Covid-19 has poured jet fuel on the eCommerce revolution adding a new wrinkle to the traditional supply chain. From speed of delivery, to increased consumer expectations, this transformation has mostly been driven by a more empowered consumer magnified by the pandemic. However, this change doesn’t come without challenges, mostly in the final mile of delivery.
This last leg of the delivery process is usually the most challenging and expensive. So much so that few carriers offer it. The biggest challenges are the requirement for specialized equipment, the need for additional personnel, and the time sensitive characteristics of residential deliveries.
Cost is not a new issue but new expectations, particularly regarding same-day/on-demand delivery, has put a greater strain on budgets. Additionally, when it comes to online retail, there can be inconsistent demand, such as increasingly higher volumes of purchases during holidays. The good news is people under 30 seem to be less concerned with cost than previous generations. In today’s new normal a new market of home delivery has emerged and is likely here to stay.
Providers Adjusting To Increased Demand
The pandemic has devastated many industries except home delivery. From furniture to parcels to groceries, demand is unprecedented. Providers are scrambling to keep up. The lag in the post office is legendary. Parcel carriers are struggling as well to keep pace. In fact, I am expecting delivery today of two Christmas gifts I ordered in early December.
There’s no question that online grocery services have had a meteoric rise to stardom within the average American household. In fact, Tech Crunch reports that online grocery sales dramatically increased this year as spring turned into summer, and in June of 2020, sales hit a record high of $7.2 billion. That’s a 600% increase in sales compared to August of 2019.
Carriers entering the final mile market face some challenges. Home and office deliveries of large items require specialized equipment; a truck with a liftgate, a hand forklift and special cargo retaining equipment. Additionally, most deliveries require more than one person. All translating in expense making specialized delivery of large items expensive.
The problem for shippers is it is impractical to charge the customer the entire cost of the delivery. It would be a deal breaker. So, most of the cost must be woven into the price of the item. With thin margins, careful logistics planning is critical to maintain profitability. Most successful companies embrace the expertise of a 3rd party logistics firm to manage this part of the operation. Peloton will incur transportation costs more than 10 times its usual cost per item, CEO John Foley said in a note to customers. The manufacturer aims to expedite bike and treadmill deliveries to consumers frustrated by delayed orders.
What Will The Future Of Home Delivery Look Like
For manageable parcels, robots and electric vehicles will be prevalent. We will see unmanned deliveries by robots and drones, unmanned pack-stations for pick-up and delivery at offices, stores and in public transport stations. Robotic implementation downstream will impact every facet of the transportation, handling and distribution of goods in the future. Most of it is here already.
Operational excellence is key in the integral door-to-door supply chain. Logistics planners will need to maintain operational efficiency, cost control and asset management to ensure profitability.
Crowd Sourcing, IOT and Smart Route Planning
Crowd sourcing will be popular for the final mile delivery. Ride share drivers, grocery delivery services and the like are a plentiful and efficient means of achieving reliable and cost effective delivery. Drones of course will play a role of some sort that has yet to be determined. Size and weight restrictions, safety concerns and government regulations will likely limit their utility. IOT and AI will likely play a big part in daily and repetitive robotic delivery by unmanned electric vehicles. A typical example is the mailman. He or she travels the exact same route daily. This is ideal for Artificial Intelligence. A robot can be programmed the route and AI will help it learn the details; terrain challenges, obstacles to avoid and the like, every day. Eventually the robot will learn the optimum path. The UPS and FedEx drivers are next. Smart Route planning will add to the overall efficiencies by being plugged in the real time traffic patterns and routes will be automatically and constantly optimized without the aid of a human.
Welcome to the future. Shippers will face many challenges. At Land Link we’ve already been here for a while. We can walk you around the Logistical challenges ahead.
Stay Safe Everyone.
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