The last-mile is perhaps the most crucial and also the most difficult part of the shipping journey. It is the only part where businesses get to interact directly with their end-customers. This means that the last-mile customer experience - the efficiency and customer service of delivery - can greatly influence consumer perception of all the brands involved in the shipping process, from the goods-maker to the shipper. It’s quite simple: if parcels are not getting to their destination on time, customers will begin to lose trust in the chosen delivery service and/or stop buying goods from the original provider.

Despite last-mile being so important to brand reputation and customer loyalty, it is notorious for being the least efficient section of the delivery route, accounting for a huge 30 - 53% of overall delivery costs. The factors behind this are multiple but two core reasons are the prevalence of empty shipping orders (where shippers return without filling the vehicle) and inefficient distribution between logistics hubs. Thus, while the “last-mile” is often thought of as simply the last leg of the journey - from warehouse to customer - it actually involves several equally important stages. The efficient movement of palletised goods between distribution hubs, for example, is crucial to timely deliveries, as is the choice of provider for the vehicles who oversee this transportation step.

Let’s take a more detailed look at some of the key problems for last-mile delivery companies transporting palletised goods between logistics hubs, and then examine how technology can help to solve them:

Inefficiency

The main last-mile issue is inefficiency. The final leg of shipment usually involves multiple stops with low drop sizes. This is particularly the case in suburban and rural areas, where delivery points can be up to several miles apart and have individual drop sizes of only one or two packages Inefficiency in transportation between logistics hubs is also a problem; if the chosen truck provider does not arrive on time, for instance, or goes to the wrong hub, the whole delivery timeline is delayed. Finding ways to optimise not only the delivery from hub to customer but also between hubs is, therefore, key to improving the whole delivery transportation process.

Rising costs

As noted above, the last-mile accounts for a significant proportion of shipping costs. "Free shipping" among e-commerce platforms is now more normalised than ever and delivery services are increasingly outsourced. This means retailers and, largely, logistics partners are having to shoulder the cost of delivery more heavily than in the past. It is no wonder, then, that delivery companies are looking towards new technologies and processes to help them to optimise and cut the costs of all transportation steps, as much internal as external.

An increasingly competitive environment

The continuous rise of e-commerce across the globe has hugely increased the number of parcels delivered each day, with the so-called “Amazon effect” increasing customer expectations as well as delivery volumes. The increasing prevalence of same-day delivery reflects this: customers now expect their goods as soon as possible and are not satisfied otherwise. Moreover, delivery companies are not only having to compete among themselves for the most efficient last-mile service but also among well-known retailers such as Amazon and Coolblue, who are building up their own delivery networks. The competition is, therefore, fierce - not only for last-mile tenders but also for the limited number of logistics personnel too. This increasingly pressurised and competitive environment is forcing last-mile parcel companies to up their game across all of their operations - from order creation to its arrival at the customer’s doorstep.

Additional pressures

In addition to market pressures, parcel companies also face pressures from other sources too. For example, new mobility policies introduced by local authorities, such as congestion charges, restricted access to city centres and bans on diesel cars, are having a huge impact on last-mile companies. Such policies mean added delivery inefficiencies and regulatory costs - both for last-mile companies’ own “last-leg” vehicles and for the internal transportation truck providers that they work with. Finding the best-price trucking providers for the internal movement of parcels between distribution hubs is, therefore, essential to reducing the cost of the whole delivery process.

The need to optimise

This increasingly pressurised and competitive environment is forcing last-mile parcel companies to up their operational game across all departments. Higher productivity and efficiency are their priority goals due to the need to deal with high volumes and prevent margins from being lowered even further. Some of the main ways that last-mile companies aim to achieve cost-reductions are by optimising empty shipping orders and improving distribution between logistics hubs. This can be achieved by optimising the supply chain and, notably, through easy access to vehicles that have high flexibility and rapidity, including those that can carry out night shifts. How can companies achieve this optimisation?

Leveraging new technologies to solve parcel companies issues

New technologies designed to optimise supply chain and delivery operations in the transportation industry are essential to the future survival of last-mile delivery companies. This means not only focusing on optimising last-leg delivery processes but also on improving other operational steps that come before delivery. For example, optimising the internal operations of individual logistics hubs is just as crucial to last-mile companies’ ability to increase efficiency and reduce costs. Ontruck’s 'Recurrent Loads' feature, for instance, enables shippers to set-up recurrent orders all at once. This is something that last-mile companies can really capitalise on. They are moving the same trucks full of palletised goods all day, every day, between the same points: using “recurrent loads”, these companies can distribute last mile deliveries much more efficiently. This means that shippers can make sure goods are getting to their destination on time.

Furthermore, Ontruck offers delivery companies the chance to leverage advanced analytics. Their technology’s spot-pricing capacity assign loads automatically to reliable, flexible drivers on-demand for internal transportation between hubs. This means that Ontruck’s technology enables delivery companies to deal with short-term fluctuations, without inefficiencies or extra charges becoming a problem. It’s a win-win-win situation for all.