Overcoming the Challenges of Last-Mile Delivery
In the last decade, UK parcel deliveries have grown at an increasingly fast rate, from 1.7 billion parcels in 2013 to 5 billion in 2023.
That equates to 159 parcels being delivered every second!
This growth is mainly due to the increase in online shopping for both food and non-food items along with the recent increase in consumer-to-consumer sales of second-hand goods.
The main challenges for last-mile deliveries and how to overcome them
- Coping with complex customer demands
- How to survive the peak demand delivery period
- Making rural deliveries
- Deciding on depot locations
- Overcoming the inability to deliver in urban situations
- The van and HGV driver workforce shortage
- Making deliveries in extreme weather conditions
- Should retailers offer ‘free’ delivery?
- An increasing number of product returns
- Failed first-time deliveries
The main challenges for last-mile deliveries are:
Coping with complex customer demands
Not only are consumers demanding more reliable and faster deliveries, they are also starting to expect shorter timed delivery slots with precise ETAs to avoid having to stay at home waiting for deliveries. Consumers expect to be able to select their delivery date and time slot, which is standard practice for home delivery of supermarket groceries.
In the latest Descartes’ Home Deliver Consumer Sentiment Study it was also discovered that for the first time in 3 years of research, the consumer was now more likely to opt for the lowest cost delivery, rather than the fastest delivery. (Download the 2024 Home Delivery study here.)
How to survive the peak demand delivery period
During certain busy times of year, such as Christmas some retailers increase the pressure on home delivery by offering incentives to maximise their sales during these periods. Events such as ‘Black Friday’ and ‘Cyber Monday’ create additional delivery frenzies.
More and more retailers are offering next-day deliveries when it might be better to offer the consumer a selection of delivery days, enabling them to choose their own preferred delivery day at a cost they are prepared to pay. This would help to smooth out the demand for deliveries, especially if preferred options for the delivery business are incentivised with lower costs to the consumer.
Logistics during peak periods is also hindered by the increase in returns, read Controlling Returns During the Peak Season for advice.
Making rural deliveries
Home deliveries save time and offer a convenient way of shopping for busy consumers.
However, deliveries to rural communities present their own problems to delivery companies, the distances between drops increases and the density of deliveries decreases, resulting in a higher cost per drop. Locating rural properties can also be problematic while failure of deliveries is high (and expensive) for those carriers who do not offer at least an estimated time and date of delivery.
To improve delivery density it is preferential to offer the customer delivery slots that are close to other deliveries already in the system. This reduces the drive distance between deliveries. See Route Scheduling Software for more information.
Deciding on depot locations
Locations for local depots and sorting hubs are becoming increasingly difficult to find due to reduced availability and the rising cost of land. Operators are forced to position distribution hubs further and further out of towns and cities, this has the effect of increasing the distance from depot to the first delivery address (stem mileage) and the distance from the last delivery back to the depot.
Descartes’ delivery planning and route optimsiation software has the ability to make calculations in a “sandbox” environment, enabling options to be reviewed and outcomes to be checked before expensive mistakes are made.
Overcoming the inability to deliver in urban situations
As towns and cities become denser and competition for street space increases with the introduction of cycle lanes, bus lanes and pedestrianisation, so kerbside parking for a delivery becomes harder.
Together with more cities starting to introduce congestion, low traffic neighbourhoods and emission zones further restricting the ability of certain vehicles to enter or at the very least increasing the cost of deliveries within these zones. This is all on top of the usual traffic congestion and roadworks or unexpected accidents that cause delays for logistics companies.
More and more delivery companies are starting to turn to electric and pedal power for their urban deliveries. Descartes’ software has the ability to calculate deliveries across a mixed fleet and to allow the use of cycle pathways for pedelled vehicles in its route calculations.
(Read about PostNL’s bicycle deliveries)
The van and HGV driver workforce shortage
The UK has been facing a chronic shortage of van and HGV drivers for some time and has been exacerbated by factors such as an aging workforce and an increase in demand for home deliveries.
Despite rising salaries, attracting and retaining drivers remains a challenge for many businesses. This shortage continues to have significant implications for the logistics industry, impacting delivery times, costs, and overall operational efficiency.
Read more about solving the HGV Driver Shortage
Making deliveries in extreme weather conditions
The UK can often experience unpredictable and extreme weather conditions making deliveries difficult, from heatwaves in the summer to freezing conditions and snow in the winter, posing significant challenges for last-mile delivery drivers.
In these conditions companies must prioritise driver safety and well-being, ensuring their vehicles are roadworthy, providing appropriate equipment, and fostering a supportive work environment. Neglecting these responsibilities can lead to driver turnover, disruptions in deliveries and in expensive fines or loss of the operator’s licence.
Should retailers offer ‘free’ delivery?
Retailers are being pressured by consumers to offer free deliveries, or at least free deliveries if the purchase total exceeds a certain threshold.
This has a knock-on effect on logistics companies, as retailers seek lower-cost deliveries and pricing models.
While 85% of the UK’ top retailers offer some kind of free delivery, often if a certain basket value is exceeded, many retailers still charge a token rate for a delivery often no more than £5 if the threshold value limit was not met. Only 10% of UK retailers offer a completely free delivery with no minimum order value.
An increasing number of product returns
It is estimated that ecommerce return rates are around 14.5% in 2023 (according to Shopify) with more than 23% of online shoppers saying they had returned an item of apparel in the last 12 months.
Managing these returns can cause logistics providers nightmares if they also have to collect these returns while making deliveries.
Descartes’ delivery scheduling software can also factor in collections, making the returns process easier and more cost effective for logistics operations.
Contact us to talk to an expert if you need to solve your returns collection issues.
Failed first-time deliveries
Failure rates for deliveries to residential properties are higher than commercial locations, due not just to the size of the standard domestic letterbox, but also to the customer not being home or the lack of a safe place to leave the parcel. This results in a return of the parcel back to a deport and the possible second attempt at delivery or the disgruntled collection by a customer.
Descartes own research showed that 67% of online shoppers had experienced a problem with a delivery in the period surveyed requiring them to make contact with the retailer or delivery company and resulted in 63% of them taking some form of action against the retailer or delivery company.
Read – How do you increase first attempt delivery rates?
Consumer anxiety is reduced when a delivery company can provide consumers automated order tracking and delivery notifications and eliminates phone calls to customer services asking, “Where’s my delivery?”. The number of first-time deliveries will increase as the customer knows when the parcel is arriving and is ready to receive it.
Conclusion
Retailers and parcel carriers are aware of the issue and through increased collaboration between them or the clever use of their own delivery fleets, some retailers are starting to gain a competitive advantage. They are doing so by offering short, timed delivery slots that can be chosen by the customer and then allowing the customer to track their deliveries ‘Uber style’ with GPS trackers in the delivery vehicles, these retailers are providing an improved customer service level. Some are even offering incentivised delivery slots in order to group similarly located deliveries together, allowing the logistics side of the business to create denser delivery routes by reducing distances between deliveries and the cost per delivery.
Home delivery is where retailers can use technology to offer a costed choice of delivery options so consumers can select what they want at a price they are prepared to pay. This will influence buyer behaviour, increasing sales, reducing delivery cost, increasing delivery capacity and improving the customer experience.
Why not read our eBook for more information on digital proof of delivery
Or our White Paper Next Generation distribution, strategies, tactics and technologies
Find out how Descartes can help you turn delivery into a competitive advantage.
