In 2016, Schneider National acquired two specialty trucking companies to launch their last-mile delivery services. Just three years later, they’re shutting down the project, citing poor performance.
What makes last-mile ecommerce logistics so difficult to do well? In this blog post, we’ll explore the challenges of last-mile delivery, and how shipping companies can improve their performance.
Low speed and high cost
In traditional white glove delivery, purchases are delivered directly to the customer’s home or business, unloaded, and placed in the desired location. Depending on the product and delivery company, installation is often included, and packaging and other debris is removed and disposed of. This process is desirable for many consumers, but generally results in slower delivery and increased costs for shippers.
In the age of Amazon Prime, consumers expect lightning-fast delivery — 63% expect their items to be delivered within three days. These high expectations for delivery speed, along with the fact that white glove services require additional time and labor, mean that this delivery option is too costly for many last-mile shipping companies, especially when it comes to transporting bulky items.
A large portion of the costs associated with last mile fulfillment lies in inefficient truck loading. Large items like sofas, washing machines, and treadmills require large trucks, and are often shipped to regional warehouses and last-mile destinations using less-than-truckload (LTL) services. Some of the downsides of LTL include:
- More touch points and product handling increase the risk of damage
- Trucks are often only partially filled, which results in inefficient fuel use
- Multiple stops along a last-mile route increase delivery time
- Large trucks have a difficult time navigating narrow streets and finding spaces to park and unload
Additionally, many shippers still rely on paper records, compounding the industry’s inefficiency. Logistics companies like Globecon seek to transform these processes with innovative solutions like blockchain, routing technology, and in-transit cargo tracking to improve both speed and efficiency.
The shift toward regional warehousing
Traditionally, shippers have built warehouses in urban areas, but with insufficient space to meet demand, prices are high. Many companies are opting to store their products in smaller, regional warehouses, which are generally more affordable. Additionally, strategically placed warehouses allow companies to contract with local last-mile services and speed up delivery.
However, smaller warehouses mean less storage space. This is a huge challenge for retailers (especially those who sell bulkier items like furniture and appliances), so partnering with third-party organizations like Globecon is now common practice.
With over 25 years of experience in the industry, Globecon manages port-side warehousing, back stock storage, and freight forwarding for companies that want to reduce turnaround time and speed up their last-mile process. We can accommodate both less than truckload (LTL) and full truckload (FTL), and our state-of-the-art Warehouse Management System (WMS) helps shippers manage timelines and track shipments.
Need a warehousing partner at the Port of Los Angeles? Contact us!