Worley Blog

THE CHALLENGE OF THE LAST MILE

Posted on: January 25th, 2021 by Clifford F. Lynch

 

For years, the so-called “last mile” delivery has been problematic; and as online buying has increased, the challenge has become even more pronounced. In 2020, U.S. consumers spent $11 billion on line, about 15% over last year. Part of this increase was a result of individual changes in buying habits, and part was brought about by the pandemic which kept many shoppers out of retail stores.

The basic objection of last mile logistics is to deliver products to consumers as fast as possible, while still maintaining some semblance of cost control. Most industry watchers would agree that this segment of the transportation cost is the most expensive, with estimates ranging from 48 to 53% of total transportation costs.

It is also time consuming, and countless hours are spent attempting to find a more efficient, reasonably priced solutions. Amazon, the clear leader in online selling, has chosen to open hundreds of distribution and sorting centers and purchased several thousand delivery vans, giving them easy access to customers. They also were the first to introduce the idea of drone delivery, which we will no doubt see in the not-too-distant future.

Walmart, Target, and others have found that online purchases can be shipped directly from their hundreds of retail stores around the country. Other firms have turned to logistics service provider networks to expand their shipping base. Uber and a number of smaller companies have established delivery services using everything from vans to bicycles. The point is that in spite of all the new ideas, the last mile remains a major issue for many firms.

Right now, we are in the midst of one of the most significant last mile efforts in our lifetimes – that of delivering COVID-19 vaccine to destinations around the country. As part of an initiative called Operation Warp Speed (OWS), Pfizer and Moderna have moved mountains to develop a vaccine. UPS and FedEx have stepped forward to provide transportation (with great fanfare, I might add), guaranteeing to maintain the -100-degree temperature necessary. Shipments were made to destinations identified by the states, and by all accounts the carriers performed admirably.

It appears however, that OWS applied only to manufacturing and one segment of the transportation movement. Once again, we hit the last mile wall – in this case, the movement of vaccine from the receiving point to the arms of Americans. Some states received more than they needed at some locations, and not enough at others. Some cities had to scramble to find people to vaccinate before the vaccine expired. In cities such as Daytona Beach, seniors waited all night to receive a shot. In New York, those who signed up had to complete a 50-question form.

A major glitch occurred in my home city of Memphis. The county health department designed a very effective online protocol for signing up for vaccination appointments. But – among the zip codes where the COVID-19 cases per 100,000 are the highest, between 6 and 36% of households have no internet. In addition, most communications from the health department have been digital. Here and in other cities, eligibility requirements seem to change frequently.

Kudos to FedEx and UPS who performed so well during their heaviest shipping seasons. Black marks to OWS leaders who did not pay enough attention to the last mile.