Last Mile Delivery is part of the supply chain management (SCM) solutions that have been gathering more traction in recent years due to the increased demand to get the right materials in the right place and at the right time.
The global last mile delivery market size is expected to increase by $146 billion USD from 2020 to 2025 at an accelerated 15% CAGR, with North America contributing to a total of 39% in this exponential growth.
In the construction industry, SCM startups were responsible 15% of the total investment in Contech during 2021, with last mile delivery solutions being strongly supported by investors in the ecosystem.
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What does last mile delivery mean?
Last mile delivery refers to a parcel’s shipment from a warehouse, manufacturer, or retail store to the final customer in a product’s journey. The final customer may be located at their doorstep, jobsite, another retail store, or local carrier’s pickup station.
In addition to being a key factor to ensure customer satisfaction, last mile delivery is both the most expensive and time-consuming part of the shipping process.
It should come as no surprise that supply chain disruptions have long been one of the construction industry´s biggest headaches. Yet, ever since the pandemic, a shift has been made towards a more online-driven way of buying, even for construction, who up until a few years ago was still very “pen and paper” focused.
With built professionals wanting to get their products and materials in the jobsite faster and in time to avoid further project delays, last mile delivery has become a strong suit in the supply chain management and logistics value chain, greatly due to the increase in digital platforms that have found a way to optimize this area.
Not to be taken literally, the term itself does not refer to the exact last mile of the delivery process, but rather the final leg, which can lead to trips of up to 100 miles.
Last mile logistics focuses on local carriers to deliver products as quickly as possible with an eye toward creating a seamless, full-service experience for customers.
What is its importance in logistics?
The cost of providing last-mile services across multiple industries accounts for 41% of overall supply chain costs, doubling the amount in other categories in the delivery process like parceling and warehousing.
Last Mile logistics is undoubtedly a crucial challenge for society and companies that work and operate mainly in large cities. Deloitte gathers its significance on:
- Environmental sustainability, where freight transport representing approximately 25% of the contaminating gas emissions, and the worsening in air quality may jeopardize the health of the increasing population living in urban areas.
- Urban traffic congestion, where 20% of urban traffic is caused by freight traffic.
- Logistic efficiency and the costs associated with freight transport and distribution, which erodes the net profit of many companies in the transport industry to negligible levels.
Therefore, it´s safe to say that last mile delivery has become a “rising star” amongst the supply chain main solutions who are quickly seeing the eyes of investors flocking towards them. “More than a trend, it´s a need that had not yet been properly addressed.
The construction industry is still ripe for more innovation and more disruption in this area, since the opportunity areas to cover, and the markets in which are needed, is ample” expressed Gonzalo Galindo, Head of CEMEX Ventures. “We need to find a way to get more building materials into the jobsite, faster and more efficiently, and we believe that through this year´s Construction Startup Competition, we will identify more solutions that allow us to do so.”
What are the main challenges?
Beyond the basic inefficiencies with last mile delivery, the construction industry also faces some additional challenges when getting materials to job sites.
Oftentimes new projects don’t have clear addresses yet, the jobsite can be difficult to route, and drivers are not entirely sure where to drop off the merchandise requested. Likewise, delivery suppliers don´t have the capacity for large and bulky items, often resulting in the delay of bigger materials due to the lack of proper transportation.
These miscommunications cause delays, which increase a project´s costs and hinders the end-consumer. Moreso, suppliers also often need to deliver fragile items (like crystal windows) or hazardous goods that a regular courier or delivery partner may not be certified to transport. Not to mention that those that choose to delivery without the proper care may result in damaged property, adding up to the extra expenses and delays.
Nonetheless, one of the biggest challenges that professionals face is that in some cases, they need specific construction materials to be delivered within a 2-to-3-hour timeframe. That kind of timing can be difficult and tremendously expensive for suppliers to hit, unless they have available solutions that help tackle this challenge.
Types of last mile delivery
When you are hungry and don´t want to cook nor leave the house, you grab your phone and quickly swipe through your favorite food ordering app to choose your next meal. Typically, you will have two options: get it delivered ASAP or schedule it for a specific time of the day.
Last mile delivery in the construction industry works just as such, whereas instead of ordering pizza, you can select the materials needed to finish a specific task in your current project.
Through logistic platforms, a contractor or jobsite manager can arrange the delivery of the materials needed in two ways:
- Scheduled: by setting up his order through and app or software that allows him to select a specific time and date for the delivery of materials.
- On demand: by ordering a driver to pickup and drop-off off the materials needed at the exact moments in which it is needed.
In the future, more solutions that integrate product marketplaces and delivery services within the same software can greatly benefit professionals in the jobsite who run out of materials or need to place a quick order before a certain timeframe.
How can it be improved?
The rockstars working at startup GoFor, part of our investment portfolio, have summed the top 3 ways in which the last mile delivery problem can be addressed in the construction industry with the help of last mile delivery platforms.
1. Manage Expectations
Although all parts that make up the supply chain management are important, last mile delivery takes front & center because it involves the end-consumer, who oftentimes has no clear idea of the entire process that comes before he places his order.
Therefore, to avoid overpromising and handling the clients´ expectations are critical for an effective last mile delivery. How can it be done? By promoting transparency and clarity throughout the entire process. This includes giving customers estimates upfront about delivery time and costs, as well as providing updates along the way.
Last mile logistics platforms make it easy to manage expectations with live estimates and automatic updates for the end customer.
2. Optimize Routes
Just like taking a cab in the city, the routes a driver chooses to follow when delivering goods can have a significant impact on the time and cost of the delivery of materials. Yet, manually optimizing routes is very challenging when it comes to driver availability and pickup location, traffic, weather conditions, delivery timeframes, and load/weight capacity.
Algorithms and auto-dispatch technology can help optimize a driver´s routes automatically based on a variety of rules. These technologies reduce (or eliminate) the need for manual intervention when assigning deliveries to drivers, helping ensure drivers are making the most efficient trip possible every time.
3. Last Mile Logistics Data Analysis
Too often delivery costs are considered a line item that´s hard to determine how much a professional is spending, why it’s costing them that much, and how much can it be reduced in future orders. Why? Because of lack of access to the data that help determine where the inefficiencies are.
Logistics data, mostly provided by digital platforms now available, can be a goldmine of information. It can optimize fleet management, find cost savings, and generally make the last mile delivery process more efficient.
Companies focused on the last mile and tracking services
The Canadians who are changing last-mile delivery services for good! GoFor is a last-minute and last-mile logistics partner for distributors and suppliers enabled by a marketplace of drivers. They provide their clients with a reliable and affordable delivery of materials, whether small loads to big, bulky items, either on demand or pre-scheduled.
The platform helps craft a better customer experience, allowing its users to track their orders and its costs, integrate it with their tools, and a contactless delivery of materials to ensure safety for both ends. Likewise, they are now leading the renewable delivery model for the industry by adding electric vehicles, carbon removal offsets, empowered drivers, and smart packaging to their service offering.
The startup was founded in Canada in 2016 and is quickly expanding amongst the biggest cities in United States, offering their services to multiple industries by supplementing their busy fleets or choosing them as an out-sourced logistics partner for deliveries.
The US-based startup developed and on-demand delivery platform for the construction and industrial sectors that addresses a critical pain point within a complicated supply chain, especially for small and medium size projects.
By offering a multi-size fleet variety, suitable for any kind of order, Partrunner´s platform integrates warehouses, retail locations and contractor jobsites, helping match the best delivery option considering the material requested, timing, location and type of vehicle needed, while ensuring significant savings in delivery costs. It also allows its users to manage their requests in real-time, review order details and delivery route, manage invoices and documentation.
Voyage Control is a UK based leading software solution provider for construction, ports, and events clients around the world. The startup´s end-to-end solution can reduce delays, waste, and cost overruns caused by inefficiencies in the construction materials delivery process through optimized scheduling of deliveries and an overview of all transactions in real-time.
Voyage Control is in use in over 200 customer sites, coordinating over 100,000 players and scheduling more than 6 million deliveries. Their customer base includes industry leaders and general contracting firms in North America, Europe, the Middle East, and Asia Pacific. Large multinationals have become the startup’s core customers thanks to the easy-to-scale ‘land-and-expand’ approach since its platform was launched in 2013.
Anywhere there are trucks queuing up to drop off or load inventory, their platform is a best-in-class option for driving efficiency of the site and the team members who run it.
Linkx is a cloud-based logistics software for the delivery of goods in Mexico. Their platform allows the optimization of their operations by managing their loads and deliveries on real-time and integrating all ends of the transaction.
The startup allows freight operators to assign deliveries to their own carriers or third parties, offers advanced shipping notice prior to the delivery of materials, digitizes the delivery confirmation, allows for partial delivery confirmation to avoid billing errors on incomplete orders, and provides a full digitalized report on real-time with data-based conclusions about their clients´ operations.
CEMEX Ventures is at the forefront driving towards the future
At CEMEX Ventures, we know the challenges that must be addressed in the construction industry to drive a construction revolution. As supply chain management goes, the proper delivery of materials in the jobsite plays a key role in driving this revolution. “It´s not only a supply chain issue for us in the sector; material delivery directly affects the industry´s productivity as well,” said Galindo. “If we start aiming at bettering all processes across the construction value chain, including and most importantly that final stretch within the delivery, we can see a direct benefit in a project´s time and cost, two of the biggest challenges in the industry nowadays”.
Our bet is to continue being a driving force in the sector and finding the most promising solutions amongst startups and entrepreneurs. Are you what we are looking for to help boost supply chain management in the sector? Apply today in Construction Startup Competition and let us evaluate your solution.