Overcome Challenges as a Last-Mile Delivery Fleet

Last-mile delivery activity skyrocketed during the COVID-19 pandemic due to the significant increase in online orders as stay-at-home mandates for the public and non-essential business workers were enacted across the globe.

While some sense of normalcy returned in 2021, along with a resurgence of pre-pandemic business activity, the new “norm” for last-mile delivery fleets is much more demanding now than it’s ever been.

For example, as of 2021, consumers made more than half of their purchases online, compared to 32% in 2019. ¹ Additionally, the U.S. food delivery market increased 204% in the past five years.

Anticipate Continued Strong Demand

Business demands for industries involved in last-mile delivery reached all-time highs within the last year, and this is only expected to grow over the next several years. The last-mile delivery market in North America size is estimated to grow by $44.88 billion during 2020-2024, progressing at a compound annual growth rate of over 14% throughout the forecast period, according to a recent report by Technavio. ²

Depending on the industry a fleet is involved in they should expand expectations regarding the kinds of vehicles they use and what the average mileage is.

Understand & Adapt to Challenges

Customers of last-mile delivery businesses have inherent expectations about the delivery times of these companies, which has been normalized by ambitious delivery systems like Amazon’s. Very short shipping windows are becoming normalized.

Other expectations – outside of very quick delivery times – that have become the new norm include improved convenience, detailed order tracking, and security and insurance, just to name a few items. There are some unique challenges that can make it difficult for fleets to meet these specific customer demands, and something as simple as where the customers are in relation to where the deliveries are sent from can be part of the challenge.

Navigation through rural areas could result in scenarios where longer travel is necessary for fleets to make deliveries, despite a low number of packages being shipped to these areas. This could result in sending assets away from more active areas of the business out of necessity, delaying delivery times in other key business areas. Travel through urban areas also causes challenges. While, conversely to rural environments, fleet drivers may make more deliveries in urban settings, traffic congestion and parking issues can also exacerbate delivery delays, cause driver stress, and increase the likelihood of accidents.

Indeed, delivery efficiency has been recognized as one of the biggest challenges for logistics providers in last-mile delivery³ and these specific issues are perennial.

Acquiring the Right Assets

Given the surge in last-mile delivery activity, businesses must ensure they have the right vehicles to help them successfully meet growing customer expectations. Proper vehicle specification will help fleets hone in on which asset types best suit their business needs, and should also give them a better idea of identifying how large the fleet should be to accommodate the activity.

However, current strong vehicle demand, along with a low supply of key assets, is creating bottlenecking issues for manufacturers that are delaying the delivery of the types of vehicles fleets need.

Demand for vehicles increased as the world continued to return to normal business activity through the pandemic. Vehicle inventory is low because of the slow recovery in auto production last year, as well as an ongoing shortage of auto microchips used to manufacture vehicles, according to Forbes. ⁴ Delays are also occurring due to consumer interests shifting more toward trucks and crossover/SUVs.

Another recent report from the Wall Street Journal mentioned that earlier orders from fleet operators of pickup trucks and cargo vans have been unfilled for months. ⁵

This report noted that this has hampered some fleets’ abilities to expand their operations to match increasing business demands. Because of this, fleets may consider utilizing other vehicle alternatives to support their business activities for the time being.

Adopt Advanced Fleet Technology

Telematics solutions – and other fleet vehicle monitoring technologies – have become so ingrained into the functions of the fleet, it’s becoming less practical to hold off on implementing them into the operations. This is especially true for last-mile delivery fleets, where timeliness is essential and downtime can be detrimental.

When last-mile fleets equip their vehicles with telematics technologies, critical details regarding the overall health of their fleet will become more clearly visible. This gives transparency into vehicle conditions and driver behavior, providing fleets a better perspective on ways to improve business productivity and driver safety.

This information gets aggregated into a centralized system that will help fleet managers identify key areas for cost savings and safety improvements. For example, telematics solutions can improve poor driving habits, aid fleets in optimization of fleet routing to improve delivery times and ensure vehicles are getting maintenance at proper intervals.

Prepare for the EV Landscape

Interest in electric vehicles for fleet operators has been percolating in the industry for a while but has recently become a more realistically feasible option for operators to implement as the technology has grown. In particular, new electric vehicle companies have popped up in recent years and introduced their new products to the industry and major OEMs have also made their own EV announcements, some of which are in direct response to the interest of fleets.

According to the Electric Vehicle Outlook report from BloombergNEF the share of light-commercial EVs sold by 2040 is expected to reach 60%, while this is expected to hit 31% in the same year for medium- and heavy-duty commercial EVs sold. ⁵

So while more widespread adoption of EVs into fleets is still some years away, there are some areas of the industry fleets will want to research or invest in to make adoption for themselves easier later on.
Some aspects of EVs fleets should closely educate themselves on include:

• New infrastructure, with EV charging stations of particular focus
• The development of EV battery technology
• Data analytics specific for EVs
• The management of EV energy usage
• How EVs will fit in with a fleet that has historically operated with internal combustion engines

If you’d like to learn more about how GPS Trackit can help to improve 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.

Resources Cited:
www.mikealbert.com/blog/last-mile-delivery-trends-insights-and-logistic-planning
apnews.com/press-release/business-wire/virus-outbreak-technology-business-north-america-lung-disease-e529f9359a62446aa2b350115c6f9b18
img03.en25.com/Web/FCBusinessIntelligenceLtd/%7B9403ad27-2b3d-4901-b56f-422945cd913c%7D_ETP_EFT0118_TheLastMileLogisticsWhitePaper_V21.pdf
www.forbes.com/sites/jimhenry/2021/04/29/high-prices-dont-seem-to-be-turning-off-demand-for-new-cars-and-trucks/?sh=35aecb836f6d
www.wsj.com/articles/chip-shortage-makes-work-trucks-scarce-for-businesses-facing-booming-demand-11626091201
about.bnef.com/electric-vehicle-outlook/