How 3PLs Help Solve Last Mile Delivery Challenges
How 3PLs Pair Smart Technology with Last Mile Delivery
For years, messenger and courier services exclusively managed the last mile. 3PLs on the other hand contracted shippers to provide services for various clients. That all changed when COVID-19 altered the ways that 3PLs managed last mile logistics. 3PLs are using this shift as a value proposition to differentiate their services from other providers. It can be a game changer.
Typically, 3PLs provide warehousing, order fulfillment and often transportation and logistics services. Recent mergers between 3PLs and smaller transportation and logistics service providers including messenger and courier service providers are being viewed by experts as the natural next step in the evolution of the business model.
In the current state of the supply chain, last-mile delivery is crucial to the shipping process. It is one of the most tedious and costly elements of the shipping process. Due to this, 3PLs are finding ways to be more cost-effective and efficient during the final mile.
What Is Last Mile Delivery?
Last mile delivery, also known as final mile delivery, is the last step of a products’ journey from manufacturing to the end customer. In this phase, products are delivered to customers’ doorsteps and to retail locations. The final mile of today focuses on fast and safe delivery processes that can enhance the customer experience. Quality final delivery tends to increase customer satisfaction, which in turn enhances the customer experience. As the market continues to progress and the demand for expediency permeates industries, last mile delivery will continue to be essential to the supply chain.
The Need for Speed
According to Investopedia, the Amazon effect describes the impact that online sales have had on brick and mortar businesses. It altered consumer buying patterns, customer expectations, and how businesses competed in the global market. Same-day delivery and customer experience now play an integral role in consumer demand.
Consumers want their items shipped to them fast and for free. Amazon has trained consumers to prefer companies that meet this expectation and reward them with their brand loyalty. The stress of meeting the “fast and free” expectation of consumers has pushed 3PLs to offer low shipping costs to enable their customers to compete in a fast-paced market.
Did you know that the cost of last mile delivery makes up 53% of the total cost of the entire shipping process? Because consumers are less willing to pay for delivery, logistic providers have had to take on the expense. This has created a need for 3PL warehouses to invest in final delivery and smart technology. Third party providers are even developing their own truckload capabilities to provide last mile delivery service directly to their warehousing clients.
Last Mile Delivery Processes
Truckload – With their own fleet of vehicles, 3PLs can better manage each delivery solution for their client’s full and LTL shipments. This will enable increased visibility and transparency and offer speedier transit.
Accelerated– By having their own final mile operations, 3PLs can utilize inhouse measures to optimize delivery for their client’s expedited shipping needs.
Residential – Managing residential final mile delivery can give 3PLs a competitive advantage. Value added services such as assembly and debris removal can help to offset delivery costs that 3PLs and clients may incur.
Retailers that operate their own warehouses often outsource services such as last-mile delivery to third party logistic providers. As experts in logistics and fulfillment, 3PLs can utilize resources and optimize services that other companies cannot. A study by Capgemini Research Institute found that over half of consumers would shift to a competing delivery service if they provided faster delivery options. To counter this, 3PLs and retailers are developing warehouse operations in urban areas. Their investment in artificial intelligence and automation is helping them to better manage warehouses or distribution centers nearer the consumer.
Leveraging Smart Technology
Workforce labor accounts for nearly 60% of the total shipping costs related to last mile delivery. To reduce costs and make workforce labor more efficient, 3PLs like Fed Ex are experimenting with self-driving vehicles and delivery robots to deliver products across the final mile. The partnership between Fed-Ex and autonomous vehicle maker Nuro is an example of 3PL efforts to use technology to manage last mile logistics.
Advancements in data analytics are allowing 3PLs and shippers to capitalize on multi-carrier parcel management for better last mile efficiency. Artificial intelligence software is being used to make final mile decisions, such as the parcel carrier that shippers should use. Those decisions are based on factors such as:
• Speed • Cost • Delivery area • Performance • Rate
3PLs are improving by leveraging delivery software and technology that:
- Optimizes distribution
- Automatically dispatches drivers
- Transports cargo and products
- Manages shipments
This technology is important to successful last mile delivery because it has a direct effect on the end-user experience. 3PLs that provide shippers with the best delivery options are helping businesses optimize to satisfy their customers. Visibility and transparency are two other challenges that 3PLs are tackling with the use of smart technology. Consumers want more visibility into and information about their deliveries. Many 3PLs and shippers are using GPS and RFID tags to let customers see real-time information about their items such as:
- Where it is in transit
- What type of conditions (weather or physical) in which it will be arriving
Benefits of 3PLs Managing Last Mile Delivery
There are several benefits to 3PLs managing final delivery. Relationships between shippers and 3PLs have deepened and more merchants are looking for alternative fulfillment options. With the last mile being such an important facet of the supply chain, third party logistic providers have opportunities to succeed. A joint study by the Customized Logistics & Delivery Association & The Transport Intermediaries Association identified four areas that 3PLs and last-mile delivery providers can collaborate to meet the demands of consumers:
Medical Lab Logistics
Business to Business
There is a reason that 3PLs have instituted a takeover of last mile delivery services: they specialize in logistics and order fulfillment and can now provide quality solutions from software E-commerce Medical Lab Logistics Business to Business Special Projects to delivery. The technologies that are available today can improve the supply chain by optimizing 3PLs for more efficient last mile logistics. Here are some benefits of 3PL final delivery management:
3PLs specialize in warehouse and inventory management. They can also distribute parcel and heavy cargo to residential, retail, and international locations. Because of this, 3PLs can make sure that products are stocked at the best possible order fulfillment centers. This can save on shipping costs and improve last mile delivery transit times.
3PLs can benefit their clients’ last mile delivery needs by consolidating shipments. Consolidating their cargo will give clients better shipping rates and can help to reduce shipment volume, saving time and labor costs.
Most 3PLs are capable of packaging or repackaging goods for last mile delivery. This is
extremely important for clients that need to ship fragile items or reposition cargo. Having value
added services such as gift packaging can also greatly impact customer satisfaction.
Delivery Route Planning
3PLs can plan the most effective routes for drivers. The software that they use can make sure that deliveries are on-time and just-in-time by optimizing routes for traffic, construction, and weather.
3PLs can deliver large cargo just as fast as they can support small parcel delivery. By operating multiple order fulfillment centers and using live route optimization, 3PLs can make sure that last mile delivery is on-time and just-in-time.
The digital age has proven that the customer experience does not end when the sale is over. 3PLs maximize client value by coordinating end-to-end logistics. By facilitating efficient return services, consumers are likely to purchase again. In addition, 3PLs can make use of their network that provide refurbishment, recycling, and repackaging services.
Final Mile Delivery Models 3PLs can Use
Local – This delivery solution contracts local services to provide delivery for multiple 3PLs clients. This can result in lowered cost for both the 3PL and their client.
3PL Driven – 3PLs that manage their own fleet of delivery vehicles can drive revenue and offer an enhanced customer experience. This solution is useful in urban areas due to stop density in the areas
The competition for customers will continue to increase. 3PLs create a competitive advantage for customers by providing lower shipping and delivery costs, efficient return service, fast delivery times, and improved visibility. All of these are vital to high customer satisfaction and an enhanced consumer experience.
Many of the events that have happened since 2020 including COVID-19, Suez Canal Jam, the Ukraine war, and dramatic rise of e-commerce, have caused 3PLs to innovate and advance all aspects of the supply chain. No advancements are more important than the ones that have improved last mile logistics. 3PL capabilities are helping businesses improve client and customer delivery experiences. The age of experience has made the final mile more important and 3PLs are primed to continue to meet customer demand and expand transportation networks.
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