How To Reduce Mid-Mile Logistics Costs: Tips For Courier Providers

We often hear that the last mile or final mile is the most crucial part of logistics management and comprises 53% of the entire shipping cost. But how many times have we heard about middle mile management or its impact on overall logistics costs? The truth is the middle mile or mid-mile is the lesser-known leg of logistics management and often gets ignored. 

Middle mile deals with the movement of goods from distribution hubs/warehouses to order fulfillment centers. Like the first mile and last mile, middle mile logistics management also involves various challenges such as limited scalability, poor visibility, improper routing, and more.

These issues lead to an increase in the mid-mile logistics costs, which further amplifies overall logistics costs. Courier companies that are following conventional logistics management practices are struggling to decrease middle-mile logistics costs. By keeping in mind these tips, they can lower mid-mile costs and ensure effortless management of middle mile operations.

#1 Optimize Routes Intelligently

Unlike last-mile delivery, routes in middle-mile logistics are generally pre-defined with fewer chances of last-minute changes, except those needed due to unforeseeable circumstances. By optimizing routes, courier providers can not only ensure timely movement and delivery of goods but also reduce mid-mile logistics costs that may occur due to delays and unnecessary diversions.

It can be done by implementing logistics management solutions that leverage the potential of artificial intelligence, machine learning, and other top technologies. These solutions optimize routes considering historical data of routes, delivery time, location, and various other constraints.

#2 Avoid Empty Backhauling

Empty backhauling is when a transportation vehicle returns empty after delivering goods to the destination. It incurs additional costs as an empty vehicle returning back to the origin consumes fuel, needs a driver, and requires regular maintenance. According to the report by Convoy, out of 175 billion miles, heavy-duty trucks in the USA travel, 61 billion run empty. It directly impacts the logistics costs and also contributes to 87 million metric tons of CO2 emissions. Advanced logistics management solutions can overcome this challenge and minimize middle-mile logistics costs by allocating other pickup tasks from nearby hubs.

Let’s understand it with this example. A vehicle is destined to deliver goods from point A to D, and after delivering  the goods, it will come back to the origin empty. If there are any pickups from locations B or C to destination A then the logistics management software will automatically assign it to the same transportation vehicle. What will happen is the vehicle will deliver goods to D and then reach C and B to pick up goods and deliver them to A or to any other specified location en route. It will eliminate the need for creating a new trip and reduce the cost of occupying resources for initiating the pickups from B and C.

#3 Risk Mitigation

Advanced logistics management solutions can help courier providers mitigate transportation risks. For instance, when moving time and temperature-sensitive goods, courier providers can leverage IoT (Internet of things) to constantly monitor the movement and safety of goods. The technology can even help determine the exact position of goods in the container. The data from the IoT devices and RFID sensors can be fed into digital control towers for logistics managers to supervise the movement of goods and take action as and when required.

#4 Prevent Theft and Pilferage 

Theft and pilferage of goods also add to the middle mile logistics costs. According to CargoNet’s report, cargo theft losses for the USA and Canada were raised to $19 million in the Q1 of 2022. This was a 73% increase for the same period in 2021. Courier companies can use logistics management software to prevent it by keeping a track of the movement of goods in real time. In case if the transportation vehicle halts beyond the prescribed duration or stops at places where it should not, the software sends an immediate alert to the logistics managers, and they can inform local authorities to take action.

#5 Capturing and Analyzing Data

AI-powered logistics management software also provides useful data insights to help logistics managers make data-driven decisions. Advanced data analytics ensure efficient and effortless management of mid mile operations to ensure smooth and cost-effective movement of goods from the source to the destination. It helps maintain warehouses, get historical data of routes, create daily trip reports, and more.

Logistics management software ensures efficient management of middle-mile operations and minimizes mid-mile logistics costs. It automates route planning and optimization, reduces vehicle idling time that reduces fuel consumption and fuel costs, avoids misroutes and unnecessary diversions that minimizes distance traveled, prevents theft and pilferages, and more. Moreover, it also offers data insights to make data-backed decisions. Besides, logistics management solutions prevent empty backhauling, which is one of the major contributors to middle-mile logistics costs.