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Racing towards more reliable Last Mile Delivery - Future of Logistics

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We are already dawned to the second decade of the 21st century and there is no debate “e-commerce” is the game changer in this century retail landscape around the Globe.

E-commerce and mobile e-commerce has redefined global markets turning small local store in to a global player. This change of market conditions and customer demands made the location of purchase of items an entirely relevant term, regardless the actual geological location of the person who purchase the item. These new dynamics of the market and global supply chain has created a new way of global traffic, transforming new logistics demands towards more reliable, growing pains on “Last mile delivery”, “same-day last mile” as an option “out-of-the-box”. Businesses focus on developing new technologies, increase supply chain models to increase volumes, especially on e-commerce and parcels, expedite deliveries and delight customers.

According to McKinsey and Company, parcel shipment is valued at more than $83 billion, and the growing e-commerce market will double in value in roughly ten years in mature markets. Moreover, shippers of all sizes have identified last mile logistics as the cornerstone to driving growth and profitability. Form customers point of view, they are willing to pay premiums for better last mile delivery such as same day or instant delivery. This makes an undoubtful challenge for global shippers to get more products to consumers faster and cost-effectively, both critical concerns in the e-commerce and omnichannel supply chain. Other than that based on the challenging customer demands, the shippers has to face the challenge of complexity of last mile delivery. They have the challenge of handling large products, that may require assembly and skilled packing and unpacking upon delivery making shippers to rethink how they can ensure the final product is an accurate reflection of what was sold.

FedEx Last Mile Delivery

As we all know Federal Express (FedEx) Corporation is the United States (the US) based shipping giant that provides two main service types based on their shipping procedures - FedEx Express and FedEx Ground. While FedEx Express provides fast, time-specific delivery commitment, white shipping packages including boxes,  FedEx Ground is a different operating company where only use surface methods i.e Trucks to transport packages and does not promise a specific day delivery. However both these services provide money-back guarantee.

Focusing more on FedEx Ground,  they offers reliable delivery to every address in the forty-eight (48) contiguous the US states within one to five business days based on the distance to the destination. They support money-back guarantee, where any package does not arrive by the end of the scheduled delivery day, FedEx Ground will credit or refund the shipping charges for the deliveries with in the US. FedEx Ground operates in such a way that when a package enters the hub, the shipping address is scanned and entered into the their system where the package  eventually reaches a truck heading to one or more destination hubs or go straight to local delivery vehicles if it is listed as local service, meaning all packages designated for FedEx Ground shipment go through one. FedEx recently announced that they can change the nature of heavy costs of supply chain, especially in the last mile, door-to-door residential package delivery through their collaboration between two of these delivery lines: FedEx Ground and FedEx Express. According to FedEx, this initiative will commence and piloted in Greensboro market in March 2020, in a way, if FedEx Express has a day-definite residential shipment that can be delivered by FedEx Ground, FedEx Ground will do the delivery.

FedEx Senior VP Patrick Fitzgerald highlighted this initiative, “Often, an Express van comes to your house the same day a Ground van for e-commerce residential deliveries (eliminating that duplication) increases efficiency, and drives down costs,” Fitzgerald also mentioned, there is a very good opportunity to maximize the efficiency and they can dilute delivery density if having two separate companies delivering to the same address. According to FedEx, the heavy investments made on technology and FedEx Ground’s “Seven-Day-Delivery” initiative which specifically tailored to serve growing demands of the e-commerce markets has made this is a possible reality.

In a word, regardless the factors of costs, Last Mile logistics will continue to dominate and will continue leading global supply chain. Agility and the openness for changes and adopting new technologies is the key to go ahead the curve and win the market in this digital era. Not a single logistics company is born digital, but getting creative in leveraging technology, strategy and time ahead innovations will make it possible for them to stride improving last mile delivery. Future of Logistics is a never ending race and logistics leaders are already on the path toward delivering what consumers want, where they need it and when they want it.

References:

  1. https://www.parcelandpostaltechnologyinternational.com/news/delivery/fedex-speeds-up-last-mile-deliveries.html
  2. https://www.mckinsey.com/industries/travel-transport-and-logistics/our-insights/how-customer-demands-are-reshaping-last-mile-delivery
  3. https://www.businessinsider.com/last-mile-delivery-shipping-explained?IR=T
  4. https://www.fedex.com/en-us/shipping/ground.html


Commentary by Norika Warnasuriya

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