This article originally appeared in our July/August issue
Free, fast, and all-inclusive. Those words sum up the challenges for those in the final-mile space. Shifts in shipper and consumer expectations have changed the whole landscape for carriers in this sector. “The expectations of shippers, consumers, and even carriers are all connected,” points out OnTrac executive Rick Chase, a board member of the Customized Logistics and Delivery Association (CLDA).
The biggest impact on those expectations is fueled by e-commerce. “Expectations have changed with the evolution of ecommerce,” says the president of Relay Express, Jim Bernecker. “As the e-commerce behemoth lumbered along, consumer expectations escalated. Before e-commerce, you would order something from a catalog company and you were happy if you saw it within two weeks. Then, along came e-commerce and all of sudden, shippers were promising five to seven day deliveries. Then, next-day and same-day. Today, we’re seeing even greater refinement of service expectations. As shippers look for competitive advantages, they are exploring four and even two-hour delivery windows.”
Those escalating expectations have been good news for the customized logistics and delivery providers. “The ‘I need it now’ push from e-commerce has grown the last mile. That’s good news for the members of our industry who are particularly well-suited to meet those demands. As e-commerce drives more parcels into residential delivery, that’s had a very positive effect on what we do,” says Chase.
But there’s another side to consumers’ increased demands in e-commerce. Not only do they want it now, but they expect free delivery. “The public sees free shipping in every ad. That’s their expectation,” points out Bernecker. “But there’s no such thing as ‘free shipping.’ Someone has to pay for it. And the big shippers don’t want those costs to cut into their profits. The price points they expect from carriers and the volume they promise don’t support what it costs us to make those deliveries. That’s the biggest challenge that’s hit our industry. Right now, the rate structure the shippers want doesn’t allow for us to do all that’s expected from the final mile. The chasm between what shippers expect and what they are willing to pay is greater than ever.”
Changing Expectations in White Glove
As e-commerce expands into larger items, like sofas and big screen TVs, the expectations for residential white glove deliveries are also evolving. “I think of it as different shades of white glove delivery,” says Bernecker. “White glove deliveries can go from ‘egg shell white’ to ‘wedding white.’ Is ‘white’ curbside delivery? Does it include debris removal? Or the set-up of a dishwasher and removing the old one? White glove can go from simple delivery to set-up, installation, and plumbing.” For example, Bernecker’s company does white glove deliveries of dialysis machines. White glove here means delivering the machine, setting it up, showing the patient how to use it, picking up the older machine, and even bringing the unused dialysis fluids back to the shipper.
It’s no secret that residential white glove is especially demanding, and it’s getting more so. “There’s more and more residential interaction than ever before in the last-mile space,” points out Bernecker. “But that doesn’t mean the price points have come up. And the pressure from some shippers to cut costs can be challenging. I’m concerned about the increased demand for what we see as unsafe deliveries. These are two-man deliveries, but shippers don’t want to pay for a two-person crew. So, they claim these are one-man jobs. For example, we’ll be told to deliver patio furniture. The sticker on the box says, ‘Team lift required or warranty may be voided’. But the shipper wants it to be a one-man delivery. ‘Just slide it out of the truck,’ they tell us. So what do we do? If you send one man and it’s damaged in delivery, that’s going to be on us. If you send two men, the shipper won’t pay for both of them. It’s a real problem.”
Big Shippers as Change Agents
It’s no secret that the big players in the shipping space are driving change and raising consumer expectations. “There are many large shippers in the e-commerce space, but clearly Amazon has been the major change agent among them for years,” says Chase. “They are the ones that introduce change. They changed the customer experience and carriers have had to adjust their services to meet those expectations.”
And it’s not just carriers that have had to respond to Amazon’s influence. Chase points out that some of the biggest retailers like Walmart have had to step up their game to compete. For example, Walmart responded to Amazon’s recent push into grocery delivery by filling grocery orders in their stores and partnering with Uber and Lyft to deliver them. And they have added a feature that allows customers to order groceries and other items online and pick them up on their way home from work and avoid any delivery expense. Distribution centers are not set up for that kind of customer experience, so it will be interesting to see if this plays out as an advantage for the more traditional brick and mortar retailers.
Both of these industry experts believe that regional and local carriers have the experience and flexibility to adapt to the increased challenges developing in the final-mile sector. “We’re fast and we’re nimble,” concludes Chase. “That’s always been our competitive advantage. We need to be open to change and to seize the new opportunities it presents us. That’s how we’ll profit from the on-going changes in the final-mile sector.”
Andrea Obston is Director of Public Relations, CLDA. The Customized Logistics and Delivery Association (CLDA) is a non-profit professional association that leads the time-critical logistics and delivery industries. The association promotes advocates, educates and provides networking and business opportunities for those involved with the time-critical customized delivery community.
For more information, visit www.clda.org.