Growing expectations article created exclusively for supplychaingamechanger.com by Michael S. Kraus, Chairman and CEO of https://expaklogistics.com/
The latest advancements in technology have had huge impacts on the world we live in, almost overnight transforming industries such as taxi services, food and grocery delivery, and music. Sometimes this change happens so fast it’s hard to even comprehend what’s happening for businesses and consumers alike.
Although many of these growing expectations have been positive, creating a more efficient and faster-moving world (can you imagine a world without Uber?), there are many that reach too far, not taking into account the realities of the industry they are frantic to establish themselves in.
The Last Mile Delivery Landscape
One of the businesses that technology has been slowly pushing itself into is the last mile delivery business. In logistics, last mile delivery is defined as being the movement of goods from a transportation hub to the final delivery destination.
Typically, that destination would be a personal residence or business, and last mile delivery would be provided by the biggest shipping providers, such as UPS, FedEx, or the USPS. Other options include third-party logistics companies, or 3PLs, who employ and/or subcontract their own fleets to fulfill orders for businesses.
With e-commerce sales rising yearly, consumers now have the power to choose between various retailers to purchase the goods they want. As a response to this, many online retailers have found themselves in fierce competition with each other to provide the fastest and most reliable order fulfillment for their customers. This movement has been led by the industry giant Amazon, who continues to grow every year, establishing an online stronghold that promises two-day deliveries on a large chunk of their merchandise.
Startups and Applications
The growing expectation to get goods to the consumer as quickly as possible has, unsurprisingly, created quite a flurry in the world of last mile logistics. To address this problem, many startups and technology companies have been attempting to deliver “magic” solutions for retailers, logistics companies, and restaurants alike.
The revolution in the on-demand delivery service has had a wide impact to say the least, ranging from B2B services that offer last mile delivery to apps that allow consumers to order anything they want and have it delivered straight to their door.
Many of these startups and smartphone applications have mainly focused on delivering items on-demand to consumers, like food and drinks from restaurants and items from convenience stores, grocery stores and brick and mortar retail locations. Apps like Postmates have had some success with their model, leveraging their operations in major metropolitan areas with a fleet of contractors who are available for delivery. Still, others like UberRush have recently shut down due to an unsustainable business model.
While mainly offering services to customers looking to order food or convenience store items delivered directly to their door, both Uber and Postmates have been busy building side businesses that offer last-mile delivery options to companies that want to deliver in major metropolitan areas like New York, San Francisco and Chicago.
Speed Bumps and Road Blocks
Postmates’ ability to access a contractor fleet of delivery drivers in these areas has mixed up the usual logistical model for last mile logistics, which would traditionally rely on trained delivery drivers on staff to fulfill orders. This new model, though promising lower overhead and higher flexibility in the short term, often falls short of expectations in the long term, due to issues ranging from unsustainable pricing to unreliable service levels and operations.
One of the main examples of the difficulty many startups have faced trying to get a foothold in the logistics industry is the recent failure of Shyp. A few years ago, Shyp was a promising startup offering stress-free shipping for individuals who didn’t want to pack and ship an item themselves.
Before shutting down, they had begun to shift away from individual customers to offering shipping options to businesses. Still, though, the pricing structure they had established at the beginning had proved to be unsustainable. When they tried to shift toward establishing a more business-oriented shipping service, faith had been lost in the company, and a shutdown of their operations followed.
Another Uber offering, Uber Freight, is still chugging along, but has faced similar problems that other logistics startups like Shyp have. The problem with many of these new delivery services is that they offer up untrusted and inconsistently vetted and/or trained contracted carriers for hauling valuable deliveries.
Growing Expectations in Conclusion
Although they might not offer the fast delivery fulfillment promises of these new startups, established carriers with good reputations still go a long way in the industry. When you hire a trusted company, you can rely on drivers with good records, expertise in hauling specific types of goods – like frozen food or refrigerated items, and the insurance and guarantees to cover any problems that might arise.
What we will see in the future is anyone’s guess – but with businesses aching to corner the market in last mile logistics, much more is sure to change. Just last year Walmart acquired Parcel, a last mile delivery service in New York City, and around the country Amazon continues to tighten its grip on the industry, trying to speed up order fulfillment wherever they can while also contracting out their services to other businesses.
Although startups will continue to innovate in the field, traditional logistics companies with the knowledge and expertise to provide consistently safe and reliable deliveries at a fair and reasonable price are still the gold standard in the industry, and will continue to be for the foreseeable future.
Regardless of who aims to provide the Last Mile Delivery service it must be consistent, competitive, and timely. Otherwise customers will move to another service provider as quickly as it takes to click a button given their growing expectations!
About the Author
Michael S. Kraus Chairman CEO of https://expaklogistics.com/. Our deep-rooted expertise and standards of excellence make Expak Logistics the first choice for companies seeking low cost, flexible and simplified solutions to their distribution and supply chain needs.