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What Is Last Mile Delivery?

May 20, 2020 Published by

Delivery driver and drops off a package

Logistics is an industry loaded with niche terminology. Among these terms, “Last mile delivery” is mentioned often, especially when it comes to delivery cost and efficiency. But what exactly does last mile delivery mean? In order to better understand what last mile delivery is, let’s look at the logistics industry as a whole.

What Is the Logistics Industry?

Before the ecommerce revolution, retail stores used to restock their inventory by direct deliveries from suppliers or wholesalers. Eventually, they began transiting items through centralized distribution centers. The growth of ecommerce, however, gave rise to efulfillment services (EFS) and distribution networks.

The logistics industry refers to the flow management of goods between the point of origin and the point of consumption. It includes the storage, handling, inventory and packaging of goods as well as their transportation and delivery.

Where Last Mile Delivery Fits In

Last mile delivery zeroes in on the last leg of a shipment’s journey, from a shipping hub, like a fulfillment center, to its final delivery destination. The key parties engaged in last mile logistics are retailers, last mile service providers and customers.

Last mile delivery begins after customer orders are entered into a centralized system. Items arrive at a warehouse, where they will be delivered to their final destinations. The orders are then designated to delivery personnel. Before being loaded into delivery vehicles, items are scanned, which allows them to be tracked and reduces the risk of losing items.

In the final step, the delivery driver scans the bar code and drops off the package. That information is then sent to a central system and logged. Some drivers also take photos of the delivered package as proof in case a customer claims their item wasn’t delivered.

Who Is Responsible for Last Mile Delivery?

When it comes to last mile delivery, companies that come to mind include:

  • UPS
  • USPS
  • FedEx

However, there are also on-demand delivery apps, such as Roadie and Postmates, as well as on-demand carrier services, like Dropoff. And let’s not forget less-than-load (LTL) services, which transport small freight and also take last mile shipments.

Why Is Last Mile Delivery Important?

Despite being the shortest part of the entire shipping process, last mile delivery is critically important.

With the rapid rise of ecommerce, businesses are tasked with meeting consumers’ faster-is-better delivery expectations, which often start—and end—with the last mile. This phase of a package’s journey is where companies are expected to deliver on their customer promise. For example, delivering packages on time, and handling them with care. The last mile delivery is what impacts customers most directly, and will often shape their view of a company, including whether or not to purchase from them again in the future.

However, meeting customer’s delivery expectations can be incredibly demanding. Businesses face many challenges with last mile delivery.

Last Mile Delivery Challenges: Cost and Inefficiency

When it comes to last mile delivery challenges, cost and inefficiency top the list.

Last mile delivery can be the costliest part of shipping for businesses. In fact, according to a 2016 Honeywell study, last mile delivery makes up 50 percent of total logistics costs on any shipment. Why? It’s mostly down to inefficiencies in transport.

The inherent inefficiency of last mile delivery makes operational costs more expensive. Last mile delivery simply involves too many stops with low drop sizes to be super-efficient. Business-to consumer (B2C) deliveries often involve one package per stop, and the sheer number of recipients for each package requires a large fleet of vehicles—with one driver each.

It can be incredibly difficult to find each package’s destination address, especially when delivering to customers in small, remote communities or new developments lacking proper signage. Compound this problem with the sheer number of stops, and you have a lot of additional driving around and time spent to accurately deliver packages.

Last mile delivery is also plagued with the nobody’s home problem, which is especially challenging when a signature is required for a package. This results in higher delivery failures and empty trip rates.

Problems with last mile delivery are why third-party logistic providers (3PLs) are always looking at the latest technology trends to keep their services streamlined for businesses while adding value to the customer experience during last mile delivery.

Don’t Ignore the Last Mile

With a constant increase in the number of packages delivered every day, and heightened customer expectations that include not just fast, but free, delivery, it’s critical for businesses to keep the last mile delivery running as smoothly and efficiently as possible.