5 Reasons Carriers Should Expand with a Last Mile Delivery Fleet

The explosion of eCommerce retail made increased demand for last mile delivery fleets an inevitability. Find out how big the opportunity is as we make the case for carriers to expand by adding last mile delivery services to their fleet.

Now is a Great Time for Carriers to Add Last Mile Delivery Services

In a numbers game, the rise of eCommerce for consumers and business buyers alike was going to produce more demand that trucking carriers offering last mile delivery services could fulfill. In January 2009, quarterly eCommerce sales in the U.S. were less than $40 billion dollars. In January 2015 that number was more than $87 billion.  According to Census Bureau data, 2016 eCommerce sales were more than $97 billion in quarter one, with second quarter sales expected to come in at over $100 billion.

With exponential growth in eCommerce comes exponential opportunity for shipping, transportation and logistics companies that pivot and innovate accordingly. By the end of 2014, the need for shipping and last minute delivery services hit critical mass, thanks in part to Amazon’s holiday Prime Membership drive.

Despite their respective organization’s massive fleet sizes, UPS, FedEx and the USPS combined capacity failed meet the e-retail giant’s even more massive number of holiday orders, many of which included free 2-day shipping for Amazon Prime member’s holiday shopping (reuters.com). Nor was this the first time established carriers had fallen short. In December 2013, both FedEx and UPS admitted their fleets had experienced extraordinary delays due to sheer capacity – delays that meant thousands of holiday gifts did not arrive on time (nbcnews.com).

5 Reasons to Add Last Mile Delivery Vehicles to Your Carrier’s Transportation Fleet

1. Timing

There’s no reason to believe that the upcoming holiday season will bring anything but an increase compared to last year’s online sales. Carriers which are able to provide last mile delivery services right now could find themselves well-positioned to step into the gap, with the next holiday eCommerce shipping season about to commence.

2. The Amazon Distribution Model

Amazon’s growing network of distribution centers and growing number of Prime Members who expect 2-day delivery (and sometimes same-day delivery) of goods purchased on Amazon.com create opportunities for both long-haul carriers and last mile delivery service fleets. While Amazon is adding strategically to their transportation fleet, they routinely partner with third party carriers to ensure shipping and delivery promises made to Prime Members and all their customers can be met.

3. Market Size

U.S. shippers made about $160 billion in 2013; however, that number is expected to be $180 billion this year. While other industries and markets may feel crowded, the expanding size of the package shipping market is always making room for more. As a percent of retail, eCommerce was just 3 percent of all sales in 2006, but is nearly 10 percent of all retail sales in 2016.

4. Consumer Expectations

Amazon’s free, 2-day Prime Shipping promise changed the game for every online retailer. Free ground shipping and returns are the norm with many consumers expecting free expedited shipping no matter where they shop. As Amazon continues to experiment with same-day and even one-hour delivery in more metro areas, demand for last mile delivery services will sky rocket in those regions, especially when existing carrier capacity is maxed out.

5. Innovative Solutions

It’s not just about Amazon and eCommerce. In New York City and Washington DC, restaurants are leveraging transportation carriers of all kinds, from bicycle and scooter courier services to Uber and Taxi drivers to deliver take-out orders and curated meal selections. Food delivery is especially popular among Millennials, a generation of consumers and business buyers who are just now coming into their purchasing power.

While addressing an audience at the National Restaurant Association Show in May, Jason Droege, head of UberEverything said, “If Uber can bring you your car in a few minutes, what are the other benefits of that sort of logistics network?” While delivery of smaller items like restaurant take-out meals might be easily accomplished by Uber, taxis and even bicycle and scooter courier companies, the logistics of handling packages which range from small to fairly sizable boxes might require last mile delivery fleets with van or even semi-truck and trailer-sized capacity. These same vehicles might be able to pick up occasional or regular contract work with furniture sellers and other local retailers who want to extend delivery options to customers either as a competitive advantage or an add-on service.

Last mile delivery represents one of the fastest-growing areas in transportation and shipping today. With eCommerce sales expected to grow year over year for the foreseeable future and Millennials opting for delivery of just about everything, it’s a trend that isn’t going to slow soon.

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