it’s also one of the most unpredictable. Consumer demands on last mile transportation seem to change month to month. Additionally, technology and big money are disrupting the industry in many different ways. Before the robots completely take over, here are five trends in last mile transportation that every shipper should pay attention to.
1.) Industry Mergers and Acquisitions
From delivery apps to carriers, there is a wave of mergers and acquisitions taking place. Schneider and J.B. Hunt, for example, have both acquired final mile delivery companies in recent years. As companies look to solidify their place in residential delivery, we can expect to see more moves like these in the months and years to come.
Pros: Consolidating services through mergers and acquisitions can give shippers access to a full host of services. This may simplify the ability to utilize one service provider.
Cons: Less competition can sometimes lead to equally less service variety and pricing.
2.) The Race To Same-Day Delivery
Let’s face it, the industry is always playing catch up to Amazon’s ambitions. In April, the company announced plans to invest $800 million in order to provide it’s Prime members with guaranteed next-day delivery. Now, the race is on for shippers to meet the new standard that Amazon is putting forth. Soon, however, same-day delivery will be the new white whale.
Pros: The technology and players already exist to meet the need for next-day final mile delivery services.
Cons: Shippers will need to reexamine their supply chains. Inventory staging in key markets will be critical to meet shorter transit times with residential delivery services.
3.) Accessorial Replacement Services
Accessorial fees, such as lift gates and two-man delivery, have always eaten into the shipper’s bottom line. Most large carriers aren’t excited to handle freight that isn’t delivered to a dock. However, last mile transportation providers such as white glove couriers will become the go-to for residential and inside deliveries.
Pros: Final mile service providers operate with accessorials already accounted for. Their equipment is ideal for residential and non-traditional delivery sites.
Cons: Many shippers will be reluctant to branch out and explore different delivery options that are already available.
4.) Demand for Consistent Service
As is the case with LTL and truckload carriers, last mile transportation service can vary by market and region. But with more ecommerce sales reaching residential customers across the country, the need for reliable service across the board is critical. Providing a consistent level of service from Florida to California will depend on the partnerships that shippers create.
Pros: Providing consistency in terms of service options will make supply chain operations easier to manage. It will also help on the front end when it comes to providing delivery options to customers.
Cons: Choosing just one service provider or utilizing a nationwide last mile delivery network will involve heavy planning and research.
5.) Here Come the Robots and Drones
It will be years before autonomous robots and drones take over the world. Nonetheless, we shouldn’t disregard these technologies as mere novelties when it comes to last mile transportation. While there are many questions to be answered in terms of privacy, job elimination and airspace safety, these technologies could one day be as common as the UPS van.
Pros: These technologies could help improve parcel delivery logistics in urban areas. They could also create a new wave of jobs that require different skill sets.
Cons: Don’t expect robots and drones to be moving heavy and oversized freight any time soon.
What trends in last mile transporation did we miss? Let us know in the comment section below!