Closing the logistics loop with last-mile delivery

Did you know that the final – and typically by far the shortest – leg of your cargo’s journey accounts for a whopping 53% of total shipping costs in B2C supply chains? Which is why it pays to streamline that “last mile” as much as possible to save costs.

This article explores the crucial role of last-mile delivery in the supply chain, the e-commerce-driven challenges it presents, and how businesses can optimise last-mile logistics.

What is last-mile delivery?

In a typical supply chain, goods move through multiple stages: from sourcing and manufacturing to storage and transportation. The last mile is the concluding link in this chain, bridging the warehouse and the end customer.

Last-mile delivery refers to the final step in the delivery process, where goods go from the distribution centre or transportation hub nearest to their destination to the end customer — typically the customer’s doorstep. The primary focus is on quick and accurate delivery .

The unique demands of last-mile delivery sets it apart from the prior stages:

• Shorter distances: Unlike earlier stages that may cover thousands of miles, the last “mile” may span just a few kilometres, depending on the distance from the local distribution centre to the final customer.
• High frequency, high flexibility: In urban areas, last mile operations involve frequent drop-offs and multiple delivery points per route, requiring careful planning and flexibility.
• Focus on fast, precise delivery: Time-sensitive deliveries are common in last-mile logistics, with many customers expecting same-day or next-day service.

Why last-mile delivery matters for retailers and businesses?

Unlike other steps in the supply chain, the last mile directly interfaces with the customer.

Being the final step before customers receive their orders, any delays, difficulties, or inconsistencies at this stage can significantly affect consumer satisfaction, making the last mile important for retailers and businesses to optimise and execute efficiently.

The last mile is also the most cost-intensive stage in the delivery process, accounting for approximately 53% of total shipping costs in B2C supply chains.

It therefore goes without saying that making the last mile as efficient and reliable as possible is extremely critical to control costs and deliver a seamless customer experience that can drive loyalty and growth.

E-commerce growth and last-mile demands

The rapid expansion of e-commerce has transformed last-mile delivery from merely a logistical final step into a critical customer touchpoint.

Online shopping has expanded consumer access to a wide variety of goods, creating a high demand for efficient delivery solutions, often with short turnaround times. This shift has intensified the need for better last-mile solutions that prioritise speed, resilience, and visibility.

Evolving consumer expectations from the last mile

Today’s consumers expect fast, reliable, and flexible delivery options as standard.

Flexibility is the key here, as customers often want deliveries at times that suit their busy lives — be it weekends, evenings, or specific hours of the day. The popularity of same-day and next-day delivery options highlights the need for speed, while preferences for particular time slots and weekend deliveries reflect a desire for convenience.

To stay competitive, businesses are offering these services despite the operational pressures they bring. Meeting heightened consumer expectations comes with its challenges, nevertheless:

• Higher costs: The demand for faster, flexible deliveries has increased last-mile costs, forcing businesses to find ways to balance speed with cost-efficiency.
• Need for technology: Rising customer expectations around transparency and speed have led to a greater emphasis on real-time tracking, which adds another layer of complexity to the last mile, necessitating companies to adapt and innovate.

Last-mile logistics: Key challenges & solutions

Traffic and urban density

Delivering goods in high-density urban areas poses significant challenges in last-mile delivery due to traffic congestion and limited access points. These issues lead to increased delivery times and operational inefficiencies. To combat these hurdles, consider leveraging:

• Micro-hubs: Establish smaller distribution centres closer to urban areas that can help reduce delivery distances and improve efficiency.
• Local partnerships: Collaborate with regional couriers or delivery partners to handle the last mile, thereby utilising their expertise in navigating congested routes and local regulations.

Customer expectations and failed deliveries

As consumer expectations continue to rise, so do the rates of failed delivery attempts. These failures not only affect customers negatively but also add to operational costs, as businesses must reroute packages and handle returns. To manage this, try:

• Better tracking and communication: Provide customers with real-time, last-mile tracking updates to manage expectations and reduce unsuccessful delivery attempts.
• Flexible delivery options: Offer multiple delivery options, such as time slots or convenient pickup locations, to accommodate diverse customer preferences.

Handling returns

Managing returns is crucial for customer satisfaction and retention. As e-commerce continues to grow, so do the volume of returns and the complexities of reverse logistics. To mitigate this, consider:

• Streamlining processes: Implement efficient return processes, such as online return portals and easy-to-use shipping labels, to reduce shipping costs and expedite returns.
• Reverse logistics partnerships: Work with specialised reverse logistics providers to help optimise the return process and reduce costs.

Tip: Integrating first- and middle-mile shipping and storage solutions with your existing e-commerce platforms (e.g. Shopify, Bigcommerce, and Salesforce Commerce Cloud) may be easier than you think. Read Unlocking last-mile shipping solutions with Maersk: Myths and realities to find out more.

Streamlining the last mile with technology

Adopting technology-driven solutions is becoming increasingly important for overcoming last-mile challenges.

Innovations like route optimisation software can enhance delivery efficiency by reducing travel distances and times. Exploring alternative transport modes, such as electric vehicles or drones, can help reduce the environmental impacts while addressing urban delivery constraints. Providing regular, real-time updates to customers can help manage expectations and improve experience while reducing costs and saving time.

Future outlook: Why last-mile delivery matters?

The last mile of delivery has become a race against time and for optimal customer experience.

When customers receive their orders on time and in good condition, they are more likely to return for future purchases and recommend the brand to others. Conversely, delays and other last-mile complications can lead to dissatisfaction and negatively impact a brand’s reputation.

As e-commerce continues to grow, the importance of last-mile delivery will only increase. Businesses must invest in effective last-mile solutions to streamline their logistics operations. Working with specialists can help drive innovation, providing you with the expertise to navigate the complexities of the last-mile supply chain and implement the most cost-effective solutions.

With our wide network of international carriers and strategic partnerships, unique blend of cutting-edge technology, and deep expertise in shipping logistics, Maersk is ideally placed to empower brands and retailers to pursue the most cost-effective last-mile strategy and integrate this with existing e-commerce platforms. Here’s more on how you can optimise your end-to-end e-commerce logistics with order fulfilment, last-mile and cross-border delivery.