Investments in the last-mile transportation and logistics sector have been soaring for companies that are not directly competing with the delivery models of UPS, FedEx and the United States Postal Service.
One of the hottest commodities in the last-mile sector has been the same-day delivery of food, beverage and grocery items. Since 2011, funding for crowdsourced delivery platforms such as Instacart and Uber Eats reached $14 billion, according to Deloitte research.
Other fast growing segments include big and bulky freight deliveries and items with extra-sensitive service requirements like medical samples and supplies.
No matter the freight type, delivery expectations in the last-mile sector are driven by Amazon, which currently fulfills 72% of orders for Prime customers within 24 hours.
The defining moment in Amazon’s last-mile strategy was its 2018 launch of the Delivery Service Partner (DSP) program. Since then, Amazon has been contracting with local delivery companies to compete directly with UPS and FedEx on a massive scale. Today the DSP program counts more than 1,300 delivery firms and 20,000 delivery vans in its ranks worldwide.
One of the benefits for fleets that are Amazon DSPs is having access to sophisticated delivery technology, but the downside is the ease with which the world’s largest online retailer cuts contracts. This has forced many local delivery fleets to search for new opportunities.
Down to the last foot
With the amount of investment dollars and capacity flowing into the last mile segment, some technology companies have found opportunities to give fleets a competitive edge by solving complex routing problems.
Generally, fleets have a majority of their deliveries planned in advance for the next day but need to dynamically add stops to these routes for 30% to 40% of orders that come in during the day with same-day delivery expectations.
[Related: Last-mile supply chain an online battleground for retailers]
Solving complex routing problems has positioned some companies to offer fleets an automated dispatch process, which will be even more valuable when autonomous vehicles arrive on the scene.
In 2014, the prospects for using autonomous vehicles for last-mile delivery were bright, and the founders of Wise Systems saw a market opportunity to develop autonomous dispatch, route planning and execution software for last-mile delivery companies.
Wise Systems is not a technology company like Instacart or Uber Eats that is trying to operate in the logistics space. Rather, it offers its technology to fleets. Although the arrival of autonomous delivery vehicles did not happen as originally planned, fleets are using the software to optimize route planning and execution down to the final feet of deliveries, said Ali Kamil, chief technology officer and co-founder of Wise Systems.
The cloud-based software captures time, location and other route data every few seconds from an app that runs on mobile devices. The software knows when drivers arrive, when they get to a customer’s door and when they depart.
With this granular level of data capture — which includes the number and weight of delivery units — the software predicts how long it will take to complete future deliveries at each customer location. It also learns from repeat visits to determine the best way to enter, the best spot to park and the best time to visit to expedite the delivery process.
“Collecting all of this data enables us to learn,” Kamil said, “so we can plan better tomorrow.”
The mobile driver app is easy to use and helps drivers make more money by completing more deliveries each day. “Drivers don’t want to be spending time monkeying around,” he noted. “It needs to be quick and easy.”
Fleets that use the software can dynamically add stops into a route optimization engine and give their customers access to a web portal for tracking the status of deliveries. The end customer can also sign up to receive text or email notifications.
The end customer can get real-time expected time of arrival with accuracy down to five minutes, he said. With this level of visibility, “what we are enabling for customers is a better and faster delivery experience than Amazon,” he said. “We are not just going accept that Amazon is going to dominate.”