Last mile, the ultimate frontier!

What is Last Mile

Last Mile is the ultimate delivery of a product to the end user. It is perhaps the most exciting and rewarding leg of the journey in a product’s supply chain. The smiles that the last mile courier witness is parallel to none. Last mile is also one of the most difficult and challenging piece  of the intermodal process puzzle, ensuring that the product gets to the end user in good shape and on time. 

Today’s demanding consumers are sensitive to shipping costs and make their purchase decisions based on shipping costs. To say that the last mile is complex and expensive, is perhaps an understatement. It comprises almost 53% of the total shipping cost. That is why the Last mile is the ultimate frontier!

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Let’s see why final mile is so complicated

Final mile or last mile or the final destination, is extremely complex. With several variations, It requires the right combination of the following ingredients:

‍Technology - Technology improves efficiencies and that results in cost savings. Technology sets you apart from amateur operators. Technology not only streamlines all aspects of the final mile but also gives much desired visibility to all concerned actors. ‍

Set up – Last mile has several dimensions to it. One must base business models on the strength they have. Hang your hat on two or three main services. Do not start with trying to do too many things at once.  Build a strong foundation for your business that can support your 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 crowdsourcing and owner operators of drivers,‍
• Same day Express -  based on hours, one hour, three hour – More complex, requiring a mix of owner operators, crowdsourcing and owned assets. Prime is applied‍
• Scheduled - relatively easier to manage‍
• High volume pre planned routes – This is perhaps the easiest of all, similar to services provided by large courier companies like Ups and FedEx. Their volume is consolidated and delivered by couriers. Since volume for each specific postal code is consolidated it creates high density and productivity is high on road.‍
• Next day – Similar to Time sensitive – Generally costly since the requirement is based on the expiry of the product or specific time product is required‍
• On demand - One the most complex of all especially if the area of delivery is large. Vertical movement of assets beyond a specific boundary impacts capacity. Throughout the day a consumer can place a delivery order and would expect to receive the item with a specific time on the same day. Clients could request any combinations of the above hence making it a challenge to ensure service failure is minimized

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This is just a brief introduction as to what is Last Mile and its complexities. With COVID and Peak around the corner in 2020, this is essentially a perfect storm from every conceivable angle on can imagine. Some of the challenges that I foresee are as follows:

1. Purchase Power - With so much uncertainty in the job market and cash flow, will consumers have the same inclination to purchase.
2. 2019 e-commerce in Canada alone saw consumer spent of a whopping $1.85 billion shopping online.
3. 2020 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 increased online volume erupt? Or will they decide to take the risk in the festive mood and take the chance of real brick and mortar visits? No one can predict the human behavior accurately. This could result in courier companies planning to be underestimated or overestimated. Either way there will be service failures.
4. This is where an acceptable service failure will become the norm a new higher seasonal norm. will it be in single digit or low double digit. At present a 7-10% on time service failure is acceptable, may not be ideal however an average of 7% over a course of a year is inevitable. The curve is higher during the winter season with mechanical breakdown and weather delays being the most prevalent codes. 

To say the least, this is peak season is not for the faint of heart nor is it this for the unprepared for the unexpected! Unpredictable and uncharted waters will be witnessed as was during the first COVID wave which caught everyone by surprise. At least we can expect to manage this volatility to a certain degree and except the outcome, whatever it will be. Last word, consumers expectations will also be lower, and shopping may start earlier, if they can remember the COVID a few months ago. Let’s all be prepared as best as we can, however expect the worse!