Cost vs. Efficiency
June 10, 2024

Cost vs. Efficiency: Striking the Perfect Balance in Last Mile Delivery Services


The delivery process gets more complex and more expensive the closer products get to their end users, which is just one of the many reasons why last mile delivery services have become so important. In a perfect world, organizations could dedicate as much money as needed to create the perfect last mile delivery experience.

We don’t live in that perfect world.

There are cost implications for each and every delivery, and shippers must build delivery programs that keep those costs under control. This month’s look at headlines from around the last mile delivery space explores the balance between cost and efficiency, the growing demand for industrial supply, how 3PLs can grow their businesses, plus other insights. Continue reading to learn more, and get in touch with us to discuss securing an expert partner to help execute on your last mile deliveries.

Balancing Cost and Efficiency in Last Mile Delivery

Cost control in last mile delivery services is crucial. Need evidence? More than two-thirds of U.S. consumers would be unlikely to make a purchase if they deemed the delivery cost to be too high. Businesses can’t fully absorb the cost of last mile delivery, and they can’t afford to fully pass it along to their customers. The solution is to find more efficient and cost-effective ways to execute on last mile delivery service.

We know from research that last mile delivery accounts for about 53% of overall shipping expenses. That stat was included in this Forbes article that highlights the benefits of effective last mile delivery, including stronger customer relationships and the ability to meet custom delivery requirements.

At FRAYT, we understand this delicate balance between keeping costs aligned and creating outstanding customer experiences. That’s why we’re dedicated to helping industrial supply companies, construction firms, manufacturers, 3PLs, retailers, and others establish last mile delivery programs that are both efficient and cost-effective — all while keeping the customer experience first and foremost.

Preparing for a Spike in Industrial Supply Demand

We’re seeing signs that “industrial fundamentals” continue to move toward pre-pandemic levels. Any sign that the industrial space is thriving should be good news to industrial suppliers. The key as the industry bounces back is for suppliers to be prepared for spikes in demand. There are three ways to handle spikes in demand from a last mile delivery standpoint:

  1. Build out a self-managed last mile delivery program (or scale an existing program).
  2. Work with a last mile partner to fill gaps as needed in an in-house program.
  3. Outsource last mile delivery to an experienced partner.

The last option above is often the best for many industrial suppliers for a simple reason: There’s no way to know how demand will shift in the coming months and years. When you have a partner that’s available on-demand to execute last mile industrial supply deliveries, you can scale your business up and down as needed (especially during peak seasons) without investing in full-time drivers and a fleet of vehicles.

3PLs and the Last Mile Opportunity

Last mile delivery is growing in importance, and it represents a huge opportunity for 3PLs to grow their businesses. Retailers and wholesalers overtook 3PLs as the leading drivers of warehouse demand in 2023, indicating that not enough 3PLs are taking advantage of last mile delivery as an opportunity to expand operations and revenue.

That said, the opportunity has not passed 3PLs by. The 3PL industry is expected to grow at a rate of 10.7% through 2030, and 3PLs are at the forefront of creating a logistics future that is “automated, efficient, and on-demand. The key to 3PLs seizing the opportunity is to add on services that their existing customers want and need — last mile delivery included.

What the End of Lean Production Means for Manufacturing Delivery

Lean production is on its way out because its central component of just-in-time delivery has failed to work effectively in a post-pandemic world. The end of lean production could have dramatic implications for manufacturers and how they think about last mile delivery.

As noted above, it’s not always advisable to go out and hire a bunch of drivers and invest in a diverse fleet of vehicles in an effort to mold a last mile delivery program that aligns with a company’s vision. Sometimes, it’s best to find a last mile delivery partner that can provide the flexibility, capacity, and effectiveness needed for a manufacturing business to transition to new delivery strategies.

Rethinking the Last Mile for Retailers

ET Insights asks if traditional logistics players should reassess their last mile burden and suggests that outsourcing the last mile is the best path to “reduce costs and enhance overall efficiency.” With the right last mile partner in place, any organization can unlock the benefits of a thriving delivery program. For example, new research indicates that retailers that offer faster deliveries experience a 10% increase in conversion rate. That extra revenue can more than cover the cost of an experienced third-party last mile partner that can help keep those fast delivery promises.

There’s growing pressure on companies to find ways to deliver more efficiently. For example, Kohl’s has partnered with Instacart to offer same-day services, and RetailWire wonders if more retailers should do the same to “remain relevant.” Chain Store Age builds on this idea by writing about the “seismic shifts” that the delivery landscape is undergoing.

FRAYT: Your Partner for Efficient, Cost-Effective Last Mile Delivery

At FRAYT, we build last mile partnerships with companies in the industrial supply, construction, logistics, transportation, 3PL, manufacturing, and retail industries to help them create great customer experiences and achieve the ROI they expect. We offer a diverse fleet of vehicles, high-quality drivers, cutting-edge tech, and a presence in major markets around the country.

If you’re ready to take your last mile delivery to the next level without costs spiraling out of control, start shipping now.

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