Four Easy Ways Businesses Can Optimize Last Mile Delivery Cost

Owing to the growth of the retail and eCommerce sector, the courier industry is growing at an exponential rate. According to Allied Market Research’s report, the global courier, express, and parcel market is expected to reach $749.0 billion by 2031. This will put a tremendous strain on the courier providers that are already struggling with shortage of staff, poor resource utilization, rising fuel costs, and unstable bottom lines.

Investing in additional resources seems an easy solution for courier providers to deal with increased parcel volumes; however, this will shoot up last mile delivery cost, which is already 53% of the total shipping costs. The most viable solution to manage delivery operations efficiently and without increasing the overall last mile cost is integrating smart last mile delivery management solutions. Here are the four ways an AI-powered last mile solution empowers courier companies to make last mile deliveries cost-efficient.

#1 Automating Dispatch To Minimize Manual Intervention

Implementing automation reduces reliance on manual elements and empowers CEP providers to gain granular insights into leg-to-leg order movements. Manually managing dispatch as well as other delivery operations, such as monitoring and tracking deliveries, consumes a significant amount of time and costs.

Having a highly flexible and customizable last mile delivery solution equips courier service providers with the capabilities such as automating order dispatch, real-time tracking, and more to save time and last mile costs.

#2 Intelligent Route Optimization To Reduce Fuel Costs

Inefficient route optimization may result in increased miles, increasing fuel consumption and costs. AI-powered last mile solutions offer smart route planning and optimization that empowers courier companies to optimize routes considering multiple constraints, such as delivery location, delivery time window, order volume, rider proximity, etc., to optimize trip productivity and delivery time.

It also ensures that each vehicle’s capacity is utilized completely to increase the number of deliveries per vehicle. With intelligent route optimization, courier service providers can unlock a 31% increase in vehicle capacity utilization and a 14% increase in deliveries per rider.

#3 Offering Multiple Delivery Options To Minimize Failed Deliveries

Delivery failures due to incorrect addresses, delayed deliveries, customer unavailability, fraudulent entries by staff, and other reasons can balloon the last mile costs. It increases the chances of RTO, which costs approximately 66% of the original item’s cost.  

Intelligent last mile delivery software enables courier service providers to offer multiple delivery choices such as curbside pickup, home delivery, slotted-delivery, PUDO, buy online and collect in-store, and more to ensure delivery success.

#4 Smart Order Clubbing To Optimize Resource Utilization

Adding more resources, including fleet and staff, to scale delivery operations and meet increased parcel volumes (especially during sales or festive seasons) can take a toll on the last mile costs. Smart last mile delivery systems facilitate smart order clubbing to utilize existing resources optimally.

Based on constraints like delivery location, delivery time window, and more, it clubs new orders with already planned deliveries to maximize the number of deliveries per vehicle. Apart from clubbing new orders, the solution also clubs already planned deliveries with the return requests to prevent utilizing new resources and creating the entire reverse pickup journey from scratch.

Last mile delivery management solutions powered by technologies like artificial intelligence and machine learning allow courier service providers, as well as their stakeholders, to manage and monitor deliveries in real-time. It empowers them to leverage data-backed insights to make smart decisions to improve customer experience, improve delivery productivity, and, above all, shrink last mile delivery costs. So, integrate smart automation for effortless delivery orchestration and to make your last mile deliveries cost-efficient.