Retailers lose visibility as they outsource last-mile delivery, FarEye says
Soaring last-mile costs are driven by fuel, address location, labor, and first delivery failure, survey shows.
Retailers and logistics providers are struggling with a last-mile delivery process that has grown more complex, expensive, inefficient, and unsustainable since 2020, according to research from the delivery orchestration and visibility service provider FarEye.
In an effort to reduce those growing last-mile delivery costs, 57% of retailers have outsourced their delivery networks over the past five years, yet 84% of them claim their organization needs more control over their outsourced delivery networks. The research comes from FarEye’s “Eye on Last-mile Delivery Report,” conducted with Researchscape International.
“For retailers that do not have the scale for their own fleet of drivers, outsourcing their delivery networks is the most cost-effective way to deliver with flexibility, however, the tradeoff is less control,” Stephane Gagne, vice president, product, FarEye, said in a release.
The survey also showed just how expensive last-mile delivery is, saying it accounts for 53% of overall shipping costs. Those costs are driven primarily by: fuel (59%), address location (39%), labor (36%), and first delivery failure (34%), FarEye found.
In addition to struggling with costs, retailers are struggling with speed, with only 44% of retailers reported that “all or almost all” of their deliveries are made on-time today. Still, they’re pushing to get even faster, with 35% of retailers offering same- or next-day delivery now, and 64% aiming to offer it by 2027.
According to FarEye, technology can help to balance those competing goals. “Instead of speed, retailers should consider improving the reliability of orders through AI and machine learning technology that will help them route orders accurately and efficiently, and ensure carrier allocation and capacity levels match demand,” Gagne said.
The research included responses from 300 leaders across retail and logistics with responsibility for logistics and retail operations in the U.S. (32%), EMEA (36%), and APAC (32%) regions.
@FarEye's Eye on Last-mile Delivery Report Finds 84% of Retailers Lack Control of their Outsourced Delivery Networks. Get the #retailer perspective on their last-mile delivery #priorities and opportunities over the next five years: https://t.co/3VKajpEvcS pic.twitter.com/2IiZrqGIG7
— FarEye (@FarEye) January 26, 2023