Updated on July 28th, 2022
It was a usual day at the office for Anjum until she ordered her favorite thali from a popular restaurant. It is slightly costlier today, with an additional tax. The same is with Alex, who couldn’t understand why shipping charges for shoes from his go-to brand are more this time. The story of Ruchi is no different as she tries to figure out the reason behind the sudden surge in delivery costs for shipping rakhi gifts to her brother, like every other year.
Fuel cost hikes across the world are biting everyone. The supply chain disruptions, geopolitical conflicts, and inflation are complicating equations between logistics-powered businesses and their customers. Even bigwigs like Amazon and Uber Middle East are exploring ways to mitigate the challenge by sharing the cost burden across their distributors or revising price structures for certain trips. Although such unprecedented scenarios are beyond the control of any single entity, safeguarding customers’ interests is critical from a customer loyalty perspective.
Now this leaves businesses with a few options:
Organizations can show this generosity when they have good deep pockets to bear additional costs at scale or know that the crisis is short-lived. Since fuel, like any other commodity, is also driven by supply-demand equilibrium and numerous other variables, and sees high demand worldwide, rarely does its price go down drastically. This brings us to the second option.
Companies can facilitate shipping through electric fleets, which are seeing good traction in the US, Europe, and the Middle East. With the current resources, using EVs for last-mile deliveries is a viable and brilliant option to bring down costs and carbon emissions. However, significant development and adoption around these modes are needed to keep the next generation of long-haul vehicles on the road and to realize the benefits wholly.
Try to find common grounds by changing delivery SLAs and consolidating orders. Let go of narrow delivery timelines where possible, as each market has a different cadence of delivery SLA. Order consolidation is a good way to bounce off higher shipping costs. Consolidated shipping means that you use lesser packaging materials and fewer boxes, which reduces both the dimensional weight and the actual weight of your shipments. Consolidating orders also helps to reduce the handling fees per package, further reducing the shipping cost. It also translates to a better cube utilization on trucks that lead to more goods being shipped in fewer cartons and lesser trips, ultimately shrinking overall carbon emissions. But some essential delivery segments like food and medicines may require instant shipping. This may be challenging to deal with.
Technology can empower businesses to optimize core logistics operations and arrest any cost or productivity leakages. This is synonymous with improving efficiencies of routes, processes, and resources (vehicle and drivers). Let’s delve deeper into how AI, ML, and automation-powered logistics solutions could help.
Dynamic route optimizers plan the shortest route to the desired destination. It considers historical data and current traffic conditions to avoid inefficient routes that may cause delays due to traffic congestions, roadblocks, or unnecessary diversions. By continuously optimizing routes on the fly, it reduces miles traveled by bikers by 23%, eliminates empty miles, prevents engine idling, and achieves much more. It also leads to saving almost 12% in mid-mile costs and up to 23% in last-mile delivery costs. Based on a pre-configuration logic, intelligent routers can automatically assign bicycles and other non-cost-intensive modes of transportation for short-distance deliveries.
Smart allocation rules consider various delivery constraints like delivery route, driver’s current workload, weight and volume of the order, proximity to the store, etc., to delegate deliveries to a driver automatically. En-route order clubbing enables drivers to add multi-stop pickups and deliveries on the go. More touchpoints per trip enhance delivery productivity and bring down the need to increase frequency or vehicles to carry out tasks. It shrinks trip volumes by 6%, ensures 14% more deliveries per driver, and saves 12% in transportation costs.
One of the reasons behind adding more vehicles to the road is the underutilization of the existing fleet. Imagine the level of cost leakage for a delivery van that is running on one-thirds of its actual capacity.
Smart logistics management platforms can help increase vehicle utilization by 31%. Utilizing the vehicle at optimum levels means lesser trips and vehicles on the road, which ultimately lowers fuel consumption. Combined with effective routing, this could save businesses 12% in mid-mile costs and 23% in last-mile delivery costs. Research also shows that driving at higher speeds accelerates fuel consumption. This is another point of consideration for brands willing to improve the mileage/performance of their vehicles.
Unnecessary delivery deviations due to driver negligence or inability to locate customer addresses can prove costly. It could be purely intentional to mark false delivery statuses using mock GPS locations or because of a poor quality address. Anyhow, the issue needs a fix as it dips delivery profitability.
Geocoding helps convert poor-quality addresses into precise coordinates, leading drivers to the exact delivery location. The system also raises an alert if driver location and actual delivery locations do not sync. It also tracks if the driver has followed the system-suggested planned route or not, which helps increase on-demand deliveries by 24%.
Delivery reattempts burn a lot of resources. This mostly happens due to customer non-availability at the time of delivery. Timely communication can make a significant difference in addressing this challenge.
Route planning and optimizing engines intimate customers on scheduled delivery through ETAs. Once the consignment is out for delivery, the system triggers a tracking link to the customer to track their delivery progress in real-time. This helps them stay on top of any delays or early arrivals and reduces the chances of missed deliveries, which adds up to USD 2Bn/year to last-mile costs.
Equipping your business with the right tech tools is the best investment you can make. It bolsters your business from such occasional hiccups and arms it with resilience. So the business machinery runs smoothly while ensuring happy customers at all miles.