Final mile delivery represents the highest costs and risks within a shipment. Each process leading to final mile delivery becomes moot if a delay occurs or shippers don’t keep customer service in the highest regard. While shippers have found ways to enhance efficiency and productivity through technology, final mile delivery teeters on the edge of oblivion. Unfortunately, shippers cannot blindly trust carriers to handle final mile logistics management without incident, and at the same time, carriers do not wish to work with shippers that micromanage operations. However, those that take the time to understand the current state of final mile delivery can understand the other party and work to develop successful final mile delivery practices that benefit everyone.
The state of final mile delivery carries the largest weight in managing logistics costs. Rapidly changing shopping habits for both e-commerce and brick-and-mortar consumers are forcing companies to augment shipping options. This is especially true for retailers in specialized industries, such as home improvement, where items may require installation and “heavy lifting.” Of course, any item requiring extra service beyond a fast drop off at the doorstep represents an opportunity in final mile delivery. Customers want options, regardless of where a retailer is located. Both rural and urban consumers expect multiple delivery options. Having the option to buy online and pick up in-store (BOPIS) is great, but what about consumers that wish to have products delivered and installed? That is where the state of final mile delivery begins to change.
In a way, shippers have focused on final mile delivery as a shipping only process. However, the evolution of final mile delivery now includes white glove services. White glove services were originally designed to describe the “white gloves” used to protect products from damage. For example, the extra care taken when moving a piano and preventing the strings from becoming out of tune is a type of white-glove service. With the rise of the Internet, customers expect the best possible treatment, and shippers have taken notice. Failure to recognize this value will result in the deterioration of customer service and transparency within final mile delivery. For those still unconvinced, look no further than Amazon.
Amazon is the biggest e-commerce retailer on the planet. Its influence is felt everywhere, and consumers can now take advantage of white-glove services within final mile logistics from the Amazon marketplace itself.
For example, you order a light switch. It is a simple device and requires little experience. However, Amazon knows that not everyone will understand how to install a light switch and avoid electrocution. So, consumers can opt for and pay an expert technician to install the light switch at a scheduled time. This simple example demonstrates the value that customers place on service after the sale, and the final mile delivery depends on customer service after the sale.
As explained by Freightos, final mile delivery shippers expect the same day service, and here’s the kicker: up to 23% of consumers are willing to pay extra for same-day service. This is in conjunction with the thousands of consumers willing to pay extra to transform a simple e-commerce shopping experience into a comprehensive means of meeting their needs.
A leading issue affecting the final mile delivery goes back to carrier services. While the big three still retain control over the lion’s share of shipping, smaller carriers exist everywhere. According to past blog posts on Cerasis, 90% of the US truck fleet is comprised of organizations operating fewer than five trucks. This might not seem like an important fact, but five trucks in every small city amount to an opportunity to connect with more carriers, than the big three could imagine. Therefore, competition between carriers will naturally increase, especially as local and regional carriers step up to the plate to handle final mile needs.
Shippers can tap into the resources of final mile carriers by gaining additional visibility into final mile services and knowing what will happen with a shipment after it leaves the dock. In other words, they need a single touchpoint to understand the entire shipment journey from pick up to final delivery, and a TMS is the solution of choice.
A final factor in state of the final mile logistics market goes back to the rapid expansion of this sector of shipping. According to MarketWatch, the Global final mile delivery market will expand at a CAGR of 9% from 2019 through 2025. That means the market will swell in size to $55.2 billion, up from $30.2 billion as of today. The driving forces behind this trend, including a demand for increased transparency and accountability, otherwise interpreted as management, is final mile logistics.
Final mile delivery might be the highest cost in supply chain management aside from manufacturing, but it is possible to reap greater rewards and improve final mile service. With the global final mile logistics management market expanding, all shippers and carriers will face the expectation for superior delivery and on-time service. In other words, customers will expect faster, cheaper final mile service, and the same trends will continue in business-to-business partnerships. Fortunately, the current state of final mile delivery is ripe for automation and an infusion of technology. In fact, industry trends suggest final mile will advance faster than any other aspect of supply chain management.
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