Consumer expectations for the timely delivery of goods have never been higher and they expect to see that product’s delivery status every step of the way. Oh, and with many retailers offering free or nearly-free delivery options, you’ll have to do it inexpensively, as well. Welcome to the challenging and rapidly evolving world of final mile delivery.
Customer demands evolving
You’d be hard pressed to find a segment in which customer demands are increasing more rapidly than in final mile delivery. Shippers and receivers want real-time visibility and integration of IT systems to ensure efficient order and delivery management, according to David Zavitz, chief administrative officer with Canada Cartage.
“Customers want and need more data from our in-cab telematics and TMS systems so that we can collaborate on improved routing and deliveries,” he said. “We often know better than they do where the bottlenecks in their supply chain might be – for example, the DCs, plants or stores that are frequently delayed in receiving or shipping out products.”
Final mile delivery providers are being pressured to deliver an “Amazon-type” delivery experience, Zavitz added, with “full tracking visibility and faster delivery options.”
He added, “For our customer, the final mile delivery is now one of their key competitive differentiators. The delivery experience is becoming as important as the product itself in determining whether our customer gets a repeat sale or not.”
Routing is critical to ensuring timely and efficient deliveries.
“First, you have to plan the route effectively so that you can provide the consumer with a realistic delivery window a few days in advance, and then you need to be able to stick to it,” said Zavitz. “Second, you have to plan the route to maximize the density of deliveries across the fleet of vehicles so that you can make the deliveries profitably.”
The Covid effect
The Covid-19 pandemic has accelerated trends such as e-commerce, while also shifting demand from B2B (business-to-business) to B2C (business-to-consumer) deliveries.
“The biggest impact we’ve seen from Covid-19 is the acceleration of our customers’ e-commerce and home delivery programs,” said Zavitz. “Pre-Covid, some were further along with e-commerce programs than others, but the companies who were late to the party got dressed in a hurry. For us, this has meant increased volumes, and being flexible to offer smaller vehicles, different crossdock and fulfillment center services, and to be as nimble as the customer needs us to be.”
For Aramark, an American food service, facilities, and uniform services provider, the government-imposed shutdowns meant sometimes arriving with a delivery only to find the business was closed overnight.
“We would show up at a customer and it was closed because there was a Covid outbreak the day before and we didn’t know about it,” said Banny Allison, director of fleet support services.
Changing buying habits have also forced final mile delivery companies to adapt in a hurry. For instance, consumers are now buying larger items for home delivery than ever before.
“These bulky, oversized items create challenges for our customers’ distribution centers as well as the courier companies,” noted Zavitz, “because they are not easy to store on racking, cannot be processed on conveyor systems and often can’t be delivered using standard delivery trucks. This has created a sub-market for non-conveyables, and we’ve seen an increase in demand for our services to handle these types of products and for us to create DC-bypass programs where we deliver bulky products direct from a vendor to a consumer.”
As vendors ship direct to customers, some are bringing delivery in-house to better control the customer experience, others are outsourcing to final mile delivery companies, while some are experimenting with crowd-sourced delivery options similar to Uber Eats or Skip the Dishes.
“It will be interesting to see if home delivery of non-traditional e-commerce items like groceries and liquor maintains the levels we’ve seen,” he said. “Some studies are showing a slowdown in these deliveries as lockdowns eased, but the convenience of it appears to be here to stay for at least some segments.”
Final mile delivery companies are also offering a range of delivery services ranging from curbside drops, to white glove service that includes delivering the item to exactly where it will be installed, removing the item it replaces and disposing of any packaging material.
The green mile
The last mile can also be the greenest mile of the supply chain. Delivery vehicles that run limited distances and return home every night are well suited to electrification.
“Daily routes and returning to park every night in the same location are a perfect match for electrification,” said Maria Lee, Amazon’s senior product manager, strategic initiatives, global fleet, when speaking at the recent ACT Virtual digital conference.
Amazon plans to have 10,000 electric vans deployed by 2022, and 100,000 by 2030. It has worked with Rivian to design an electric van specifically around its most common load configurations and duty cycles. For longer hauls, Amazon is exploring renewable natural gas and keeping an eye on hydrogen fuel cells as the technology is developed. It has a “sustainable science team” charged with mapping out the total environmental impact of each alternative fuel option, Lee explained.
“We are not going to wait around and see what OEMs will deliver,” said Lee. “We will influence product design to meet our needs.”
At FedEx, the general rule is “the right vehicle for the right route,” according to Boris Kort-Packard, chief engineer, global vehicles, which could mean a variety of alternative fuels are deployed. “We are fuel-agnostic.”
The fleet doubled its use of alt-fuel vehicles from 2,000 to 4,000 over the past year and feels up to half its fleet could be ideal for electrification.
In dense urban areas, cargo bikes are taking the place of delivery vans. Amazon’s Lee said five cargo bikes can replace one delivery van. While they’re viable in many cities, she noted it takes a lot of coordination and planning with those cities where they are deployed.
“Safety is a huge issue,” she said. “You don’t want your delivery providers in any risk situations. City planning is going to be very critical for anything like that to be successful, but we’re absolutely using them where we can and where it makes sense today.”
In July, FedEx launched a cargo bike pilot project in Toronto. Curbside Cycle, the Canadian supplier of the electric-assisted Bullitt cargo bikes FedEx deployed, claims they can often deliver 25-30% more parcels per day than a traditional cargo van since traffic congestion and parking are not an issue.
“According to DHL in Europe – who have a fleet over 1,000 Bullitts – an entire van is replaced with a single cargo bike and performs more efficiently at much lower cost,” says Eric Kamphof, Curbside’s manager. “This is what we are gunning to achieve in Toronto.”