Last-Mile Delivery Carriers - How It Works

Posted on: July 29, 2020

There’s no doubt that today’s consumers expect fast and accurate shipping every time they shop online. And because of COVID and stay-at-home orders, an increasing number of Canadians are now buying everything online, which creates new challenges for last-mile delivery carriers nationwide. 

Before the COVID-19 pandemic, it was estimated that the same-day delivery market will be worth USD 9.6 billion by 2025, a substantial increase from a market worth of USD 3.5 billion in 2017. In the current situation, those figures can only go up. 

The market is mainly driven by the increasing demand of e-commerce and the rise in disposable income in households located in urbanized areas. Thanks to good infrastructure and innovative techniques that allow carriers to process and deliver the orders within one or two days, North America currently has the highest shares of the market. 

But consumer expectations are also growing. 93% of consumers expect to be able to check on their orders at all times - from the moment they buy the products until the products arrive at their front doors. And 47% of consumers say that they won’t order again from a brand that lacks order tracking visibility. 

As more consumers want faster deliveries, the last leg of the entire shipping process - last-mile delivery - becomes the most challenging part of the supply chain management. 

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What Is Last-Mile Delivery?

Last-mile delivery is a term used in the logistics industry to describe the last part of the delivery process, when a package is transported from a hub to its final destination. 

Last-mile delivery is a cost-effective way of delivering packages in a short amount of time. Shipping couriers pick up the packages from retailers/wholesalers/suppliers and transfer them to a regional/local hub, where the packages are processed. The packages are then picked up by a carrier and delivered to their intended destination. 

Why Is Last-Mile Delivery Important For Businesses? 

Last-mile delivery is an efficient and cost-effective way of getting your packages to your customers. This type of service ensures that your customers receive their packages in a short amount of time, which is important for creating and maintaining customer loyalty

If your customers don’t receive their packages fast enough, chances are they’ll look for another seller next time they want to buy something. 

Amazon made two-day shipping the new norm, and now other retailers have to fall in line in order to maintain their customer base. Offering fast or free shipping are now considered great marketing strategies to attract new clients because they can help you generate repeat purchases. 

Can Last-Mile Delivery Help The Fulfillment Industry? 

Last-mile delivery completely changed the fulfillment industry. Order fulfillment means completing the entire process of receiving an order, processing it, packing the products, picking up the order, and delivering it to end customers. 

When a business uses a fulfillment agency that offers last-mile delivery, it ensures that its orders will arrive at their destination as quickly as possible. You could argue that modern fulfillment agencies need last-mile delivery to stay competitive and attract clients. 

How Much Does Last-Mile Cost? 

Last-mile delivery is often the most expensive part of the shipping process, accounting for up to 41% of the total supply chain costs. So almost half of what businesses spend on shipping and supply chain costs account for the final mile. That’s more than most businesses spend on warehousing. 

So do companies support the cost on their own? Not all the time. 

Some businesses pass the cost on to the consumer, but that can sometimes backfire. Consumers expect to receive their packages at home or at work, but they might be reluctant to pay extra for the shipping. High shipping costs are the main reason for customer dissatisfaction, closely followed by a lack of same-day delivery service and late deliveries. 

But on the other hand, businesses that offer cheap or free last-mile delivery generate repeat purchases, so they increase their customers’ lifetime value (CLV). 

So some businesses support the entire cost of last-mile delivery on their own to attract and retain a lot of customers. And that makes sense if you take into account that the cost of last-mile delivery was only $10.10 in 2018. If your company’s customer lifetime value is high, spending $10 on delivery to get more customers will be worth it.

Last-Mile Delivery Frequently Asked Questions (FAQ)

What Are Last-Mile Carriers?

Last-mile carriers are shipping companies that pick up a package from the nearest hub and deliver it to its final destination. They fulfill the last segment of the shipping process and deliver the order to the end client.

How Does Last-Mile Delivery Help With Fast Shipping?

Last-mile delivery shortens the time it takes to get an order delivered to the right address. This type of delivery directly affects a company’s ability to deliver packages quickly and without spending too much.

Instead of shipping their products from a warehouse directly to a client, businesses hand their packages to a shipping courier. The courier takes the packages to a local hub where they are sorted according to their destination.

Next, another courier will pick up all the packages that travel in the same direction and deliver them to a regional/local hub that’s close to their receiver’s address. And finally, another courier will pick up the package from the last hub and deliver it to the end user.

This process greatly reduces the shipping cost and shortens transit times. Canadian carriers regularly send couriers across the nation, so some packages can leave toward their destination in as little as one or two hours after pickup.

What Is First-Mile Delivery?

First-mile delivery is the first step in the shipping process. This is when businesses hand their packages to a shipping courier.

What Is The Last-Mile Challenge?

The process of cutting shipping costs and improving the efficiency of last-mile deliveries is commonly known as the “last-mile challenge”.

How Can I Improve My Last-Mile Delivery?

You can improve your last-mile delivery service by lowering your costs and improving your transit speeds. This can be achieved by using multiple warehouses, partnering with a 3PL company like Ship Expert, or being closer to your customers.

Ship Expert And Last-Mile Delivery

At Ship Expert, we offer some of the best last-mile delivery services in the country. We bring down the shipping costs and speed up the transit time of every order. 

When you contact us to deliver your package, the first thing we do is getting quotes from all the major carriers. Then, we select the carrier that offers the best value on the buck and pass all the savings on to you. This way, you and your customers get fast and affordable shipping on every order. 

Ship Expert also offers real-time order tracking for both you and your customers. You’ll receive an estimated arrival time and the package’s tracking information, so you’ll know where your package is at all times. 

And best of all, we offer volume discounts that are normally reserved for high volume businesses, no matter how many packages you send. 

Create an account with Ship Expert and access our volume discounts. 

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