Every logistics personnel has, at least once in their career, heard that the best way to reduce the overall budget is to reduce last-mile delivery costs. Keep in mind that last-mile delivery accounts for up to 53% of total logistics costs. But before all this, one should know: what is last-mile delivery?
Last-mile delivery is the process of delivering a package to your customer’s doorstep. This is the most important part for any logistics professional, as it helps them remain a reliable partner for their customers.
Nowadays, one of the main trends we see is people preferring online mode shopping over traditional shopping. This shift has increased e-commerce demand worldwide. Eventually, more deliveries are going out every day. Customers now expect quick delivery, sometimes on the same day or the following day. Meeting these expectations has become a primary concern for every owner of an online business.
Why Last-Mile Delivery Is the Most Expensive Part of Logistics?
Last-mile delivery is the most expensive part of logistics for several reasons:
a. High Operational Costs
Usually, last-mile delivery has high operational costs because of vehicle maintenance, fuel consumption, labor costs, and inefficient route planning. When routes are not well planned, delivery times get longer, and fuel consumption increases. Companies also need to deploy more labor to complete the same number of deliveries. All these make last-mile delivery one of the costliest parts of the logistics process.
b. Failed Deliveries & Return Attempts
Customer unavailability for delivery often leads to multiple delivery attempts, as the delivery person has to go back several times to complete the order. These repeated attempts significantly increase costs. Wrong addresses can lead to a parcel being returned, which escalates the delivery costs.
c. Traffic Congestion
Most people who shop online live in urban locality, so traffic congestion is also a factor to consider. Heavy traffic can waste fuel and slow down deliveries. This limits how many packages a driver can deliver in a day and drives up overall costs.
d. Distributed Delivery Locations
When drivers deliver to homes, the delivery points are spread out across different streets and neighborhoods. This means the driver has to travel longer routes between each stop. If there are only a few deliveries in a particular area, the driver spends the same fuel for fewer packages. This makes each delivery more expensive compared to areas where many packages can be delivered close together.
e. Manual Scheduling & Lack of Automation
Last-mile delivery costs also rise due to the absence of automation. When companies schedule deliveries manually, they make more mistakes. Resources might not be used efficiently, and decisions can take longer. All of this adds more time and cost to complete the deliveries.
f. High Customer Expectations
Customers now expect fast delivery while doing an online purchase. As a result, businesses look for logistics partners who can fulfill orders faster. However, faster delivery increases operational pressure and increases overall costs.
3. Cost-Breakdown of a Typical Last-Mile Delivery
Cost breakdown of last mile delivery
Most of the last-mile delivery cost comes from labor, which takes up almost half of the total expense. Transportation and fuel are the next most considerable, followed by failed deliveries. One effective way to reduce expenses is by cutting down the second and third categories. Logistic companies can employ several strategies to achieve this.
How to Reduce Last-Mile Delivery Costs?
A phone showing shortest route
a. Route Optimization & Smart Routing
AI chooses better routes to reduce fuel and time, avoiding traffic. Drivers can avoid traffic and take the fastest roads, which cuts the distance for each delivery.
b. Automated Driver Assignment & Task Scheduling
The system picks the right driver based on availability. The system removes manual planning, and deliveries are assigned faster. This saves time and reduces operational costs.
c. Use of Driver Mobile Apps
Drivers receive real-time updates and can instantly share proof of delivery. This reduces communication errors and ensures drivers complete tasks correctly. Drivers can submit proof as either a photo or a signature. The concerned team member can then share this proof with the customer, providing clear confirmation of the delivery.
d. Reduce Failed Deliveries
Customers get real-time alerts and see accurate delivery times. Contactless delivery is also possible, and live tracking helps reduce missed deliveries. Nowadays, customers can even choose a preferred delivery time or update the system when they won’t be available at home.
e. Improving Delivery Density
The automated system can help group deliveries in the same area and send them in batches. The driver doesn’t have to continually go back and forth, which saves time. It also saves fuel since the route becomes shorter and more organized. In some cases, the company uses pickup points in places like gated communities or apartment buildings. All packages for that area are collected in one common spot. This makes it faster and easier for the driver to deliver everything at once instead of going door to door.
f. Use of Analytics & KPIs
The system checks how drivers are doing, how much fuel the vehicles use, and if drivers face delays during deliveries. This helps the company find problems early and fix them, so the vehicles are used better and deliveries happen on time.
g. Real-Time Tracking
Customers can track orders live, reducing the need for questions and calls. This makes planning easier and makes the delivery process more transparent.
Conclusion :
Technology’s really shaking up last-mile delivery right now, and companies can’t afford to fall behind. This last leg of the journey isn’t just crucial—it’s expensive. You can reduce these costs with the smart moves. Streamlining last-mile delivery is probably one of the fastest ways to cut your overall logistics expenses.
Think about it: using tools like AI for route planning, automatic driver assignments, mobile apps, and live tracking makes deliveries faster and easier. These moves can also help you earn positive feedback from customers. Smart tools make deliveries faster, more reliable, and better. Plus, when you cut down on failed drop-offs, bundle deliveries in the same neighborhood, and actually deliver what customers expect, you’re not just saving cash—you’re building trust. In a world where online shopping keeps growing, jumping on these tech solutions isn’t just smart. It’s essential if you want to stay in the game. Many brands underestimate how last-mile delivery affects repeat customers.
Explore How LocoLogic Can Transform Your Last-Mile Delivery
Ready to take your last-mile delivery to the next level? With iScripts LocoLogic, you can streamline your operations, reduce costs, and ensure faster, more accurate deliveries. From automated dispatch and smart routing to real-time tracking and driver apps, LocoLogic gives you everything you need in one platform.
Don’t wait—boost your delivery efficiency and customer satisfaction today by exploring what iScripts LocoLogic can do for your business.