June 17, 2022

Breaking Down Last Mile Delivery Costs

Overview: Delivery costs

Deliveries are the highest cost of the complete supply chain process. It comprises about 40% of the entire delivery process.

The reason for this is that last-mile delivery is the final step of the shipping process, and many factors are involved in the delivery. When an oversized cargo is moved to the final destination, many things must be considered, affecting the supply chain’s total cost.

Delivery Logistics

If poor logistics are implemented, the cost of the delivery will increase substantially. An excellent logistic process considers:

  • The best route to use for the shipment to be efficient and timely.

  • The best roads to avoid stops.

  • The best delivery logistics means if the cargo delivers to more than one destination, it should consider who to fulfill first and last.

  • The cost of returning to the warehouse (if needed)

Yet even using the best route, there will be counter time. Predicting many other variables that directly affect fuel and fuel cost is quite expensive.

ensuring quantity of shipments

Fuel Cost

In the last months, fuel cost has increased by over 25%. Gas prices affect the price of delivery and, in some cases, the price of the product. Traffic lights, car accidents, and traffic jams are stops that, at some point, cannot be avoided and should be considered in the delivery costs. Additional stops mean an increase in fuel consumption translates to a higher delivery price.

Failed Deliveries

Failed deliveries are probably one of the things that are not under Last Mile’s control. It should be avoided as much as possible, even when it is considered. Nevertheless, it’s not always possible to prevent this. The most common reasons of failed deliveries are: transportation accidents, wrong item delivery, and the person who is in charge to receive the package is not there.

Tracking is a way to avoid failed deliveries by ensuring the sender and recipient are aware of the day and the estimated time of the delivery.

Returns and Refunds

Returns and refunds are other factors that could potentially increase last mile price. Depending on the nature of the item, the return and refund vary. Even when the items are packaged to avoid damage, sometimes the object can be flawed before the delivery. It also happens that after some time, the item is not under the best conditions or doesn’t suit the needs of the customer.

handling returns and deliveries

Customer Experience

The shipment has a direct impact on customer satisfaction. The timing, product condition, installation (if applicable), and product quality are considered once the item has been delivered to the customer. Even when the product does not belong to the delivery company, the customer views it as part of it. If the shipment is not excellent, it directly impacts both parties, the one that sells the item and the one that delivers it. Refunds and returns must be a smooth process for customer satisfaction.

Why consider Last Mile Logistics delivery for my company?

Last mile or final mile shipping is quite complicated. It involves many processes and stages that need special attention.

Last Mile Logistics can be that trusted 3PL partner for your company. With our resources and expertise, you will be able to scale up and have market expansion while keeping your customers happy.

tracking shipment to destination