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Technology Boom Is Changing Last-Mile Delivery And Opening New Opportunities For Parcel Carriers

While much of today’s trucking news surrounds over-the-road and intermodal deliveries and how they are changing under the onset of technology and transport efficiency, one area that’s received little attention is the boom in last mile delivery services.

The fact is, e-commerce is changing the way last-mile deliveries are managed. As data miners look at past trends on delivery data by shipment size, they are finding that a large portion of deliveries are happening by way of small shipments on less-than-truckload carrier vehicles.

Many smaller trucking companies are now offering same-day service in a number of metropolitan markets. These deliveries – sometimes referred to as ‘the final mile’ – are rising thanks to an increase of e-commerce and multi-channel marketing techniques available now only because of internet marketing.

The boom in e-commerce has hugely increased the need for final-mile deliveries. They’ve also caused both headaches and new opportunities for companies throughout the supply chain, whether it be for well-known couriers like UPS and FedEx or regional delivery fleets and big LTL providers, who are adding last-mile operations to their transportation portfolios.

Developments in e-commerce and the ability for shippers to find transport options at scale has created a tidal wave of demand for these final mile operators. And there are two types of motor carriers who are filling the need.

As smaller players try to increase their appeal in a more competitive market, “white-glove” services are being looked to in order to provide that competitive edge, which could involve not just delivering the shipment, but also offering assembly, setup and installation services.

At one end – for small packages shipped in niche markets – small carriers are even looking into drone and robot technology, an area once reserved for the big players. On the other side of the spectrum there’s an increasing need for larger items at lower amounts. When an LTL truck can fill the void, shippers need to rely on the smaller, LTL outfits to get the job done.

So, what’s behind the boom? Quite frankly, technology is making the complex requirements of last-mile delivery much more profitable, so why not enter the fray?

How Drones and Automation Are Changing the Game

Remember that one time now-so-long-ago when Amazon founder and CEO Jeff Bezos made a bold prediction? He once said that drones delivering packages to your door could one day be as common as the mail truck pulling up in front of your house.

Last December, Amazon beta tested something called Prime Air Service in England, where packages weighting 5 pounds or less were dropped to a customer’s door step within 30 minutes.

Still, we’re a long way from drone delivery, but more large operators are beginning to test the model. No longer is Amazon the only player looking at drone delivery as a way of getting that final mile package to your door. Now UPS is also testing drones for commercial package delivery.

In February, UPS partnered with a third-party company to incorporate drone delivery into their day-to-day operations. The drones are designed to launch from a ground-based vehicle – in this case an electric-drive car – and autonomously deliver the package to a customer’s doorstep before returning back to the vehicle. The vehicle operator isn’t out of a job either, since they still need to drive it from destination to destination.

UPS admits this is different from anything they’ve done to-date, but that it also has excellent implications for deliveries to rural locations where package cars may need to travel many, many miles just to make one delivery to a house in the middle of nowhere. In this scenario, the package car can sit stationary somewhere in town while the drone travels the extra miles to make the delivery.

Even Daimler is getting in on the action by designing an electric-driven concept van that launches drones from the roof loaded and launched without the operator having to get involved at all. The drone takes off, makes the delivery and returns to the vehicle completely autonomously.

Since drones weigh less, are more powerful and offer better levels of reliability than they used to, their payload-to-weight ratio and energy consumption allows them to better fill this niche needs without eliminating truck driver jobs.

Last-Mile Robot Deliveries

A company called Starship Technologies has designed a six-wheeled robot that can make short deliveries within a particular radius from the company’s headquarters. These robots can also operate in tandem with – or be launched from – traditional delivery vehicles.

Daimler has also gotten into the robotics delivery game. Early tests of their new robotic technologies involve delivering groceries or takeout food. Daimler has provided the traditional delivery vehicles for Starship’s budding technology, developing what they dub the “Robovan.” Much like the UPS example, this configuration allows the van to approach, then a robot exits the van and makes the delivery before continuing on.

A racking system back at fleet HQ loads 400 packages over a nine-hour shift. Compare that to prior loading and delivery methods – 180 packages over an 8-hour shift, and you can see where the 100% efficiency increase makes a huge difference.

What we could see, decades down the road, if all of these technologies come together are semi-autonomous electric vehicles deploying drones and robots to complete final mile deliveries.

The Sea-Change in Consumer Buying Habits

Sure, we’ve been talking a lot about small to mid-size regional last-mile fleets utilizing advanced technologies to get packages delivered in innovative ways, but a larger conversation surrounds how larger item delivery and customer service advances will change the game at the other end of the spectrum.

As UPS and FedEx feel the strain of the capacity crunch – a topic we’ve brought up before – smaller parcel operators have been filling the void, taking on business handling big, heavier items than would normally fit their automated loading and delivery systems.

What’s an example of this? Think omni-channel purchases. Imagine a consumer researching a washing machine online, then call a brick-and-mortar store to ask about the brand and brand pricing, then place the order for delivery. Rather than carry their own costs for fleets and truck drivers – unlike large players like Wal-Mart – most retailers prefer to outsource their deliveries through these omni-channels.

As a matter of fact, a recent survey found that people are more inclined to purchase large items online than ever before. In 2012, up to 38% of consumers were unwilling to purchase a large appliance online, whereas in 2016 that number had dropped by a huge amount, to a mere 12%. The fact is, more consumers are willing to purchase large appliances and other items for their home online than ever before which is changing the last-mile shipping landscape in a big way. But how?

Where Parcel Carriers Take Advantage

In the past, large items were delivered in one of two ways, either from the guy at the store you bought the large item from, or shipped on a truck via LTL.

The problem lies in where these items are being delivered. For LTL carriers – even if all they are pulling is a 33-foot pup, small by their standards – getting a Class 8 commercial motor vehicle in and out of residential neighborhoods isn’t easy. Whether it be overhanging tree branches or mailboxes, there’s a lot large big rigs have to deal with when they are attempting to make their way around residential neighborhoods for last-mile deliveries.

Also consider that these trucks are delivering heavy items being offloaded on trailers designed more for loading docks and street-side buildings than they are for side-streets and cul du sacs. Also, these deliverables may require a signature. Will someone be home when the big rig arrives?

This is where the little guys come in. Small parcel carriers are developing logistical options and investing in mid-size vehicles that allow them to get larger purchases to the customer faster and more efficiently, with less hassle on everyone’s part.

Larger companies are also finding success partnering with smaller parcel carriers to complete these shipments. After all, no one wants to lose business, especially if a new relationship between large and small carrier – one that benefits both financially – can be established.

This is especially true where items need to be set up or installed. This is where we go back to the “white glove” service discussion. There is greater value-add and customer satisfaction when a consumer buying a large item doesn’t only get it dropped at their doorstep, but also counts on someone coming into their home to help set it up.

Quite frankly, we’ve evolved from the ‘do-it-yourself’ to the ‘do-it-for-me’ crowd, and smaller carriers are stepping in to fill the void.

The fact is, e-commerce and the ability for consumers to shop online is reshaping trucking. Whether it be through the onset of drone delivery, robot-vehicle combination delivery, or new opportunities for small parcel carriers, seeing the trucking landscape evolve sure is exciting, isn’t it?

We certainly think so, and you can count on us at the QuickTSI blog to be right here reporting on it as soon as it happens.

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