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Fast Mile Revolution in the Last Mile Industry

Until a year ago, customers delighted in next day courier service for their online orders. However, with the multifold rise in the volume of necessity-based products during the COVID-19 pandemic, the customer demand window has shrunk from the next day to the same day and even 30 minutes in case of certain deliveries.

Fast Mile Revolution in the Last Mile Industry

Author: Vikrant, Head of Operations

Until a year ago, customers delighted in next day courier service for their online orders. However, with the multifold rise in the volume of necessity-based products during the COVID-19 pandemic, the customer demand window has shrunk from the next day to the same day and even 30 minutes in case of certain deliveries. Customers are becoming increasingly impatient and want delivery in the shortest possible time.
If e-commerce companies can’t fulfill customers’ expectations using courier services, they are ready to shop in brick-and-mortar stores to meet their urgent delivery needs. There is no doubt that the demand patterns have changed drastically since the pandemic across the globe, including in the GCC market. The goal of e-commerce companies is to gain customers over physical stores by offering on-demand delivery to customers in the shortest amount of time. It has become a major competitive differentiator for them.
EZ Dubai Report 2021 highlights that the e-commerce market in the MENA region grew by 15% from 2020 to USD 31.7 billion in 2021. It is estimated to become a USD 18 billion market in absolute value terms over 2021-2025. UAE is at the forefront of this massive growth in the MENA region. The UAE market size reached USD 5 billion in 2021, nearly doubling from 2020, and is expected to surpass USD 8 billion by 2025. Consumer demographic and behavior are the primary driving factors behind UAE’s e-commerce growth:
  • 22% of UAE’s population is below the age of 25, with one of the highest rates of internet usage, not only in the GCC but globally.
  • 34% of UAE consumers shop online weekly.
  • UAE has a higher online transaction size on average (USD 122 in 2019-20) as compared to both emerging (USD 22) and mature e-commerce markets (USD 76).
  • More consumers purchased online across all categories during 2021 as compared to 2020, with an average of 75% of people typically purchasing online in 2021 vs 72% in 2020.
With GCC driving the e-commerce boom in the Middle East, local 3PL logistics companies and delivery partners also now face a herculean task to manage same-day or rather immediate deliveries with complete control of the cost. This had led Jeebly to revolutionize the category by changing its company DNA by calling itself a ‘Fast Mile Delivery’ company rather than the Last Mile delivery company. Jeebly CEO Raman Pathak envisages a paradigm shift in the business processes of e-commerce logistics and an increase in the adoption of cutting-edge tech-enabled processes to overcome the limitations of traditional operational logistics.

Challenges That Come Into Focus As Customers Expect Same-Day Delivery

1. Ineffective Routing Solution

Despite the availability of automated routing solutions, many last mile solutions providers rely on the drivers for their ground-level knowledge of the delivery location. As a result, drivers try to optimize self-projected routing solutions. The manual routing process makes it difficult to get visibility across 40-50 delivery locations.
Even if the logistics companies use the cloud routing software, it may not take into consideration real-time conditions such as traffic, weather, road closures, etc. The route mapping tool may also miss situations where a driver can just walk across the road to the delivery point, but the vehicular route might show a U-turn probably a few hundred meters away. Such inefficient route planning not only increases the turnaround time of delivery but also undermines the utility of cloud routing systems. And that’s not all, as customers also demand the convenience of last mile tracking so they can stay updated about the exact location of the shipment.

2. Incorrect Delivery Address

Most courier service companies have system integration with e-commerce ordering platforms to receive customer details and addresses. If the address is incorrect or incomplete, it leads to more miles, time, effort, and cost for the entire ecosystem, especially for the last mile solutions providers.

3. Shrinking Turnaround Time (TAT)

Increased demand for the same-day delivery tagged alongside an increase in vehicular traffic and congestion works against TAT. The security process at entrance gates in urban residential and commercial areas are a few more roadblocks that come in the way of the last mile solutions provider’s success.

4. Just In Time (JIT) Inventory Process

The concepts of JIT and Kanban made Toyota a world-renowned success. The supply chain industry has tried implementing JIT to cut down idle inventory at each leg. However, the new wave of consumerism via online platforms along with same-day delivery has compelled e-commerce platforms to store more inventories, especially for fast-moving items. This leads to additional cost, forecasting time, storage requirements as well as inefficient delivery tracking for the entire value chain, undermining the advantages of JIT.

Agile, Flexible, And Scalable Solutions To Fast Track The Fast Mile Deliveries

1. Effective Route Modeling

It is imperative that last mile solutions providers forecast and plan their routes efficiently to optimize deliveries. Deploying cloud-based route planning software or online tools for vehicle and performance tracking in real-time and add-on capabilities such as geo-fencing and off-route alerts can help optimize the overall delivery performance.

2. Real-Time Shipment Scheduling

Location scheduling and last mile delivery tracking by customers ensure their availability at the delivery location thereby reducing the bad address attempts. However, companies must use this feature judiciously because a zone change by the customer can still lead to confusion and delayed delivery. One of the ways to handle this scenario is to allow customers to update their location before the consignment is out for delivery (OFD). This will massively improve fast mile delivery.

3. Alternate Delivery Locations

Amazon has leased 39 car parking services in central London to convert them into micro hubs. The e-commerce giant also offers Amazon Hub Locker facility in certain US locations for free pick-up and drop-off service for its customers. These are brilliant examples of alternate delivery locations.

Alternate delivery locations such as micro hubs, local stores, or even drop boxes can convert the last mile into fast mile delivery. It is a quicker option but likely to incur additional costs to the company. Hence, logistics companies should adopt this approach based on the success- improvement ratio.

4. Auto Dispatching and Segregation

Manual segregation and dispatching of consignments, especially of bulk volume, make it challenging to stay abreast with swift geopolitical changes. The software-based dispatching system automates the entire process, saves time, and provides a consistent fast mile delivery matrix. However, it is recommended for logistics companies to do their homework in terms of capacity planning layout and volumetric measurements of shipments for auto dispatching.

5. Last Mile Crowdsourcing

The core success of last mile delivery lies in the density of deliveries as it saves the travel time and dead kilometers significantly. So, the logistics companies need to aggregate both the supply and channels for an effective fast mile delivery solution supported by last mile delivery tracking. Channel aggregation here refers to the utilization of unused delivery sources in local areas including local grocery or pharma delivery manpower. They are able to combine their resources and cover the last mile during their free time on a per successful delivery basis.

6. Micro Warehousing

It is not feasible and cost-effective for e-commerce companies to transfer consignments from the mother warehouse to each location for faster delivery. Hence, it has become extremely important for them to stock inventories at multiple micro hubs. A couple of e-commerce aggregators have put the onus of maintaining minimum order quantities at multiple locations on their sellers. Even several logistics companies are introducing shared micro hub services across the region. Store-based deliveries are also a welcome step for the e-commerce industry toward changing last mile delivery to fast mile delivery.

Matching the pace of the e-commerce industry with the rising consumer expectation is the need of the hour. With most companies dealing with competitive products, delivery performance including the ease of last mile tracking plays a pivotal role in defining the consumer experience. Fast mile delivery can be considered the latest revolution in the last mile industry that is pushing the logistics benchmark of delivery from a few days to a few hours. The hyperlocal industry has paved the way for e-commerce to realign its inventory placements and delivery parameters. Innovative solutions including micro hubs, milk run, and tech-enabled routing will continue to be the key pillars of the change.

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