Last-Mile Logistics: Optimizing Efficiency in Urban Deliveries

The last mile of a shipment may be the shortest portion of its trip, but it is often the most important. When the final mile doesn’t go well, it can result in missed delivery windows, disappointed customers, and product returns, which can increase costs.

The final mile can also be the most difficult to manage.

“The last mile is where everything comes together or falls apart,” said Nathaniel Klein, COO, Sun Logistics. “For LTL [less than truckload] deliveries in cities, the last mile is like navigating a maze – narrow streets, tight delivery windows, and diverse receiving hours make it a logistical puzzle.”

Although challenging, employing the following four strategies can help urban delivery fleets make last-mile deliveries go smoothly.

Why Is the Last Mile So Important?

With the growth of eCommerce, consumers have grown accustomed to getting packages dropped at their doors on the day they were promised. The last mile matters, because it’s the only leg of a shipment visible to consumers, and a missed delivery, can quickly shift their attitude about a company, no matter how much they like the product they’ve received.

“The final mile is crucial because it is often what the customer remembers most often; due to cognitive bias, the customer will remember the most recent experience better than past experiences,” Klein said.

Joel Eigege, VP Supply Chain Operations, Ryder Last Mile, said a missed delivery window can cause consumers to spend their dollars elsewhere.

“For us at Ryder Last Mile, there is also the element of ‘crossing the threshold,’ where you are delivering not just to a doorstep but into consumers’ homes and their personal, cherished spaces,” Eigege said. “In many instances, this will be the only human interaction that the consumer has in the retail experience, so it can present a ‘make or break’ moment for consumers that may impact their brand loyalty and willingness to spend with a brand again.”

Strategy #1: Solve for Capacity and Fluctuating Demand

One of the biggest challenges last-mile delivery companies face is fluctuations in demand.

“Final mile volumes tend to be very seasonal and change daily within a week. Economic changes in consumer spending behavior shifting back toward experiences post-pandemic also mean that more retailers are relying on promotional windows to meet market expectations,” Eigege explained. “These tend to create short-term needs for increased capacity anywhere from 20% to 50% above normal in a matter of weeks.”

The massive increase in online orders during the pandemic is a prime example of a sudden uptick in demand. When this happened, many delivery companies didn’t have the truck capacity to handle it. Eigege said Ryder’s strategy for managing through it was to bring on supplemental resources.

“Through the pandemic, the increased demand for final mile deliveries stretched the industry,” he said. “At Ryder Last Mile, we attribute a lot of our success to the strong internal and external partnerships we had that allowed us to ramp up the number of trucks and drive teams quickly to support customer needs.”

When looking for a partner to help handle increased demand, Eigege said the key elements to look for are technology, delivery cost, and a focus on the customer experience.

“If someone else can help create additional value for you or help reduce cost, it is worth evaluating,” he said.

Strategy #2: Use Data and Technology to Plan Better

Last-mile delivery challenges are unavoidable, but Klein and Eigege said planning can help urban delivery fleets react to them better.

“Don't just react to problems – anticipate them! Analyze past challenges to understand root causes and proactively develop solutions,” Klein recommends. “This can significantly improve efficiency and customer satisfaction in the complex urban LTL environment.” 

Eigege said data and technology are essential to a continual planning process.

“This is where the use of data and technology can help account for different factors such as traffic, in-home time, and any restrictions that might sub-optimize a route,” he said. “Using technology for tracking and communication also helps keep your teams focused on proper execution. At Ryder, we focus on route optimization, predictive analytics, and consumer-centric communication and visibility.”

Sun Logistics also relies on technology to automate processes and increase precision and data to guide them to the right solution.

“We have integrated our systems and processes with big data to remove administrative work, use predictive models, and automate processes, such as appointments, routing, and shipment entry, to ensure we can provide the highest level of service in the most efficient and profitable way,” he said.

Beyond using technology to better manage last-mile logistics, delivery companies should also consider the technology they offer their customers.

“In today’s environment, it is important to understand how consumers’ experiences with technology outside of your space impacts their experience within your space,” Eigege said. “Consumers are conditioned to receive an enhanced level of visibility to their order while in progress and increasingly expect to have a 100% digital experience or the flexibility to do so, should they choose.”

For instance, Ryder offers RyderView, a self-scheduling, customer and service-provider visibility and communication application. The app offers flexibility in scheduling and an “Uber-like” experience for customers on the day of delivery.

“Technology is a differentiator for us that can lead to a more delightful customer experience,” Eigege said.

Strategy #3: Reimagine Origin Points and Destinations

Another strategy Eigege recommends is thinking big picture about diversifying origin points and clustering stops.

Although drive miles are often low in urban areas, Eigege said drive time can be incredibly expensive — and for that reason, urban delivery companies should work to concentrate the number of stops in service areas.

“Route density, or keeping stops close together on a route, can impact productivity,” he said. “As you grow, fleets should look to grow tall instead of wide. The more business you can obtain in a market or even a ZIP code, the more density of stops you will have, which helps optimize the final mile.”

Strategy #4: Retain Talent and Knowledge

Focusing on employee engagement and retention might not seem like a strategy for improving last-mile delivery logistics, but Eigege said it can prevent delivery companies from losing critical knowledge for executing smooth deliveries.

“It is important to build a culture that supports engagement and retention at all points within the final mile,” Eigege said. “This is increasingly important with your dispatch and driver teams as their knowledge of local traffic, restricted-access buildings, and the overall customer experience you want to deliver improves with time. Some of this can be solved with technology, so ensuring you are utilizing the right route optimization and even predictive analytics software is key. There is no substitute for human experience and a high-functioning team – invest in your people!”

Klein agrees that optimizing last-mile logistics relies on a blend of people, processes, and technology.

“The combination of technology, process, the correct incentives, and culture has allowed us to execute in the most challenging zips of NYC with the highest level of service,” he said.