We talk a lot about long-haul fleets and other interstate operators, but it is important to remember that the transportation and supply chain sector has truck companies operating in it of all shapes, sizes, and operational types. One of the fleet types that is often overlooked but is one of the most important is last-mile delivery fleets. Their importance cannot be understated, and there are certainly steps these fleets can take to dominate their sector.
Of course, last-mile delivery fleets face similar challenges as other fleet types, yet they must deal with an entirely different set of demands, vehicle uptime issues, and dozens, if not hundreds, of stops per day. For last-mile delivery fleets to drive efficiency and productivity, they have got to invest time and effort into analyzing trends, data, and establishing best practices. Their policies must be airtight. So, what is a last-mile motor carrier to do to take advantage of an exploding marketplace?
A New Buying Paradigm Emerges
With COVID-19 relegating everyone to sitting at home for the better part of a year, people have completely changed their buying habits. As a result, companies are adjusting to meet completely new types of demand. There is a reason why Amazon had some of its best quarters during the pandemic. With so many people at home ordering next-day delivery goods, last-mile companies have had their handful.
Even before the pandemic, the U.S. e-commerce market had been growing by double digits for over a decade. During the COVID-19 pandemic, it grew by over 44%. These are astronomical numbers. As a result, the last-mile delivery segment has exploded with growth. Consider that last-mile deliveries account for 53% of overall shipping costs, and the importance of this sector comes in full view.
As a result of all this growth and activity, last-mile delivery companies truly play a critical role in the supply chain and commerce in general. That’s why we wanted to take some time to evaluate what makes the last-mile segment tick. What do these companies look for and what makes them tick? Furthermore, if you own or manage a last-mile delivery company, how can you succeed in a marketplace as red hot as yours?
How to Break Through in a Tough Market
Fleet managers running last-mile delivery fleets should consider different methodologies for success. Whether it be partnering with vendors that can help fulfill ancillary duties so the company can focus on the core of their operation or utilizing technology to a greater affect, there’s a lot a fleet manager can do. In this new age of buying, consumers have developed heightened expectations and companies must work hard to meet those expectations.
Many traditional fleets are even looking into ways that they can break into the red-hot last mile market. With so many players already in the game and new ones set to enter, the marketplace is going to get much more competitive than it already is. Opportunities abound with small couriers that work with UPS and FedEx. Even regional delivery and LTL fleets are getting in on the game.
Moving into the last-mile market might include singing on as a local or regional contract hauler for a nationwide last-mile operation. You could also develop your own system and fill the niche in marketplaces where last-mile services are deficient. While the market is certainly tough to enter, the explosion of e-commerce has created opportunities for old and new players.
Another option is to break down the different types of last-mile deliveries you could get into. If you move into this segment, you could be working with:
- Small packages (usually apparel)
- Non-conveyable items
- Heavy items such as appliances
Non-conveyable items usually consist of anything between small box and big box. There is a huge array of merchandise that fits this category, and we can thank Amazon for that.
Technology is Always the Answer
Here we go again bringing technology into the picture. We do that because we feel that the technological solutions being developed today can help trucking companies really reach the next level. When it comes to last-mile delivery solutions, technology again provides a comprehensive option.
Many third-party vendors offer last-mile tracking of heavy goods. Once your freight is on the way, these vendors can provide you with online order management, text message updates to you and your truck drivers, and even voice-activated features. The idea is to keep the process as transparent as possible. With consumer expectations as high as they are, you need a competitive edge to push ahead in the market.
Big players like Ryder are even getting in on the game. Their last mile technologies allow their customers to schedule and track orders and submit proof of delivery with photos. When the shipper is involved in the entire process from end-to-end, they can rest assured that their valuable cargo is in good hands and will get to where it needs to be in expedited fashion.
Back-end systems and fleet management software also work behind the scenes to keep last-mile fleets on track. Computer routing technology allows fleet managers to separate their freight by weight, size, and many other factors. If a package is under a certain weight, computerized systems can ensure they get to the right truck.
As you are gathering data on your operation, these types of systems also allow you to better analyze the data, create greater efficiencies, and improve your bottom line. When you are making complex logistic decisions, it is easy to make a mistake and end up in a revenue losing situation. Use cost information systems to determine if you are making the right choices. Also consider technological solutions that address customer service. Push notifications that let the shipper know when deliveries are made go a long way to creating trust and transparency.
The Customer is Always Right
You may be reading this thinking, “Well that’s not true for trucking.” Certainly, shippers often get things wrong, and wind up upset about something that may not be in your control. Still, when you deal with them, you must treat them like they are always right. Why? Because last-mile deliveries are all about great customer service.
LTL and long-haul fleets never have to deal with the end user, but last-mile delivery drivers do. While retailers used to be able to dictate when a customer received their delivery, with next-day shipping becoming the norm, end users now have much higher expectations. Now, the customers tend to drive the service levels being provided by the companies delivering their products.
Some trucking companies are implementing specialized programs, such as empowering managers to work with carrier partners to ensure service levels are consistently met. There is nothing wrong with partnering with other providers or vendors to ensure you provide the highest level of service you can.
Find a Trusted Partner
The fact is developing partnerships with other operators can help you expand and enter a last-mile market without requiting specialization. Partnering with authorized carriers also takes the guesswork out of getting it right the first time. It can sometimes be difficult to enter a market with little to no experience.
Partnerships usually come with top notch service that can help your fleet stand out in a saturated last-mile market. Consider things like assembly after delivery, or setup or installation of the product. Consumers are very grateful when they don’t have to pull out their tools. Installation or assembly services represent a value add that puts a shine on your operation.
Ryder operates last-mile hubs all over the country, focusing mainly on areas where deliveries can be prepped and delivered, then installed or assembled. Ryder drivers assemble products shipped in boxes, whether it be furniture, appliances, or otherwise. Even something as simple as blanket wrapping such items before they arrive can go a long way from a customer service perspective. The huge challenges presented by the COVID-19 pandemic have provided opportunities as well. Trucking companies of all sizes have had plenty of time to reevaluate their operation, make changes, learn and grow. While 2020 was a very challenging year, there is light at the end of the tunnel. And with the marketplace changing so much, new, and old players are making their way into a market that is ready for expansion. Ready to learn more about how you can do it? Join us in Part II of our series, coming up! We’ll spend time talking about the various challenges you might face and how to overcome them!