In the world of ecommerce, customers want two things: faster delivery times and cheaper prices. As companies compete along these two metrics, squeezed margins force new innovations in efficiency. "Your margin is my opportunity," Jeff Bezos famously said, and Amazon has indeed pushed the envelope in developing a logistics model that sets the standard.
But the envelope can be pushed a lot further, and the so-called "last mile" represents a fat-cutting challenge with plenty of opportunity. The last mile is "the stage of shipping that gets the product to the consumer's home," explains Josh England, president of trucking and logistics at the firm C.R. England. Shipping involves multiple "legs" or segments, and the final one is the most expensive; efficiency factors such as economies of scale have dwindled, or disappeared altogether, by the time an item is en route to one's doorstep.
DISRUPTING THE LAST MILE
Disruption--in any industry--occurs through one of two channels: better practices or better technology. In the race for last-mile efficiency gains, logistics companies innovate in both areas--and in the interplay between the two. Tech innovations can push old concepts even further, while also bringing in totally new paradigms.
Take route optimization, described by Brandon Harrison, C.R. England's chief sales officer, as "the process of determining the most efficient way to move a shipment within a freight network." Route optimization is nothing new: it involves balancing longstanding variables such as "length of haul, lane density, number of stops," and more. But new technologies like cloud computing, big data, and artificial intelligence can help process the necessary data points needed to better-optimize routes.
Another old idea, load efficiency, involves "maximizing the usage of capacity, both in the form of cube and weight." Harrison explains how the concept and practice of load efficiency "enables the industry to drive costs out of the supply chain" by making better use of "trucks, drivers, trailing equipment, and containers." As with route optimization, new technologies allow better visibility into the complex factors affecting load efficiency.
IMPROVING PICKUPS AND DROPOFFS
Uber's "Uber Freight" division launched its "Power Loop" concept earlier this year. Power Loop appears to be another incarnation of a longstanding solution to the problem of unloading times. Many freight companies already participate in "trailer pools" that "enable...