What Are The Best Ways to Minimize Last-Mile Delivery Costs?

Redbird Logistics Services > Supply Chain > What Are The Best Ways to Minimize Last-Mile Delivery Costs?

Last-mile delivery represents the “final miles” of the distribution process. It starts at the fulfillment center and ends at the customer’s door. It’s no secret that online retail and eCommerce has driven this type of home delivery service to surge around the world. As a result of it’s increasing popularity, last-mile delivery has become increasingly expected by consumers. When paired with the increase in internet retail sales that jumped from just over $290 billion in 2008 to $1.6 trillion in 2018, it’s no surprise why this type of delivery continues to grow in demand.

The global last-mile delivery market size has reached over $3 trillion in 2018 and is expected to exceed $5.5 trillion by 2025. Over a period of just 18 months, between 2017 and 2018, B2B last-mile delivery demand has increased by 33%, whereas B2C demand increased by 67%. 

To make things even more interesting, 48% of customers expect next-day delivery, while 23% demand same-day deliveries. And if in 2012, people were willing to wait a maximum of 5.5 days for their packages to be delivered, in 2018 that number is down to 4.1. Only about 50% of customers would be willing to wait a full week before becoming disgruntled. 

What’s more, it was revealed that almost two thirds (63%) of online buyers abandon their shopping carts due to high shipping costs. Some 36% do so because “orders take forever to ship.” Taking the brunt of delivery costs will, however, erode the company’s profit margins. Finding a balance that meets customer expectations, all the while maintaining their profit margins should be on every retailer’s mind. In fact, profits could decline by 26% over the coming years unless companies figure out ways to minimize last-mile delivery costs and optimize their process. 

Below are several ways to cut costs and optimize your last-mile logistics without sacrificing customer service. 

Workflow Automation

Automating your last-mile delivery system is a sure way to streamline your operations and boost overall profitability. A transport management system (TMS), for example, can provide a multitude of benefits in terms of freight optimization, inventory reduction, GPS tracking capabilities, billing and processing, and more. Another example of optimization software is a warehouse management system (WMS), that will tackle the storing part of the supply chain.  


Another way to minimize cost is by investing in warehouses in urban areas, close to your end-users. Instead of using multiple distribution channels, urban warehouses such as sun warehouses or cross-docking can be found in highly populated areas that provide for quick and convenient shipping. Your goods will be transported from the manufacturer or other production sites and stored at these places from where they will be delivered to your customers. This strategy will help lower costs while improving delivery speeds. 

Route Optimization

Traveling through properly optimized routes is one of the most efficient ways to reduce last-mile delivery costs. Route optimization software will determine the most optimal routes and will assign tasks based on traffic conditions, estimated arrival times, time windows, volumes, number of vehicles, load distribution, and more. Having access to the best delivery routes will reduce operational costs and fuel consumption by allocating your time and resources in the most efficient manner. 

Reverse Logistics

Reverse logistics stands for the flow of goods in the opposite direction towards its point of origin. It starts with the end-user and can find its way back to the retailer, manufacturer, or, in some cases, as raw materials via recycling. Put simply, reverse logistics happens when a buyer, for whatever reason, returns a product. When implemented correctly, this process can make the entire supply chain faster and more cost-efficient

Also known as a “green logistics system”, reverse logistics will provide some eco-friendly benefits. With a returns management plan in place, companies can benefit from a secondary ROI from every product entering the reverse flow. It will also help decrease capital tied into inventory and will enhance the overall transparency of the supply chain. Likewise, it will help boost productivity and growth by controlling the efficient day-to-day operations of the supply chain position. 

Reverse logistics also lowers your overall carbon footprint and improves the public’s brand perception due to environmental commitment. Likewise, it will increase overall customer satisfaction and loyalty by focusing on their needs and requirements. 

Excellent Resource Utilization

Doing your due diligence and being industrious with your resources is a major step forward in making your last-mile delivery process more efficient and sustainable. This will result in better turnaround times, faster deliveries, fewer detention times, and better vehicle utilization. 

When you’re managing deliveries by assigning the best available drivers, you can cut costs and get better control over your fleet. You can also use crowdsources delivery services without having to buy additional vehicles or hire additional staff, particularly during peak seasons. 

The same thing can also be said about the vehicles they choose to use for particular shipments that account for specific traffic conditions, geographical locations, or exact purposes. For example, cars and motorbikes may be a better alternative when shipping goods in urban areas that often have traffic congestion or parking limitations. Trucks and vans, on the other hand, may fare better in suburbs and rural areas. Choosing the right vehicle for the job, will help you optimize your Vehicle Fill Rate (VFR), reduce costs, and the total time spent in transit. 

Outsourcing Your Last-Mile Logistics

Working with a third-party logistics provider will eliminate the need for you to invest in the delivery software, warehouse space, transportation, and the manpower needed to handle all final mile delivery processes. This, in turn, will allow you to focus on other core competencies of your business such as customer service. 

By simply outsourcing your warehousing, you will not only cut costs by a significant margin but you will also improve your inventory management. It will help you avoid many of the costs associated with purchasing, implementing, and maintaining all the advanced tracking and optimization software needed in last-mile logistics. Finally, a 3PL will provide you with valuable insights and best practices that will further lower costs within your supply chain. 

By collaborating with a reliable logistics company, you will save time and money so you can scale your business easier than before. 

Redbird Logistics Services will help you achieve this goal. Our logistics services and supply chain solutions will be sure to maximize the efficiency of your supply chain, network optimization, and increase customer satisfaction. 

If you’re looking for a top logistics company, Redbird Logistics Services can help!!  Contact us today!

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