Want to bring down your last-mile delivery costs by 20%?
If you’re involved in the last-mile delivery industry, chances are you’ve noticed that costs have been rising. There are a number of reasons for this. Increased online purchasing, infrastructure and manpower constraints, congestion, vehicle maintenance expenses, weather conditions, etc. all contribute to higher last-mile delivery costs. This article explores these issues and provides strategies for combating them.
Reasons for increasing last-mile delivery costs:
Last-mile delivery expenses are a large portion of the total shipping costs for any business. The delivery operations account for more than half of all shipping costs. This indicates that taking steps to improve the efficiency & cost-effectiveness of is essential in order to help reduce overall transportation expenses.
Increase in online shopping
One of the major factors is the surge in online shopping demand post-pandemic. As more individuals turn to the internet for their product requirements, parcel deliveries are increasing. Companies have been struggling to keep up with this increased volume of orders, resulting in higher last-mile delivery costs. To address this issue, companies must invest in extra infrastructure, cars, and personnel, as well as explore innovative technology solutions.
Fierce competition from giant delivery services
Last-mile delivery services are facing increased competition from giant delivery companies. Large companies have the capital to extensively invest in infrastructure and technology, making it tough for smaller businesses to generate significant returns on their investments. Consequently, small businesses must either raise their prices or maintain low profit margins in order to compete.
High need for drivers and automobiles to sufficiently delivering packages on time
Last-mile delivery services need enough drivers and vehicles to ensure timely deliveries. The number of orders is increasing significantly; however, not all businesses can keep up with the rising demand. As a result, they have to increase wages for their drivers in order to attract more staff. This significantly adds up to the overall cost.
Growing difficulty of finding suitable delivery locations/parcel hubs
One of the major reasons is that businesses have difficulty finding suitable locations to store their items and dispatch them. As more residential areas become urbanized, fewer parcel hubs or warehouses become accessible. This makes it more difficult for business owners to ship out orders swiftly and without breaking the bank. This results in additional fees being added to the total cost of last-mile delivery services as businesses pay higher rents and wages due to location difficulties.
Strategies for combating last-mile delivery costs:
Last-mile delivery is both the most significant and crucial aspect of the supply chain process. To ensure a positive client experience, products should be delivered on time with optimized cost of delivery. Here are some pointers that can help in efficiently managing last-mile deliveries.
Maximum yet optimal utilization of all resources
Optimizing the route, load and space correctly can help in efficiently managing multiple pick-up & drop deliveries. This not only manages the vehicle’s delivery capacity but also helps in reducing fuel utilization that adds up to higher delivery costs.
End-to-End digitalization
Digitalization & automation brings end-to-end visibility & transparency over the entire last-mile delivery process. To begin with, all the manual paper work like generating LRs, PoDs should be digitally done, allocations to vendors, vehicles and drivers should be direct and automated and all interactions should be accurately recorded to help in better analysis and management of last mile deliveries.
Cost monitoring
Managing last-mile is equivalent to managing multiple deliveries at the very same time. Thus, there are high chances of missing out on the costs spent for the delivery process. An efficient last-mile delivery management software not only records all the spend but also gives a detailed analysis of budgets, spend reports and high cost/low cost operations. This visibility helps in controlling process costs and also managing & planning logistics spends in the long run.
To know in depth about ways to reduce to reduce last-mile delivery costs attend our webinar on “𝙍𝙚𝙨𝙝𝙖𝙥𝙞𝙣𝙜 𝙇𝙖𝙨𝙩-𝙢𝙞𝙡𝙚 𝙙𝙚𝙡𝙞𝙫𝙚𝙧𝙞𝙚𝙨 𝙬𝙞𝙩𝙝 𝙘𝙪𝙩𝙩𝙞𝙣𝙜-𝙚𝙙𝙜𝙚 𝙩𝙚𝙘𝙝𝙣𝙤𝙡𝙤𝙜𝙮”
Register now ⏩ Click here
Elixia’s Last-Mile Delivery Platform is a SaaS-based delivery management platform designed to address the challenges of high delivery density and operational costs associated with last-mile deliveries. It keeps businesses ahead of the competition by providing live delivery tracking, load consolidation, multiple pickup/drop, route optimization, and electronic proof of deliveries from the comfort of your laptop, phone, or tablet. Intuitive dashboards and precise compliance reports are generated and shared for greater visibility among all stakeholders involved in the delivery process.
