{"id":3077,"date":"2019-07-13T19:18:55","date_gmt":"2019-07-13T17:18:55","guid":{"rendered":"http:\/\/en.advancedfleetmanagementconsulting.com\/?p=3077"},"modified":"2019-07-13T19:18:55","modified_gmt":"2019-07-13T17:18:55","slug":"the-big-and-small-of-last-mile-delivery","status":"publish","type":"post","link":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/2019\/07\/13\/the-big-and-small-of-last-mile-delivery\/","title":{"rendered":"The Big and Small of Last Mile Delivery"},"content":{"rendered":"

\"Final-mile<\/p>\n

Final-mile delivery, like this one by XPO Last Mile, requires not only getting the product there in a specific time window, but often can involve getting it into the customers\u2019 home and even setting it up.\u00a0<\/strong>Photo: XPO Logistics<\/em><\/p>\n

The Big and Small of Last Mile Delivery<\/h2>\n

When A. Duie Pyle analyzed several months\u2019 worth of delivery data by shipment size, it discovered a large portion of deliveries were actually quite small shipments for a less-than-truckload carrier. And there, the Northeast regional LTL saw an opportunity in last-mile delivery.<\/p>\n

Enter the Express Solutions business, which aims to offer same-day service in all the metropolitan markets in the Northeast by the end of the year.<\/p>\n

Last-mile delivery, sometimes called final mile, is an item\u2019s final destination in the supply chain, whether that be the local Walmart or shoe store or office building \u2014 or increasingly, thanks to the rise of e-commerce and omni-channel marketing, the customer\u2019s home.<\/p>\n

Because e-commerce is booming, the need for final-mile delivery means both headaches and opportunities for companies in a wide swath of the transportation and logistics business, from small couriers to UPS and FedEx, and from regional delivery fleets to big LTL and truckload carriers like XPO Logistics and Schneider.<\/p>\n

\u201cThe rise of e-commerce has created a tidal wave of demand for last-mile logistics \u2014 it requires ongoing investments in scale and technology to keep ahead of consumer expectations,\u201d says Charlie Hitt, president of XPO Last Mile.<\/p>\n

At one end of the scale, for small packages, technology such as drones and robots are being explored. At the other end, an increasing appetite for delivery of larger items means less-than-truckload and truckload carriers are increasingly getting involved. \u201cWhite-glove\u201d services, which involve not just delivery, but also assembly, setup and installation, are booming. And behind the scenes, making the complex requirements of last-mile delivery possible \u2014 and more importantly, profitable \u2014 is sophisticated computer technology.<\/p>\n

Drones and robots<\/h3>\n

In 2015, Amazon founder and CEO Jeff Bezos predicted that while Amazon delivery drones were still \u201cyears\u201d away, someday they will be \u201cas common as seeing a mail truck,\u201d according to published reports.<\/p>\n

We\u2019re certainly not there yet, but Amazon and UPS are among the companies testing drones for commercial package delivery. Meanwhile, autonomous robot-delivery devices could show up on the ground even sooner than drones in the air.<\/p>\n

Amazon last December started a beta test with a handful of customers in England of its Prime Air service, which promises to make deliveries of products weighing up to 5 pounds from dog biscuits to tech gadgets via drone in 30 minutes or less.<\/p>\n

In February, UPS worked with Workhorse Group to test incorporating drone delivery into day-to-day delivery operations. The drones launch from the top of an electric-drive UPS package car, autonomously deliver a package to a home, then return to the vehicle as the delivery driver continues along the route to make a separate delivery.<\/p>\n

\u201cThis test is different than anything we\u2019ve done with drones so far,\u201d says Mark Wallace, UPS senior vice president of global engineering and sustainability. \u201cIt has implications for future deliveries, especially in rural locations where our package cars often have to travel miles to make a single delivery.\u201d<\/p>\n

A similar scenario was envisioned at the IAA Commercial Vehicle show in Germany last fall, when Daimler showcased the Mercedes-Benz Vision Van, a concept electric-powered delivery van. It also launches drones from the roof, but they are loaded and launched entirely automatically while the driver continues making deliveries.<\/p>\n

\u201cDrones are evolving rapidly,\u201d said Steve Sashihara, founder and CEO of transportation and logistics consulting firm Princeton Consultants, in a conference call hosted by investment firm Stifel. \u201cThey are lower weight, more powerful, and more reliable than ever. The payload-to-tare weight ratio needs to increase, and energy consumption rates need to be improved.\u201d<\/p>\n

Back on the ground, a company called Starship Technologies has developed a cute six-wheeled delivery robot. The company launched pilot programs in five cities in Europe last year, and recently secured approval for pilot-testing in Coeur D\u2019Alene, Idaho, Washington, D.C., and Redwood City, California.<\/p>\n

These early tests involve delivery of groceries or take-out food directly from company to consumer via sidewalks. But Mercedes-Benz Vans believes they also could be used to greatly enhance the efficiency of last-mile delivery. Working with Starship, the company developed a \u201cRobovan,\u201d configured to allow the robots to exit the van autonomously during delivery stops.<\/p>\n

The robots will be loaded with their goods in the Robovan using a racking system that enables 400 packages to be delivered every nine-hour shift, compared to 180 packages using previously available methods, an increase of over 120%.<\/p>\n

And with Uber\u2019s push for true autonomous vehicles and the belief that they go hand-in-hand with freight movement, perhaps in the future you\u2019ll see drones and robots deploy from a driverless version of one of these vans.<\/p>\n

\"A.
A. Duie Pyle, a Northeast regional less-than-truckload carrier, is investing in equipment specially spec\u2019d for last-mile delivery for its Express Solutions venture.\u00a0<\/strong>Photo: A. Duie Pyle<\/em><\/p>\n<\/figcaption><\/figure>\n

Going bigger<\/h3>\n

At the other end of the spectrum, last-mile delivery is increasingly meaning larger items and more hands-on service.<\/p>\n

As delivery of e-commerce has at times strained the capacity of FedEx and UPS, the parcel carriers have increasingly been trying to do less business with big, heavy items that don\u2019t fit their automated systems. So they\u2019ve significantly hiked fees for oversize items like kayaks, office chairs or rugs. And then there are things like washing machines and gun safes that you would never look to a parcel carrier for.<\/p>\n

\u201cConsumers are increasingly buying heavy goods sight unseen,\u201d says XPO\u2019s Hitt. \u201cA large part of that is e-commerce, but there\u2019s also more omni-channel activity that doesn\u2019t happen online. For example, a consumer might research a refrigerator online, and then telephone a mall store and order the brand and model for delivery. Many retailers prefer to outsource omni-channel deliveries rather than carry the costs of fleets and drivers.\u201d<\/p>\n

A survey by business consulting firm AlixPartners on B2C trends and home delivery found that barriers to ordering large or bulky items such as furniture and appliances seem to have come down. Unwillingness to purchase appliances online fell from 38% in 2012 to just 12% in 2016. More consumers are now willing to order these large items online for delivery to the home than just a few years ago \u2013 88%, up from 62%.<\/p>\n

In the past, those large items might be delivered by a guy from your local appliance store who might get it to you next week, or shipped via LTL.<\/p>\n

But for LTL carriers, even those pulling 33-foot pups, it\u2019s tough for a Class 8 rig to get in and out of residential neighborhoods. Drivers have to avoid mailboxes, kids on bikes and overhanging tree branches. Then they have to manhandle heavy delivery items, offloading from trailers designed more for docks and street-side office deliveries, using pallet jacks to pull deliveries up steep driveways or through muddy yards.<\/p>\n

\u201cHeavy goods, in particular, require special considerations, such as whether a doorway is wide enough to accommodate a large appliance, and, of course, whether someone will be home to take receipt,\u201d Hitt says.<\/p>\n

At Texas-based LTL Central Freight Lines, drivers spend an average of 22 minutes longer at residential deliveries than business deliveries, says President Don Orr. \u201cThat\u2019s over 100% longer. And it\u2019s hard to get paid for it.\u201d That\u2019s why his company is not one that\u2019s jumping into the last-mile space.<\/p>\n

Despite the challenges, however, some LTLs (and even some truckload carriers) have been creating last-mile divisions with equipment, training, and technology developed specifically for that purpose.<\/p>\n

That\u2019s exactly what A. Duie Pyle is doing with its new Express Solutions division. It spec\u2019d out a Hino straight truck with liftgate and additional visibility and safety equipment designed specifically for last-mile delivery. The New York fleet is even diesel-electric hybrid.<\/p>\n

One of the advantages, explains Chief Operating Officer Randy Swart, is that \u201cwhen you\u2019re able to have the small trucks take some of the small freight, the larger trucks focus on the larger freight. We find we get to our customers earlier because the driver doesn\u2019t have the truck fill up with smaller deliveries. This frees us up for pickups earlier, which helps our cycle time. We deliver over 60% of our freight before noon.\u201d<\/p>\n

Other carriers, however, are looking to partner with companies already involved in last-mile delivery.<\/p>\n

\u201cWe have no interest in getting involved in final mile,\u201d said John Kenneally, vice president of transportation for Roadrunner Transportation Systems\u2019 LTL services. He made the remarks during a panel discussion of LTL carriers at the Customized Logistics and Delivery Association\u2019s fall meeting, as reported in the group\u2019s magazine. \u201cWe don\u2019t want to bring products into consumers\u2019 houses\u2026 we\u2019re good on the road and at the dock, but if you have a driveway, that\u2019s another story.\u201d<\/p>\n

On that panel, carriers including YRC, Reddaway and Roadrunner said they saw opportunities for partnerships with the association\u2019s members in areas such as \u201cwhite-glove\u201d residential deliveries, home deliveries that require quick responses to e-commerce demands, deliveries that require unique experience or equipment, and reverse logistics.<\/p>\n

At XPO Logistics, which says it\u2019s the market leader in last mile for heavy goods, all of its last-mile deliveries in North America are made by independent last-mile carriers. \u201cWe have business relationships with approximately 5,000 contractors and installation technicians in our last-mile network, which is the most capacity of any player in our space, by far,\u201d Hitt says. \u201cIn 2016, we facilitated over 12 million last-mile deliveries.\u201d<\/p>\n

But while the actual delivery may be handled by partners and contractors, Hitt says, \u201cwe\u2019re constantly investing in warehouses, staging hubs and other infrastructure. We operate from customer warehouses and retail sites, as well as 45 last-mile market delivery centers, facilitating pickup and delivery services in more than 500 markets.\u201d<\/p>\n

Truckload carriers are also getting into the game. Wisconsin-based trucking giant Schneider, for instance, offers Final Mile+, which gives shippers varying levels of custom delivery and assembly options, with proprietary tracking visibility at every stage of shipping, and a reverse logistics service to make returns easy.<\/p>\n

White-glove service<\/h3>\n

The need to work with partners especially arises when it comes to what\u2019s called \u201cwhite-glove\u201d service, where customers not only need an item delivered, but also set up or installed.<\/p>\n

\u201cWe also have a slight change in peoples\u2019 mindset from the \u2018do-it-yourselfers\u2019 to the \u2018do-it-for-me\u2019 crowd,\u201d explains AlixPartners\u2019 Mark Iamperi. \u201cThis is evident in studies on the behavior patterns of Millennials. What we\u2019re seeing is that there\u2019s increased interest in these different installation or assembly services, where there is an additional value-added-service to be performed by the driver after the actual delivery component is performed.\u201d<\/p>\n

And it\u2019s not just retail, notes Ken Manning, founder of TCG, an SMC3 company. \u201cThere are final-mile carriers that specialize in medical equipment, in technology. I know one instance where this one company has about 250 vehicles\u2026 and their drivers are trained to set up medical equipment like MRIs. That takes a great deal of skill and effort [that] an LTL carrier\u2019s not inclined to provide.\u201d<\/p>\n

Enter companies like the members of CLDA. John Benko, a former airline guy who moved into ground transportation and logistics, joined the organization in 2004 when it was the Messenger and Courier Association. He was involved in the rebranding the association as it adapted to changes in the industry, including less demand for urgent courier delivery and more demand for e-commerce and final-mile solutions. He is currently the group\u2019s president, as well as chief strategy officer at Birmingham, Alabama-based final-mile company Pace Runner.<\/p>\n

The group\u2019s members, he says, have expanded into white glove, threshold, e-commerce, LTL work, and a host of other verticals that require different and larger equipment. With the advent of Amazon and other large online retailers, E-commerce has shifted retail from bricks and mortar to online. That and the \u201cI need something immediately\u201d mentality of today\u2019s consumer have been a boon to these carriers, which operate everything from light vehicles to tractor-trailers and warehousing.<\/p>\n

Benko\u2019s own company, Pace Runners, is growing at a rate between 30 and 50%, which he calls \u201cexplosive growth.\u201d The company operates some straight trucks but primarily offers customer services via independent contractors or agents.<\/p>\n

What his company and the CLDA\u2019s members do \u201cis more boutique, more nimble\u201d than big parcel carriers and most LTLs, he says. If you\u2019re shipping via UPS and what you want to ship doesn\u2019t fit UPS tariffs or their pickup times, you simply have to take your business elsewhere. \u201cWhereas we ask the customer, \u2018When do you want us to show up? Do you need technology? How do you want us to bill you?\u2019 Because of that, e-commerce fits particularly well in our bailiwick.\u201d<\/p>\n

That kind of nimbleness is helping these smaller last-mile carriers compete against the likes of UPS and FedEx with large e-commerce shippers.<\/p>\n

Back-end Technology<\/h3>\n

The big challenge in taking advantage of opportunities in last-mile delivery is to figure out how to do it efficiently and profitably. And that\u2019s where computer technology comes in.<\/p>\n

At A. Duie Pyle, Swart says, \u201clearning and developing the technology for routing was probably the most difficult thing. Now we had to separate our freight into large and small, where before when we had just tractor-trailers, we put it all on one and routed it. Now it\u2019s separating out the freight under 400-500 pounds and routing that on the smaller trucks, and the larger freight on the other vehicles. Developing the technology to [warehouse] it and route it that way efficiently, while keeping to the delivery requirements, to the service and equipment requirements \u2026 it\u2019s quite complex.\u201d<\/p>\n

Pace Runners\u2019 Benko says today, \u201cTechnology is much more necessary than nice; 10 years ago if you had a scanning solution you were the exception to the rule. Today, very rarely are you going to pick up business if you can\u2019t provide that transparency from pickup to the end delivery point. If [as a customer] I can\u2019t see where my tennis shoes are at any point in the supply chain, I\u2019m not a happy camper.\u201d<\/p>\n

Carriers such as XPO and Schneider offer proprietary IT to allow both shipper customers and that shipper\u2019s end-user customers to stay informed and in control of the delivery experience.<\/p>\n

But there also are third-party software companies making the last mile possible.<\/p>\n

TCG focuses on the \u201ccosting\u201d and profitability aspect of the enterprise with its TCG Final Mile CIS (cost information system). It\u2019s a specialized version of the TCG system used by many LTLs, without the linehaul but with more detail in delivery options specific to final-mile operations, such as extra efforts required at the stop. The software \u201ccosts\u201d every shipment, pulling in information such as fuel consumption point to point from the electronic logging system and tolls paid through automated tolling systems such as PrePass. With that kind of data, the carrier can determine the most and least profitable customers, lanes, zip codes, etc., and figure out pricing for future bids.<\/p>\n

This helps address one of the big problems with last-mile delivery in residential areas \u2014 that the lack of density makes last-mile deliveries generally more time-consuming and costly than a traditional LTL or parcel delivery.<\/p>\n

\u201cThey could determine, for instance, that the volume of freight on Mondays and Tuesdays is greater than the rest of the week because people are ordering stuff on weekends, so they might have a different price for Monday and Tuesday deliveries than for Thursday or Friday deliveries. If they\u2019ve got the data and have it organized in the proper way, then they can make those determinations,\u201d says TCG\u2019s Manning.<\/p>\n

Paragon, which is based in the UK but offers its Paragon HDX last-mile fulfillment technology in the U.S. and other countries, notes that according to a consumer survey last year by OC&C, the shift to e-commerce is increasing the cost to fulfill dramatically, with a $45 item now costing $15 for a two-man delivery to fulfill.<\/p>\n

\u201cMaking small-volume deliveries to a large number of different locations, next day or even same day, can make a retailer\u2019s delivery operation very costly,\u201d says Will Salter, CEO of Paragon. \u201cIn the past, retailers were able to dictate when a customer received deliveries. Now it\u2019s the other way around \u2014 customers tend to drive the service levels\u2026 want to choose the day and time window, and are keen to see that at the point of sale before they commit to buy.<\/p>\n

\u201cAs soon as you make a promise to deliver at a certain time, you\u2019re introducing restrictions into the whole planning process and making it more difficult\u2026 The whole thing is balancing profitability with customer choice and convenience.\u201d<\/p>\n

This is where that back-end technology comes in.<\/p>\n

\u201cThe biggest change from a technology point of view is moving upstream when you\u2019re considering logistics decisions,\u201d explains Brian Larwig, vice president and general manager of optimization at TMW, which offers Appian final-mile software.<\/p>\n

Today, transportation systems can actually be incorporated into the online transaction, whether on the e-commerce site or perhaps on the salesperson\u2019s tablet at the local retail store. If you order a dishwasher, Larwig explains, \u201cas someone\u2019s placing that order, you can hit the transportation optimization systems to estimate transportation costs or optimize your network as you go, so you can see how impactful that order\u2019s going to be on your business and whoever\u2019s handling the distribution of it.\u201d<\/p>\n

Taking that a step further, he says, the e-commerce site could use the optimization software and return the five most optimal windows for free delivery. \u201cIf none of those works, the end user can choose other options \u2014 maybe with various costs associated with them because they fall into areas of your\u00a0 network that cost you more.\u201d<\/p>\n

The idea, he says, is \u201cyou\u2019re always building an optimal network with every order that comes in.\u201d<\/p>\n

by Deborah Lockridge<\/a><\/p>\n

Source: https:\/\/www.fleetforward.com<\/a><\/p>\n

FLEET MANAGEMENT AUDIT<\/h3>\n

Fleet management is the use of a set of vehicles in order to provide services to a third-party, or to perform a task for our organization, in the most efficient and productive manner with a determined level of service and cost.<\/p>\n

Fleet management activities are shown in the following graph 1:<\/p>\n

\"fleet<\/p>\n

Graph 1: fleet management activities<\/p>\n

The proposal audit analyses and assesses all fleet management activities shown in the graph 1, and its main goals are:<\/p>\n