The grocery industry saw seismic shifts in consumer buying patterns during the pandemic and it is unlikely that the market will return to its pre-pandemic state. Rather than going to grocery stores, consumers went online to buy everything from toilet paper to produce to ice cream. Last-mile logistics for groceries has become increasingly important. It is also very complex as product integrity has to be maintained in order to keep food safe for human consumption.
One-way grocers have responded to the market shift is to build more warehouses to bring products closer to the end consumer and facilitate same-day delivery. The global demand for warehouses is expected to grow from $285 billion in 2022 to $326.3 billion by 2024. In the United States alone, warehouse space is expected to reach 420-450 million square miles this year.
There are several things fleets participating in the last-mile delivery segment of food distribution need to do to be successful.
- Foster partnerships with the shipping warehouses. While relationships always have been important in the trucking industry, they are critically important when it comes to last mile deliveries. Developing partnerships across the entire supply chain so that all parties are in sync will lead to the greatest efficiencies and highest level of customer satisfaction. Make sure to nurture relationships so you are a partner and not merely a vendor.
- Rethink and optimize routing. Given all the changes in the grocery market, it is time to take a clean sheet approach to routing in order to make sure each route is optimized for maximum efficiency. Don't be bound by historic sequence of stops. The order of stops you have used for the past 10 years may no longer make sense. Meet with each customer to talk through their needs and set up routing that accommodates their needs but that also is most efficient for you.
- Improve loading and unloading times. Given the short length of haul in the last mile, shippers and carriers need to realize that on time departures and loading delays will now have broader ramifications. It is harder to make up loading and unloading delays since trucks will be traveling fewer miles. Fleets need to work with the warehouses to improve loading and unloading times in order to improve network optimization and utilization. Effort needs to be put into ensuring swift loading and unloading times to keep trucks rolling. A delay of an hour will have a significant ripple effect and impact customer satisfaction. Set expectations about arrival and departure times and the amount of help there will be loading and unloading trailers. Set KPIs and monitor progress. Use data to find where problems are occurring and get to the root cause so delays can be eliminated.
- Become a transportation consultant. Now is the time to help customers improve their overall efficiency too. Become an expert in last-mile delivery and customer buying habits so you can offer input to customers on things such as adding more warehouses and distribution centers as population shifts occur.
While last-mile delivery is complex, having assets operate in smaller geographic areas actually has some benefits, especially when it comes to carrying refrigerated goods. Having trucks in closer proximity allows you to react better when a problem occurs. If a load is 100 miles away and there is a problem with the vehicle, you can go get it and reload it onto a trailer that you have waiting. It is much more difficult to deal with problems when a trailer is 500 miles away.
While there are a number of challenges in last mile cold chain, there are opportunities as well. It just requires some creative thinking, data analytics and a focus on partnerships to be successful.