For Last Mile Delivery, it’s Time to Think About the 2022 Holiday Season
For last mile delivery companies, now is prime time to start preparing for what's expected to be a busy holiday season. In addition to continued growth in online sales, there are a lot of other factors to consider, including how to address extenuating factors such as gas prices, labor shortages, and continued supply chain delays that are destined to impact operations.
Despite inflation, U.S. retail holiday sales are expected to rise 3.3 percent this year, with e-commerce anticipated to grow 15.5 percent year-over-year, according to Insider Intelligence. With more e-commerce sales comes more pressure on retailers and distributors to make sure they’re not leaving their customers in the lurch during peak shopping and delivery season.
This year those pressures come in many forms, according to DispatchTrack’s 2022 Last Mile Holiday Perspective survey of logistics professionals. Despite all the talk about oversupply, nearly two-thirds of those surveyed said they were concerned about shortages since supply chain hiccups still persist. Plus there are worries about delays beyond their control, continued market unpredictability, unknowns that could cause upheaval, and how to handle the business impact of yet another potential wave of COVID outbreaks.
Costs are another major challenge. With rising prices across the board, 92 percent of those surveyed said they expected their operating costs to spike this year — and that's before they considered the impact of rising fuel prices. Even though gas prices have recently dropped to less than $4 per gallon after rising to more than $5 per gallon in June, according to AAA, these costs are still more than they were during the 2021 holiday season, when the average was just $3.39 a gallon.
Planning Ahead, Yet Questions Remain
Despite two years of obstacles stemming from the pandemic that impacted holiday buying and delivery, the Last Mile Holiday Perspective found that only one in three logistics companies are planning for what may lie ahead in the coming months. Of these businesses, about 40 percent are renting warehouse space and/or trucks to address fulfillment issues. And about half have either invested in new technology or expanded their existing technology to help them be more efficient and flexible in adapting to change.
While some are taking these proactive steps, many variables remain outside of their control. For example, according to the American Trucking Association, there's a shortage of 80,000 drivers. Driver shortages ranked as a top concern for logistics professionals, and 64 percent are just as concerned about driver shortages this year compared to last. There’s also the worry of increasing salaries to attract and retain drivers. Average wages increased nearly 11 percent to attract and retain new drivers to fill the gap, which doesn’t include sign-on bonuses and other incentives being offered. Then there's uncertainty about inventory making its way through the supply chain in time to meet delivery promises. And once the product reaches the last mile, there are unpredictable traffic and weather problems that can disrupt delivery on any given day. That’s just part of the reason that the vast majority of logistics professionals (82 percent) are concerned about missing delivery windows this year.
3 Tips to Minimize the Impact of Uncertainties
Given the current state of flux, last mile delivery companies have no choice but to expect the unexpected. Though this may seem easier said than done, there are three tips that can help address many of the challenges that impact their operations and bottom line:
- Optimize routes to maximize truck capacities. Given the complexity of the routes that are being driven each day, delivery route optimization is critical to not only ensure deliveries are made on time, but to also maximize route and truck capacities. A powerful technology solution for optimization should design routes that take into account traffic patterns, customer time window requests, variations in driver speed, and service time — all without losing efficiency. Creating efficient routes means minimizing miles per stop and backtracking so you can save on gas expenditures, reduce wear and tear on vehicles, and get more out of your existing delivery capacity. It also enables you to have additional truck capacity to make extra stops in case any unexpected obstacles arise.
- Keep customers informed. Last mile delivery schedules can be unpredictable, which means there’s always a risk that customers won’t be home to accept deliveries. When you open lines of communication — using texts and emails to keep customers informed every step of the way, and giving them ways to track their orders in real time — customers are more likely to be home when the delivery truck arrives. Consider adding two-way communications capabilities so customers can easily reach out if changes occur that prevent them from being home when the driver arrives. By offering multiple channels of communication, you can minimize re-delivery attempts, reducing costs even further and boosting customer satisfaction by consistently delivering at the right time.
- Get a real-time view into deliveries. Knowing where your trucks are at any given time can help circumvent delivery problems. Real-time visibility enables you to spot potential delays, whether they’re from traffic, unexpected delivery disruptions, or other factors. With a variety of communication channels in place, you can then proactively reach out to customers to adjust or reschedule, reducing labor, gas, and even inventory costs related to re-delivery.
It’s impossible to predict and plan for every scenario that could occur and impact logistics in the coming months. However, taking steps to limit miles driven, improving communication with customers, and keeping an eye on operations in real time, last mile delivery companies can reduce the risk of being the grinch that spoils gift-giving this holiday season.
Shailu Satish is the co-founder and COO of DispatchTrack, the leading provider of right-time delivery management software.
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