Opinion: ‘Remember Last Mile? You Should.

By Will O’Shea
Chief Marketing Officer
3PD Inc.

This Opinion piece appears in the April 12 print edition of Transport Topics. Click here to subscribe today.

If transportation publications carried “Where are they now?” stories, last-mile delivery might be one of the first functions profiled.

During the late ’90s, it was often front-page news — with good reason. The dot-com era was going strong, online orders were steadily growing, and many shippers were scrambling to figure out how to avoid shipping individual orders without compromising their profit margins.

However, shortly thereafter, the dot-com fever waned — and so did much of the emphasis on last-mile delivery.

As the dot-com dream came unglued, transportation professionals also began to face a host of other formidable challenges, such as anti-terrorism, globalism and rising fuel prices, and those wound up consuming the largest share of their time and attention.

Because of these changes, last-mile shipping virtually disappeared from the headlines — and from many supply-chain agendas. But don’t assume that it’s gone, or even gone dormant, because nothing could be further from the truth.

Over the past 10 years, last-mile demands have continued to multiply. According to government statistics, online sales are an impressive 30 times higher than at the turn of the current century. And that doesn’t even begin to take into account the strong effects of catalogue sales or the statistics associated with the sale of heavy goods that the average consumer cannot transport to their final destination.

In fact, the annual value of large-product, last-mile delivery was last clocked at somewhere around $8 billion. That’s billions of dollars’ worth of goods that must use individual deliveries every year.

Just as significant, many of the issues associated with last-mile deliveries during “e-tailing’s” heyday continue to throw shippers a curveball today. For example:

• The ability to get a small-volume shipment to a customer on time and within budget still can have a profound effect on a company’s bottom line. Last-mile shipping costs represent 6% to 8% of the costs of many orders. Given how thin many companies’ profit margins are today, techniques for reducing that percentage can’t be ignored. 

• Customer dissatisfaction with last-mile service is still a potential deal-breaker. A December 2008 Forrester Research report said that the quality of customer experience could mean as much as a $184 million revenue difference for companies. And a Warehouse Education and Research Council Survey conducted several years ago indicated that most customers were unwilling to accept any more than two negative service experiences before taking their business elsewhere. 

• It remains difficult for even longtime logistics experts to pull off perfectly cost-effective last-mile deliveries all the time — as the recent financial woes of the U. S. Postal Service demonstrate.

Fuel prices are high. The need to redeliver products, particularly large ones, is more common than it should be, with one in 10 large products having to be redelivered (usually at the expense of the shipper). And customers often still experience sticker shock — and try to bargain with companies for a discount — when the cost of their delivery is tallied.

Perhaps most important of all, last-mile tools have come a long way in the past decade, which means there are now many time-tested, easily implemented strategies that could yield tremendous logistics savings for your company.

For example:

• You may be able make substantial reductions to your redeliveries — and trim your final-mile logistics costs by 10% to 15% —  simply by adding to your delivery process a couple of inexpensive pre-delivery customer communications, such as automated calls and e-mails.

• You could realize significant freight savings (and reduce your carbon footprint) just by building your last-mile loads a little differently, as have many retailers that used to optimize by individual store but now optimize by multiple store locations. 

• Or, you may be able to prevent or minimize the bane of all businesses’ existence — customer returns — simply by offering more value-added customer services, such as installation and product familiarization during delivery, because “can’t get product to work” is a frequent reason for returns.

Based on all these factors, I’d like to make a less-than-radical suggestion: It’s time to consider pressing the “refresh” button on your last-mile strategy — especially if you haven’t done so since the early days of the Bush administration.

After all, last mile clearly is an activity that’s not only here to stay, but it’s here to stay in a big way and offers many efficiencies for those willing to take the trouble to pursue them.

Besides, it has one quality that no other link in the supply chain can touch: It’s the only one most customers actually see, which means it is, in many ways, the face of your company — for better or for worse.

What kind of face do you want your customers to see? And where else might they take their business, if you’re not really worried about the answer to that question?

3PD, Marietta, Ga., is a provider of last-mile logistics and delivery services for heavy goods. The company provides services in nearly 500 cities throughout North America.