The last Mile is the final leg of delivering a product to the end user. It is perhaps the most exciting and rewarding leg of a product’s supply chain journey. The smiles the last-mile courier witnesses are unlike any. The last Mile is also one of the most challenging parts of the intermodal process, ensuring the product reaches the end user in good condition and on time.
Today’s demanding consumers are sensitive to shipping costs and make purchase decisions based on them. To say that the last Mile is complex and expensive is perhaps an understatement. It accounts for nearly 53% of the total shipping cost. That is why the Last Mile is the ultimate frontier!
Let’s see why the final Mile is so complicated.
Final Mile, or the last Mile, is highly complex. With several variations, it requires the right combination of the following ingredients:
Technology improves efficiency, resulting in cost savings. Technology sets you apart from amateur operators. Technology not only streamlines all aspects of the final Mile but also provides much-needed visibility to all stakeholders.
Set up – Last-mile delivery in Canada has several dimensions. You must build business models around your strengths and focus on two or three core services. Avoid trying to do too much at once; start with a strong foundation that can support long-term growth.
Last mile dimensions – Last mile options list below are not an exhaustive list since there are some complex, tailored-made requirements of some clients:
Same day – Manageable even with crowd sourcing and owner operators of drivers,
Same day Express – based on hours, one hour, three hours, more complex, requiring a mix of owner operators, crowdsourcing and owned assets. Prime is applied
Scheduled – relatively more straightforward to manage
High-volume, preplanned routes – This is perhaps the easiest option, similar to services offered by large courier companies such as UPS and FedEx. Their volume is consolidated and delivered by couriers. Since volume for each specific postal code is consolidated, it results in higher density and productivity on the road.
Next day – Similar to time-sensitive. Generally costly, as the requirement is based on the product’s expiry or a specific time window.
On-demand: one of the most complex, especially when the delivery area is large. Vertical movement of assets beyond a specific boundary impacts capacity. Throughout the day, a consumer can place a delivery order and expect to receive the item within the specified timeframe. Clients may request any combination of the above, making it challenging to minimise service failures.
This brief introduction outlines what the Last Mile is and its complexities. With COVID and Peak around the corner in 2020, this is essentially a perfect storm from every conceivable angle one can imagine. Some of the challenges that I foresee are as follows:
Purchase Power – With so much uncertainty in the job market and cash flow, will consumers have the same inclination to purchase?.
2019 e-commerce in Canada alone saw consumers spend a whopping $1.85 billion online, which will be a new frontier, uncharted territory, making predictions of package volume and delivery capacity will be a nightmare. Will consumers avoid crowded malls, and will online volume surge? Or will they decide to take the risk in a festive mood and risk in-person visits? No one can accurately predict human behaviour. This could lead courier companies to be either underestimated or overestimated. Either way, there will be service failures.
This is where an acceptable service failure will become the norm, a new, higher seasonal norm. Will it be the single digits or the low double digits? Currently, a 7-10% on-time service failure rate is acceptable; however, an average of 7% over the year is inevitable. The curve is higher during the winter season, with mechanical breakdowns and weather delays as the most prevalent codes.
To say the least, this is peak seas, is not for the faint of heart, rt nor is it for the unprepared for the unexpected! Unpredictable and uncharted waters will be encountered, as during the first COVID wave, which caught everyone by surprise.
At least we can expect to manage this volatility to some degree and accept the outcome, whatever it will be. In the last word, consumers’ expectations will also be lower, and shopping may start earlier if they recall the COVID-19 period a few months ago. Let’s all be prepared as best we can; however, expect the worst.
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