How Will Last-Mile Distribution Change Logistics?

Missing service, missing drivers and significantly missing capacities endanger the current business models, well-running processes and service to customers.

Many e-commerce has been on the receiving end for failing to honor speedy last-mile distribution to consumers. Amazon was one time in a very uncomfortable position of having to accept that they grossly over-promised consumers on the same day deliveries in Chicago (South Side).

Study shows that 64% of consumers are not willing to part with any extra pay for two-day shipping. Many are quickly leaning to same-day delivery. For you to keep pace, many companies are now implementing advanced last-mile distribution plus warehouse strategies which are designed to streamline logistics for an increasingly complex delivery environment.

There is potential that exists in this space for innovative 3PL/BCO companies whose background in moving goods and warehousing presents them with an exceptional advantage.

Locally Sourced Logistics

In the densely populated areas, many retailers are opting for small local warehousing – even in those expensive real estate markets in the country. Instead of traditional warehouses surrounding ex-urban areas, the new hyper-local focus places last-mile logistics directly in the spotlight. Those smaller hubs mean better delivery speeds. Still, also they present challenges when it comes to moving and managing stock between hubs as well as getting the inventory into the fulfillment flow efficiently.

Where many B2B logistics professionals have focused traditionally on moving large amounts of freight between major retail hubs and ports, the majority want to use their logistical expertise to help in local delivery. Reputable trucking companies like Schneider National are acquiring smaller last-mile experts to expand their reach into this niche market.

Changes to the supply chain and the improved focus on local warehousing will transform the role of interstate shippers as well where increased LTL between smaller local hubs will feed the regional movement, enabling smoother running of the business to consumer delivery.

Small Trucks, Big Problems

The last-mile distribution is complicated. Large retail stores are designed with bays that handle an LTL rig, but most cul-de-sacs are not. It means that shippers are today becoming reliant on a network of smaller delivery vehicles, which equals many smaller loads.

Even under the best conditions, packing a fleet of delivery of vehicles to maximize efficiency is a major challenge for distribution services. Smaller vehicles present a unique challenge when it comes to delivering large items, such as refrigerators, which, according to recent studies, shows that they are growing in e-commerce popularity. Some last-mile professionals are already retrofitting specialty vehicles designed to take on large parcels using a straight truck lift gate and increased safety and visibility equipment.

Giants like UPS carriers seem not to keep up with the new demands; there’s untold possible waiting to be unlocked here.

New transportation concepts – Mobility and Uber Freight

Robots, cargo-bikes, drones and new freight platforms allow new approaches to delivering goods. The new freight platforms are, e.g. Saloodo and Uber Freight on which shipping requests can be inserted and matched with a private Saloodo or professional Uber Freight carrier. The next step is in realizing new transportation concepts is an autonomous transport operation of, e.g. robots and drones.

For instance, drones can operate autonomously from a micro hub and deliver goods within a small radius in a couple of minutes. Storage capacities can be subcontracted to these micro hubs and, e.g. transformed to a consignment warehouse. Especially shipment warehouses are suitable for vacant commercial spaces as they usually build upon an agreement for a specific customer.

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