Reducing the Cost of Last Mile Delivery

by Cameron Craig, 2 February 2022

The ‘last mile’ of a delivery journey, when an item travels from a transport hub to its final destination, is a particularly costly and challenging part of the delivery process. In this article, we break down the costs associated with last mile delivery and what you can do to make a reduction. 

Why is Last Mile Delivery So Expensive? 

Last mile delivery is fundamentally different to each other leg of the shipping journey: in other stages, there is only a single, or very limited number of destinations for the freight at the end of the journey. In Last Mile Delivery, a large number of deliveries to different locations are typically pooled together within a truck or car. As well, companies are potentially dealing with hundreds or thousands of packages every day. This means that last mile delivery requires multiple, frequent stops along the course of a route rather than a continuous journey to one destination. 

The problem comes in when you realise that with each extra stop comes the potential for increased permutations of route and logistical troubles. Multiply this by the number of packages in a truck and a large issue becomes apparent. With so many opportunities for the journey to veer off course, there becomes very little guarantee of efficiency on the journey.

The 3 Main Factors Driving Up the Cost

1. Failed Delivery

The potential for failed delivery is one of the key differences between Last mile delivery and every other leg of the journey. Due to drivers missing the delivery window, customer absence, or customers being unaware of their delivery’s status - deliveries frequently fail to connect with their recipient in the last mile. The rate of failed delivery generally  sits at around 5%, which results in wasted labour and fuel spent on pointless and/or repeat deliveries. 

2. Fuel Costs

Last mile delivery, particularly in urban areas, requires driving at low speeds with frequent acceleration and breaking, or even hours spent idling in city traffic. These actions are far more fuel consumptive and expensive than coasting along a freeway, and making it difficult to estimate costs.

3. Deviation From Route

Route deviations can quickly rack up costs associated with ‘out of route miles’ - that is, the fuel cost associated with travelling further than or alternatively to a planned route. While a surface level solution is simply to enforce that drivers stick to their intended route. Without a GPS system connected to sophisticated route management software, it becomes necessary for drivers to go off-route when they come across challenges such as roadwork or heavy traffic delays. The problem with this is that it can lead to unexpected costs, because the planned route is no longer a good indication of how much fuel was used in the journey.

3 Ways to Reduce the Costs of Last Mile Delivery

1. AI Route Optimisation and Integrated GPS

Intelligent Software can massively increase the efficiency of both route planning and the time spent on the routes themselves. Algorithms are able to perform complex functions quickly and easily, eliminating the potential for human error and saving admin time in the process. This results in routes that are optimised for minimal delays and fuel usage. Save the money spent on excess idling and being stuck in traffic. 

A transport management system that allows drivers to easily access this information is also crucial. After all, there’s no point having a perfectly planned route if the driver isn’t aware of its existence. Integrating different elements of the system together - particularly the route planning software and the GPS and navigation system available to drivers. This means that drivers are better able to stick to their routes and avoid creating out-of-route mile costs.

2.Advanced Track and Trace  

Advanced Track and Trace gives customers the ability to track their delivery status online and receive updates. This allows for better communication with customers, and this transparency often results in lower rates of delivery failure. Since customers can plan to be at home in time  for the arrival of their goods.

3. Reducing Labour 

Labour is one of the most expensive aspects of the last mile delivery process. Now, a certain amount of labour is of course necessary to complete the delivery, but many companies bleed revenue through poor labour management. This is either by way of excessive admin time spent manually planning out routes and dispatch, or overscheduled drivers who are left with nothing to do. 

A comprehensive TMS is able to not only reduce administrative labour costs by automating a number of administrative functions such as routing, dispatching, and invoicing. This also allow for more efficient scheduling due to a centralised system of information. 

Start Automating the Last Mile Today

Last Mile Delivery is challenging and unpredictable by nature, which drives up costs exponentially. However, it can be more easily and cost effectively managed through a TMS software. It has the capacity to respond seamlessly to quick logistical changes and automate administrative tasks. 

Want to get started with route optimisation, track and trace, and scheduling options? Book a Demo with Transvirtual and start your free trial today.

Your Quick Guide to Less Than Truckload Shipping?

by Matt Corby, 10 June 2022

Every year, the market in the United States alone for less than truckload (LTL) shipping is worth more than $86 billion. Of course, not everybody is familiar with less than truckload shipping and what it entails. However, based on how big this market is, you can be sure that it...

Freight Bidding (And How to Do it Right!) 

by Cameron Craig, 9 June 2022

Nothing strikes fear into the heart of a mild-mannered transportation professional like freight bidding season. And we get it: freight bidding can often be a complex, stressful, and unsatisfying process for everyone involved.  But the great news is that it doesn’t have to be that way. Freight bidding can be...

Answering Your Charge-Per-Mile Delivery Questions

by Murray Phillips, 8 June 2022

Charge or not to charge? It’s not the most glamorous aspect of running a business, but determining your rates is an important part of making sure that your operation is profitable. There are a few different approaches to this issue, and today we’re breaking down one of the most common...

How to Implement Contactless Delivery

by Cameron Craig, 7 June 2022

Learn how to improve driver and consumer safety during COVID-19 with contactless delivery COVID-19 has become a major risk to driver and consumer safety, hasn’t it?  The trouble is, it also led us all into a delivery boom which requires more drivers to be at more doors every single day....

What is a Freight Broker and when do you need one?

by Matt Corby, 6 June 2022

There are so many moving parts in transport management, aren’t there? And there are just as many ways to waste time, money, and incur damage. One thing’s clear: not all freight management systems are created equal. Successful companies rely on a freight broker to handle their shipping logistics, especially during...

What is centralised dispatching and how does it work?

by Simon Unicomb, 1 June 2022

In 2020, e-commerce sales accounted for nearly 15% of the world’s total retail spending. Now if that doesn’t seem like a lot, what if I told you that means close to $4 trillion of spending every year? Online shopping is fast outpacing brick-and-mortar stores. But what does that mean for...

  • Rated 4.9 / 5

A must-have tool for running a profitable transport and delivery business.

Want a full-featured transport management system that makes your delivery business simple? Save time, lower costs and move your freight faster with TransVirtual’s tools for businesses big and small.