Carriers taking last-mile transportation in house

The inexorable rise of e-commerce sales, spurred on year in and year out by an increasing number of consumers forgoing brick and mortar shopping for the convenience of internet commerce, continues unabated. This year alone, online shoppers are expected to spend around $270 billion on internet purchases, according to Forrester’s online forecast.

Due to a number of delivery challenges for the typical LTL carrier, this influx of online orders has necessitated growth in the last-mile transportation industry. These B-to-C moves are inherently more challenging for carriers, so they have historically contracted last-mile delivery services to a third party.

There’s been a lot of talk about the Uberization of the last-mile portion of the supply chain, and XPO Logistics is just one of the carriers embracing this trend. This development would mean LTL carriers would further embrace the third-party, last-mile equation. But the last-mile industry is too complex, and shipment visibility is too much of a prized piece of the puzzle, for all carriers to fully embrace this development. Last-mile transportation is currently incredibly fragmented, and as in any relatively new business, there are a number of early adopters participating in the last-mile arena that really have no specialized training. LTL carriers need to pay specific attention to maintaining a relationship with a trusted last-mile provider.

But as the share of online sales grows – along with the number of providers – it is true that some LTL carriers have been taking a closer look at the amount of business they send to third-parties. These carriers want to know whether investing in last-mile services will be worth it in the long run. Of course, a decision to bring last-mile moves in-house can’t be taken lightly; in addition to the numerous logistical challenges LTL carriers would have to solve, there’s also the question of pricing. Carriers would have to develop their own pricing scheme, as there are no standardized rating calculations for last-mile moves. Any LTL carrier creating a last-mile division would face an uphill battle.

Even with all that said, the fact remains that for some carriers, moving to an in-house last-mile solution could pay big dividends. Once last-mile is integrated into a carrier’s business, they would have greater visibility across the entire supply chain, engendering increased confidence in clients across the board.

Transportation Costing Group provides activity-based costing tools to help companies find the right answers, in order to produce optimized results for accurate and credible costs at the shipment level. TCG’s tools can provide a deep look into the profitability of a company’s operations; by taking a close look at their business, carrier representatives can use TCG tools to weigh the pros and cons of jumping into the last-mile pool.

Speakers at SMC³’s Jump Start 2018, held in Atlanta from January 22-24, will fully dissect and analyze the last-mile trend. Sign up today at http://www.smc3jumpstart.com.