Last Mile Delivery: Optimizing the Final Step of Shipping

Last mile delivery—the final leg of a package's journey from distribution center to customer's door—is the most expensive and complex part of shipping. This guide explores strategies to optimize last mile operations and reduce costs.

What is Last Mile Delivery?

Last mile delivery refers to the final transportation step where a package moves from a local hub to the end customer. Despite being the shortest distance, it often accounts for 50% or more of total shipping costs.

Why Last Mile is Expensive

• Individual deliveries to unique addresses
• Low drop density in residential areas
• Failed delivery attempts
• Traffic and parking challenges
• Customer availability issues

Last Mile Delivery Options

Traditional Carriers (USPS, UPS, FedEx)

• Extensive networks
• Reliable tracking
• Various speed options
• Best for most e-commerce

Regional Carriers

• Lower costs in specific areas
• May offer better service locally
• Good for high-volume routes

Crowdsourced Delivery

• On-demand drivers
• Flexible capacity
• Same-day capability
• Variable quality

Optimizing Last Mile Costs

1. Carrier Selection by Zone

Different carriers excel in different areas:

• USPS: Strong in rural residential
• UPS/FedEx: Strong in commercial/urban
• Regional: Can beat national carriers locally

2. Delivery Speed Alignment

Match delivery speed to customer needs:

• Not everything needs overnight
• Ground shipping often arrives in 2-5 days
• Offer options at checkout

3. Package Consolidation

When possible:

• Combine multiple items in one shipment
• Reduces per-package delivery cost
• Better customer experience

4. Address Verification

Clean addresses reduce failed deliveries:

• Use address validation at checkout
• Standardize formats
• Verify apartment/suite numbers

Customer Experience Factors

Delivery Notifications

Keep customers informed:

• Shipped confirmation
• In-transit updates
• Out for delivery alerts
• Delivered confirmation

Delivery Instructions

Allow customers to specify:

• Safe drop locations
• Gate codes
• Delivery preferences

Flexible Options

Offer alternatives:

• Hold for pickup
• Redirect to neighbor
• Schedule delivery date

Last Mile Metrics

Track these KPIs:

• On-time delivery rate
• First attempt success rate
• Customer satisfaction scores
• Cost per delivery
• Returns due to delivery issues

Future of Last Mile

Emerging trends:

• Drone delivery for rural areas
• Autonomous vehicles
• Smart lockers and pickup points
• Sustainable delivery options

Conclusion

Last mile delivery significantly impacts both costs and customer satisfaction. By choosing the right carriers, offering appropriate delivery options, and focusing on address quality, you can optimize this critical shipping phase.

AtoShip helps optimize last mile by comparing carrier rates for each destination and providing tracking visibility throughout the delivery journey.