Counting the last mile costs

One of the biggest challenges in the express delivery industry is the last mile of same-day delivery Defined as the last stage of the delivery journey, the last mile is often the most expensive and time-consuming part of the supply chain journey despite being the shortest part of the delivery process. It s also, however, the key to customer satisfaction

Last mile delivery is particularly challenging in rural areas where delivery points along a particular route can be several kilometres apart. In SA, challenges such as loadshedding and potholed roads make the last mile delivery in cities just as challenging, negating the gains in proximity.

Increasing the costs of the last mile delivery are failed deliveries, returns and replacements. Incorrect address details, unforeseen delivery incidents, traffic congestion and unpredictable weather all increase operational costs and impact the ability of logistics providers to make a profit.

Keeping up with rising consumer expectations is becoming increasingly challenging. While customers want fast delivery of their online purchases, they re less enthusiastic about paying for that delivery with many likely to abandon their online shopping cart if they re faced with additional expenses they didn t expect at checkout. As a result, many online retailerschoose to absorb the cost of delivery.

Customers also want realtime visibility of their packages which requires that logistics providers invest in real-time tracking technology to provide customers with transparency

The challenge for express logistics providers is that the cost of the last mile part of the supply chain process accounts for more than half of the total shipping cost.

Optimising routes and implementing best-in-breed technologies are regarded as some of the most effective ways to cut down on operating costs for last mile delivery.

David Lazarus, RAM s executive chairman, reveals that the business has invested in a logistics IT solution specialising in courier and express parcel distribution and which includes a last mile delivery solution. The fully integrated and transparent platform provides customers has upgraded and bolstered its sorting function by applying high levels of automation, allowing it to process and handle more packages more efficiently and accurately. The company has also implemented the latest technology to provide critical information at each point in the distribution cycle. Our one-time pin (OTP) has streamlined deliveries as it is completely paperless and also allows a receiver to designate another recipient should they not be available, reducing the chances of a failed delivery.

The Courier Guy s model is unique in that drivers operate in a small area. As a result, firsttime delivery success is high and customer deliveries are easily completed. Add to this a pricing approach simple for e-tailers to use and cutting-edge technology and you have a successful model for doing business, says Pitchers.

Though price is a consideration, what customers using express delivery services want most is reliability and transparency.

Globally, DHL is a frontrunner when it comes to sustainability, including moving to cleaner energy and fuel.

Locally, the company has had electric scooters in operation for the past five years and is currently piloting fully electric delivery vans with a view to converting a large portion of its fleet to electric vehicles. This is in line with the group’s commitment to convert 60% of its last mile delivery fleet globally to electric by 2030. Michaletos says DHL Express, which is primarily focused on international deliveries, has seen significant growth in the e-commerce space globally. The uptake of this in SA and Africa has been slower but has significant growth potential as intraAfrican trading grows.

Jed Michaletos investment.

Currently, 15 of the top 20 fastest growing cities globally are in Africa and it s estimated that, by 2027, all 20 will be found on the continent. When you combine that with population growth, there is opportunity for e-commerce on the continent and, in turn, for the further growth of the express delivery industry.

He also predicts that the green economy will provide a new vertical market for logistics with real-time information and visibility of their supply chain.

The company remains committed to SA and is making a significant investment in a new facility based at Waterfall in Gauteng. This facility, which includes a R100m investment in new equipment, will increase the company s operational efficiencies, allowing it to process shipments more quickly while at the same reducing manual processes. This building has been designed to be fully carbon neutral, which is a first of its kind for DHL Express on the continent. DHL’s investment into the new facility over the next 15 years is about R500m, says Michaletos. We see SA as a prime destination to help businesses trade in Africa and beyond. We have a specific focus to help SMEs connect and trade on a global level. An example is a South African-based customer of ours, a textile business, which has ramped up its international deliveries from five shipments a month to more than 500 a month. That ability to open up international markets for small and medium-sized business is a huge motivator.

The company has also implemented other solutions to address the last mile challenge, including 42 hubs across southern Africa and a sophisticated address capturing tool to ensure every shipment has a valid delivery address.

Fully integrated handheld mobile devices allow for proactive decision-making by providing real-time, accurate and reliable information while a self-service digital solution called RAM Smart Track allows the receiver to engage seamlessly with RAM throughout the delivery process.

In addition, the company has implemented state-of-the-art track and trace technology while a workflow solution ensures the timeous resolution of issues and requests. Ultimately, increased volume has provided for denser delivery routes and better efficiencies, says Lazarus.

INSIGHTS: COURIER SERVICES

Lockers add convenience

An interesting trend in the local courier industry is the introduction of delivery lockers which are playing a role in disrupting the industry.

The Courier Guy was one of the first to introduce a smart locker delivery system. Called pudo which stands for Pick Up Drop Off the lockers have the advantage of being highly cost effective and convenient for customers. The company currently offers 1,100 lockers situated around the country with delivery locker to locker starting from just R50 for an extra small 2kg parcel.

To ensure the safety of packages, pudo lockers are located in monitored areas and have multiple security systems including video surveillance, anti-break locks and a package detection system.

To send a package, users login via the pudo website or app, make a booking by selecting a locker, filling in the online waybill and choosing the correct box size. Users have the option of sending locker to locker, door to locker or locker to door. All of these options are facilitated by The Courier Guy s network of drivers and depots.

Once the package has arrived at a pudo locker, the recipient receives a text