XPO Logistics has grown quickly to become one of the largest final-mile delivery services.In the early 1990s, Wal-Mart became the largest customer for a number of dry-van and refrigerated carriers as it was rapidly expanding its retail presence.
A lot has changed since then. Wal-Mart continues to demand attention from carriers, but it has been losing ground to online retailer Amazon.
Many less-than-truckload and truckload carriers are now contracted with Amazon for line hauls to its regional distribution centers, as well as for first-mile logistics to pick up shipments and for final-mile deliveries.
Carriers that work for Amazon and other online retailers have to deal with lane volumes that change quickly, up and down, and with very high service standards. Yet the opportunities in e-commerce are too big to ignore.
Choosing wisely
The growth in online sales has translated to more demand for carriers — in addition to UPS and FedEx — to make residential deliveries.
Company executives say ‘The Dayton Difference’ is all about going the extra mile for customers and for others.Dayton Freight Lines, a Dayton, Ohio-based less-than-truckload carrier, has been purchasing more straight trucks and vans to make residential deliveries and to avoid sending its tractor-trailers into neighborhoods.
Management has been turning down opportunities to deliver freight with additional handling requirements, says Derek Kirby, director of safety.
“We want to take freight to the first place that is out of the weather — a carport or garage. We want to be there one minute and gone the next,” he says.
“We have to define what we want to do and not be pigeonholed,” he continues. “We have to be really careful about what get ourselves into, and make sure we define that. If we try to become everything to everybody we will not be successful at what we do.”
For residential deliveries, Dayton Freight Lines averages three delivery stops per hour using straight trucks and vans. To be shipped by van, a shipment has to weigh less than 125 pounds, he says.
Besides being more efficient than tractor-trailers, its fleet of delivery vans has proven useful as a training ground for new drivers. The company has a program that trains dock workers, starting at 19 years old, in vans before graduating them to CDL holders driving straight trucks and Class 8 tractor-trailers.
Crossing the threshold
Through a number of acquisitions and organic growth, XPO has become the largest provider of last-mile delivery services for heavy goods in North America. In 2016, the company managed over 13 million last mile deliveries.
Truckload carrier CalArk became involved in final-mile logistics in 2014 with the purchase of a warehouse and delivery vehicles.XPO specializes in white-glove delivery services, where drivers do more than pick up and deliver freight. The company has business relationships with over 4,000 independent contractors that specialize in last mile service, and its contractors cross an average of 35,000 thresholds a day to complete last mile deliveries.
“We deal with unique situations, such as in-home installations that require a two-person team and the removal of old equipment,” says Charles Hitt, president of XPO Logistics’ Last Mile business unit. “When an item is bought online, the last mile delivery person replaces the in-store sales associate as the most personal and memorable interaction with a retailer’s brand.”
In 2014, irregular-route truckload carrier CalArk expanded its business capabilities to include contract warehousing and distribution services by purchasing a 650,000-square-foot warehouse close to its main facility in Little Rock, Ark.
During the past three years, the company has grown and developed a final-mile, white glove delivery service that uses straight trucks and Sprinter vans. The fleet primarily delivers furniture and other large household goods.
CalArk began the final-mile delivery service with 20 drivers. The fleet is now at 154 drivers, adding to its overall truckload fleet of more than 600 tractors and 2,200 trailers.
“That market continues to grow very rapidly,” says Malea Still, vice president of development and sustainability.
Route planning
Routing software has become an essential tool for private and commercial fleets to cut costs and meet the tight customer service demands in the world of e-commerce.
Nebraska Furniture Mart uses the Appian Direct Route software to optimize its daily delivery routes.About 2 ½ years ago, Nebraska Furniture Mart (NFM) implemented the Appian routing application from TMW Systems to have expanded capabilities for its home delivery model, says Josh Parrish, the company’s delivery operations assistant manager.
“When we came across the Appian software, it had things that we were never able to do with our other software,” he says.
NFM operates a total of four stores in four locations: Des Moines, Iowa; Omaha, Neb.; Kansas City, KS; and Dallas-Fort Worth, Texas. Each store is assigned a fleet of vehicles to deliver merchandise to customers within a radius of approximately 400 miles.
As customers purchase goods in stores or online the orders are grouped into designated geographical zones to begin the route planning process. On average, its trucks make about 15 delivery stops each day.
The Appian product designs the most economic routes for each zone by accounting for the dimensions of freight, the company’s routing preferences, delivery constraints and other factors.
Once Appian has designed the routes, NFM may alter the plan slightly by moving stops to another route should circumstances change due to labor supply and other variables.
On the day before delivery, NFM contacts its customers to provide a two-hour time window for arrival.
As the route progresses, NFM gives its customers real-time ETA status — accurate to within 25 minutes — through its website. The visibility is possible through an integration between the Appian system and an app on drivers’ handheld devices called D2Link, also from TWM Systems.
In the home furniture delivery market, giving customers real-time visibility of delivery status creates a competitive advantage, he says.
“Our business model is unusual. It is great that we have this software to support the different aspects needed to keep it moving and growing,” explains Parrish.
Real-time visibility
The final-mile industry contends with challenges related to consumer expectations, particularly with online purchases.
XPO uses software to capture electronic proof-of-delivery, item-level scanning, online images and immediate consumer feedback through opt-in surveys.
U.K.-based Dreams is implementing a live track and trace feature from Paragon to give its customers the ability to track their orders online as the delivery route progresses.“Consumers expect speed and visibility in the delivery process, and a range of delivery options and costs,” Hitt says. “We know very quickly whether a consumer is unhappy with a delivery and can move to rectify it.”
XPO also has information systems to manage the real-time workflow and the consumer experience. Retailers can log into its portal to pull daily performance reports and review quality scores for the independent contractors used in their last mile activities.
“Our platform provides critical tools and shipment visibility to all parties — the retailer, delivery contractor, our operations team and the consumer,” he says.
Dreams, the United Kingdom’s most recommended bed retailer, makes approximately 500,000 home deliveries every year using a fleet of 130 vehicles. The company offers its own dedicated delivery service with the purchase of any mattress or bed set online or in store.
To make its deliveries as efficient as possible, the company is using a route scheduling and planning software system from Paragon, says Brian McCarthy, logistics director of Dreams. Paragon began in the UK but operates in many countries.
In the United States, Paragon opened a sales and support office in Frisco, Texas, in 2002.
Dreams has its headquarters — or “bedquarters” as its likes to say — in High Wycombe, UK.
Within the next 12 to 18 months, McCarthy says that Dreams will be using additional features in the Paragon routing software that will allow its customers choose a time window for delivery on the date of their purchase, whether online or in the store.
“It will become part of the schedule there and then,” he says.
Dreams will also be using Paragon to allow customers to choose an AM or PM delivery at the point of order. Additionally, the company is implementing a live track and trace feature to give its customers the ability to track their orders online as the delivery route progresses.
Commercial and private fleets continue to leverage technology to be more efficient and responsive to customer demands. Perhaps nowhere is this more evident than in the fast-moving world of e-commerce, where online sales have increased 15 percent annually in recent years.
