6 Tips for Reducing Last-Mile Delivery Costs

Last-mile delivery is the last lap of the delivery race. It’s the home stretch in the supply chain, gobbling up around 53% of total supply chain costs. 

Why? It’s a mix of fuel, labour, reverse logistics, returns, the environment, maintenance, and storage—it’s a whole package deal.

Customers are about instant gratification, expecting same-day delivery when they click that online order button. With the need for speed on the rise, companies are searching for ways to trim down those last-mile delivery costs. Understanding last-mile delivery meaning is imperative to cut down last-mile delivery costs.

Here are some tips to make that last mile a cost-cutting breeze and how to improve last mile delivery.


What are Last-Mile Costs?

It takes a Last-mile cost to get that package from a distribution centre to your doorstep. It’s a make-or-break moment for customer satisfaction and having a cost-effective and slick system in place. That’s the golden ticket to building brand loyalty.

If last-mile delivery isn’t a well-oiled machine, it’s trouble city. We’re talking financial hits, a bruised brand image, and customers left grumbling about their experience.

The last mile costs an average of $10.1 per package. And get this: businesses typically charge you $8.08 to cover these costs, dipping into the profits. Even if you’re handling smaller packages, it can still burn a hole in your pocket. Delivery drivers alone snag an average hourly salary of $15.69, not to mention other costs like warehousing, fuel, and vehicle TLC.

Now, do the math. If you take a $2 hit (at least) for every delivery, the last mile problem starts to sting. It’s clear—drivers need to hustle with multiple deliveries per hour to keep the business wheels turning and growing. It’s not just about the package; it’s about the dollars and sense of making last-mile delivery work.


Six Tips for Reducing Last-mile Delivery Costs

The last-mile delivery benefits far outweigh its challenges. Let’s check out the ways you can reduce the cost of last-mile delivery:

Route optimization

Route optimization finds the smartest way to get from point A to point B without breaking the bank. It’s not just about taking the shortest route; it’s a bit of a puzzle, considering factors like how much stuff you’re hauling, the size of your ride, the traffic vibe, delivery time slots, and where you’re stopping along the way.

If you plan those delivery routes beforehand, you’re in for a treat. It’s a fuel-saving, productivity-boosting trick. Plus, it’s a time saver to pick the perfect route to match when your customers are ready and waiting.

And guess what? With today’s GPS tracking systems, route planning is a breeze. It will put your route plans on autopilot, cutting costs left and right. Optimal routes save fuel and make your vehicles work smarter in the long run. 


Different delivery options

Giving customers the power to pick how they want their goodies delivered isn’t just a nice touch; it’s a game-changer. It’s like a win-win, making customers happy while trimming down delivery expenses.

Why? Well, offering different delivery options lets the company tailor the delivery game plan to fit everyone’s schedule. For instance, cut costs on features that customers might not be interested in. 

For example, if customers are in a relaxed mood for same-day delivery, they can pick a later date and a time that suits them.

And here’s the double win: Multiple delivery choices don’t just save on costs by skipping unnecessary steps; they also cut down on returns and the headache of failed deliveries. It’s not just about delivering; it’s about delivering exactly how and when customers want it.


Enable Real-time Tracking

Real-time tracking is not just a cool feature; it’s a trust-builder and a cost-cutter in the world of last-mile delivery. With this, customers know where their package is, when it set sail, the estimated arrival time, and even if it’s stuck at the nearest warehouse or cruising with the delivery agent. 

But it’s not just for the customers. Real-time tracking is what the last-mile delivery companies need. It’s the key to managing costs, ensuring delivery transparency, and even monitoring how well the drivers are rocking it.

With real-time tracking, companies can cut down on those unnecessary miles, supercharge driver productivity, and, as a bonus, catch any delivery hiccups in the act.

Also, companies can get into the real-time data pool to spot any weirdness in the delivery system. This insider info helps them play detective, fix issues on the fly, and keep the delivery wheels turning smoothly.


Maintain proof of delivery

Companies need to keep a solid record of dispatch and delivery details, the condition of the goods, whether the customer was MIA and the payment deets. 

Instead of drowning in paperwork, go digital. Snap notes, pictures, or videos of everything, and boom—upload it straight into the system. Why? Because having real-time data on hand is the superhero move for tackling customer queries. Plus, going electronic reduces paperwork clutter and saves precious office storage space.

Companies can be delivery champs when you take the reins on last-mile delivery costs—think optimized routes, less fuel-guzzling, and keeping a close eye on the fleet. On-time deliveries mean happy customers, and happy customers mean brand loyalty and a boost in the profit game.


Auto dispatching

Auto-dispatching is a time-saver and game-changer in the delivery world. Instead of doing it manually, let technology do the heavy lifting. Auto-dispatching makes deliveries a breeze, getting them organized and assigned without wasting time on the nitty-gritty.

How does it work? Auto-dispatch tech does the drop assignments for delivery agents automatically. This isn’t just a time-saver; it’s a cost-cutter. Automating dispatch means labour costs take a dip, and productivity shoots up. 

Also, when you combine auto-dispatching with route optimization, you’ve got a powerhouse duo. They team up to slash fuel and labour costs, keep things eco-friendly, and ensure resources are managed like clockwork. 


Decentralize your warehousing

Warehouse strategy is a trick to cut down on last-mile delivery costs. If you bring the warehouse closer to the customer, you’re golden. Stick a warehouse right in the heart of the action, surrounded by potential customers in an urban hotspot. 

Getting to the customer becomes a breeze, especially when time is of the essence. Want to level up? Introduce smaller warehouses in the customer’s backyard, a.k .a. “forward stocking locations” (FSL). 

These FSLs trim shipping costs and keep the inventory in check.


What next?

In a nutshell, cutting down on last-mile delivery costs is all about smart strategies. From choosing the most efficient routes to giving customers delivery choices and embracing real-time tracking, these steps are like the secret sauce for delivery success. 

And why not make life easier with auto-dispatching and strategic warehousing? Adopting these tips can save on costs and keep customers happy with timely and efficient deliveries.