Demand Increases for Last-Mile Delivery Drivers

During the global pandemic brick and mortar businesses were forced to change the way they serviced their customers. While transportation was always crucial to ensuring that businesses received their inventory, last-mile delivery service wasn’t always a part of the equation. Companies that sell physical products had to pivot not only to online sales models but they were charged with getting the products to their customers’ doors. 

The annual State of Retailing Online study from the National Retail Federation (NRF) and Forrester claims that consumers expect traditional and digital retailing to be intertwined. However, they aren’t abandoning retail brick and mortar stores. So, the need for drivers has increased across industries at a time when driver recruiting is most difficult. 

E-Commerce spending is on the rise 

Because of the changing demands and expectations of consumers coupled with the business model pivots forced by the pandemic; more companies than ever are offering last-mile delivery. From food and beverage to home goods and fashion, businesses must deliver – literally. Gucci now offers deliveries in selected cities from the store to a customer’s home in just 90 minutes or less.

According to eMarketer, US consumers will spend $933 billion on eCommerce in 2021, up 18% YoY, and equaling 15% of total retail sales. Brick-and-mortar retail spending will grow 6.3% in 2021, to $5.149 trillion, the strongest growth rate seen since 2011.

As stated in the Future of E-commerce Packaging to 2025 by Smithers, the global market for e-commerce packaging is currently estimated at $49.2 billion and growing at a CAGR of 15% for a projected value of $98.2 billion by 2025.

What is last-mile delivery service?

The last-mile delivery service is the last step of the process to take a shipment from a distribution location to the customer. Fleet managers are making operational changes to meet the increased demands of last-mile delivery while maintaining cost efficiency. This is the most expensive part of transportation logistics for many businesses. McKinsey has reported that parcel shipment is expected to double its current value of $83 billion within 10 years. Globally, final mile shipping is expected to become a $55.2 billion industry by 2025, up from $30.2 billion, according to a recent report by Roadie.

What problems do last-mile delivery fleets have with drivers?

In addition to this being a costly area for businesses, the needs are difficult to predict. Therefore, planning can be unrealistic. Although supply chain management has improved greatly with improved technology, systems, and operational efficiencies, last-mile delivery continues to create some of the biggest challenges. Last-mile logistics account for 40% of the supply chain costs. 

The last stop for delivery is constantly changing which makes routes change daily. This makes it harder to predict the time and resources needed to meet a company’s constantly changing needs. Additionally, expectations have changed over time; consumers and businesses alike want their deliveries to arrive quickly, including same-day delivery.

Improving recruitment strategies, providing excellent driver training, and implementing the appropriate technology can help combat these problems. It will also reduce the churn rate and increase employee satisfaction. Companies are often focused on the customer experience, but sometimes lack focus on the employee experience. In an industry that is so hard to staff for, this is an important area of concentration. 

Legacy shippers can’t keep up with last-mile drive demands

FedEx, UPS, USPS, DHL are the major players that have previously delivered 95% of all e-commerce orders in the United States. With increasing demands and the challenges born from the pandemic, they haven’t been able to keep up. Refrigerated last-mile delivery of perishable goods has been 2% of online grocery sales but is expected to reach 20% by 2025. It’s even more critical that these products have fast and omnichannel options and perishable products are at a higher risk for loss.

The last-mile delivery market size is expected to reach $200 Billion USD in 2027, says Brandessence Market Research. Through strategic partnerships, businesses can more easily keep up with last-mile delivery demands. 

According to Datex Corporation, third-party logistics providers have found that they can expand their supply chain service offerings by building partnerships with local freights in primary markets including e-commerce, medical lab logistics, and B2B. Combined with improved business efficiencies, strategic partnerships can create optimized outcomes for everyone involved.

If you’d like to learn more about how GPS Trackit can help to improve efficiency, safety, increase productivity and reduce costs for your business, speak with one of our knowledgeable Fleet Advisors at 866-320-5810 or get a quick Custom Quote.

SOURCES: 

• https://nrf.com/resources/state-retailing-online
• https://www.wmagazine.com/story/gucci-delivery
• https://www.curri.com/article/how-long-does-last-mile-delivery-take