October 16, 2019 last mile logistics
9.84 billion parcels were distributed around the world in 2017.
The last mile delivery market is experiencing breakneck growth. A significant reason for this growth spurt is the rising volume of parcels which can be attributed to a high growth rate of the e-commerce business.
As more customers place orders, supply chain companies will need to find ways to fulfill them faster thereby differentiating themselves.
Thus, there is a need for every last mile carrier to pay attention to the trends in the industry and figure out how they can best serve their business.
Keep reading to find out some of the latest trends in last mile delivery.
1. The Gig Economy and Crowdsourcing
The advent of the gig economy (and consequently crowdsourcing) has led to the disruption of many industries and logistics isn’t an exception.
With the gig economy, the focus moves from seeking long term jobs to spying out short term contracts.
Combine this with the increasing desire for convenience from customers and you have inevitable disruption coming from the gig economy and crowdsourcing.
Large scale firms like Amazon and Postmates have taken note and are taking advantage of this workforce. These companies advertise new deliveries on their applications. Drivers can then fulfill that task and earn some money.
These services, however, do have some downsides to them at this nascent stage. They don’t cover as wide an area as traditional delivery does.
In fact, they mostly happen to operate around urban areas. As a result, the gig economy is still inefficient when dealing with final mile delivery.
Despite these challenges, you will only write off this trend at your own peril.
Expect it to play a more significant role in the future as economies of scale for gig economy platforms improve their convenience and geographical areas of operation.
2. Speed Is Now Critical for Any Last Mile Carrier
In previous years, last mile delivery companies that didn’t deliver as fast could somehow still survive.
The main reason for this being that as a whole, the industry had not made fast turnaround times something a customer could expect or rely upon.
Things completely changed when Amazon introduced same day and next day delivery services to the wider market. The company upended the industry by not only offering free shipping but also consistently delivering faster.
Inevitably, customers started to expect other last mile companies to deliver faster. Today, customers are willing to pay a 30% premium for same day delivery service.
Such customer demand is proof that speed will only become more crucial to a last mile company’s success.
3. Evolution of the Postal Service
The changing technological landscape has inevitably led to a sizeable decline in the volume of postal mail. On the other hand, parcel deliveries from e-commerce businesses have seen a significant uptick.
Legacy companies like the United States Postal Service (USPS) have taken notice and are now seeking a piece of the pie.
When a postal company like USPS adds a parcel to home delivery, the cost is incremental since the postman was still going to that same house.
For delivery firms like FedEx and UPS, adding that parcel comes at a higher cost as it is an independent stop.
The result is a resurgence of these legacy postal firms as customers use them for their last mile deliveries.
As their costs reduce, even more, customers will want to add more categories of products to the postal service delivery.
4. In House Delivery
Last mile logistics is the most expensive part of the distribution business. In a bid to reduce these costs, more companies are now bringing a portion of their last mile delivery services in-house.
Amazon, for example, now operates its own fleet of delivery planes in addition to those it uses from third-party delivery companies.
In this connection, some last mile delivery firms have taken the unusual approach of working in cooperation with their competitors.
Instead of competing, these cooperation deals seek to pool transportation assets so that it can be cheaper for every firm to deliver.
5. Warehouses in the City
Same day delivery offers a customer instant gratification that is hard for them to overlook the next time they place an order.
As more customers ask for same day delivery, businesses have noticed the benefits that come with offering this service.
To enable fast turnaround times and consistently deliver that instant gratification, businesses are opening up warehouses in urban areas. Where there are no pre-existing buildings, some are constructing them.
With Amazon having a big lead in offering two-hour deliveries, the trend will be for more firms to invest in urban warehouses to catch up.
6. Delivery Technology
Today’s customers have become used to tracking their order from when it starts shipping to when it arrives at their doorstep.
A secondary application that arises out of this technology is the ability to monitor other factors that affect the quality of a parcel.
If a customer places an order for pharmaceutical drugs, for example, they can add sensors to the package which will relay its real-time temperature throughout the journey.
Companies are also using weather prediction analytics tools so that they can best plan their delivery routes and avoid wastage.
7. Delivery by Autonomous Vehicles
Technology today has advanced enough to help businesses begin creating ways around factors limiting the supply chain like the cost of labor and its availability.
Using self-driving cars and delivery drones, logistics companies can eliminate the need to employ drivers in their fleet. In addition, they can be able to guarantee 24-hour delivery no matter the location.
However, tests are ongoing to smoothen delivery by autonomous vehicles; it will take some time to become mainstream.
Regulations need to be created to govern this development but it is safe to say that this is a trend worth watching.
Stay Ahead of the Curve
The last mile delivery industry is living in exciting times. A boom from e-commerce is increasing the total volume of parcels slated for delivery.
As customers grow to expect instant gratification in parcel delivery, every last mile carrier will need to innovate to stay competitive. Therefore, they should study industry trends and see how they can add value to their operations.
Need It Now has over 30 years of experience in the industry and is one of the most reliable firms in local and international deliveries. Click here to get a free quote today.
