Last mile logistics: what are the challenges?
Today’s economic world is uncertain and unpredictable. Companies are faced with constant changes in consumer habits and regulations and must adapt to them. The logistics and transport industry is no exception and went through many changes in recent years. How does it impact the business operations of logistics providers?
In this article, we outline the different challenges that logistics companies have to overcome to keep up with the changes in today’s world.
Global and interconnected markets in a fast-changing environment
The economic growth of countries, the outsourcing of production and just-in-time operations have increased the pace of global trade. Air, sea, rail or road transport… all transport modes are used to move goods from one country to another, sometimes to the other side of the world. Coordinating these different types of transport must be mastered by carriers, who increasingly expand their networks and especially internationally. Globalization has been hit hard over the past two years by the Covid-19 health crisis. The pandemic shook the entire world economy, bringing thousands of factories to a halt and interrupting production for weeks before rushing back into action to make up for the lost time.
A boom in deliveries
Since 2020, health restrictions have greatly boosted online sales and home delivery. Lockdowns, business closures or avoidance of crowded stores… many consumers have turned to online shopping, greatly increasing the number of packages to be delivered. According to a survey by the YouGov institute in February 2021, 90% of French people placed an order online in 2020, of which 37% said they ordered more often than before the health crisis. This surge in parcels (1.36 billion in France alone in 2020), will have to be handled and managed by logistics players who were not prepared for them. Infrastructures are not always adapted to such a sudden increase in activity, the lack of personnel is also a problem… During the peak period, these pressures further challenged the carriers and their organizations.
Disrupted delivery processes
To avoid the spread of the Covid-19 virus, carriers have had to adapt their delivery methods by promoting contactless delivery. Safety distances must be respected between individuals, the package must no longer be delivered from hand to hand and no handwritten signature is allowed. This is a real change in the legal and administrative processes of deliveries. Different solutions exist to make deliveries contactless, some of which require a bit of digitalization such as a specific app to confirm the proper delivery of a package to the recipient by scanning a QR code or taking a picture of the delivered package.
New promising technologies
The digitalization of the logistics industry is essential for companies who are increasingly required to improve their processes. The rise of new technologies, such as artificial intelligence, offers logistics companies many opportunities to improve their productivity and increase their performance. Indeed, logisticians and especially carriers still use very manual systems (paper, Excel spreadsheets, etc.). The challenge is to replace them with more modern, agile and flexible technologies, which can quickly identify any unforeseen events in the field, thus offering logistics professionals greater flexibility. The tool becomes a real decision-making assistant and brings much greater value to human work. This increased flexibility, thanks to new technologies, allows us to improve the quality of our service for our end customers, who are increasingly demanding.
Ever more demanding consumers
Over the last few years, Amazon has disrupted traditional market practices by offering ever faster delivery at low prices. Faced with this tough competition, carriers are seeing their margins shrink from already low levels.
Today, consumers are looking for ever more customized delivery options:
- They expect shorter and more flexible delivery times: delivery in 1 hour, on Sunday or in the evening, precise time slots (2 hours) and flexible…
- They want to be delivered anywhere: at home, at the office, in a pick-up location, in a locker…
- They want to be notified in real time of the location of their parcel and of any delivery delay. New technologies allow consumers to follow the progress of their package and to be informed by email or text of any changes.
Consumers are worried about climate change and are now paying more attention to the environmental impact of their shopping habits. According to a study by Star Service and IFOP in 2021, 70% of them (especially younger consumers) say they have a better image of online retailers who offer a green delivery option. According to this survey, 27% of them would be ready to pay more and 80% would accept that the delivery time be extended.
The environmental issue does not only affect the last mile: every link in the supply chain can be optimized to implement green logistics. The latter is encouraged by public authorities who are introducing more stringent regulations: making more room for clean transport methods (walking, cycling, electric cars) in urban areas, banning highly polluting vehicles from city traffic, etc. As a result, transport companies are prompted to convert their vehicle fleets from diesel/gas to electric.
Logistics companies are faced with many challenges that they must overcome to remain competitive. Adaptability and proactivity are essential qualities for the players involved, who are evolving in a highly competitive market where profits are still fragile. All the processes of a logistics company are affected by these changes, from production to delivery, and all trades are involved. Change can be frightening and unwelcomed if it is too sudden or poorly prepared. Therefore, it is essential to lead a proper change management process with your teams. Discover our approach in the rest of our report.