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Your Order is on Its Way: the Last-mile Problem

Deliveries are not as simple or easy as it looks. On the side of consumers, it only involves making a purchase online and waiting for it to arrive at their doorstep. However, the package travels, often miles and miles, to get to its destination. It requires manpower and resources to transport it from its source, which is the seller, to its goal, which is the recipient.

And, as consumers demand speed, logistics service providers have to grapple with the problem of the last mile.

What is the Last Mile?

The last mile is the term used to describe the final stage of delivery. It is the journey between the local hub and your house.

It is a problem that no one can seem to solve.

The last mile is the key to customer satisfaction. The customers want their packages to arrive as quickly as possible and in the best condition. However, it is also the most time-consuming part of shipping and the most expensive.

It takes a while before the package leaves the local hub and arrives at its destination because, most likely, the delivery vehicle is making multiple stops. When the tracker says that your package is “out for delivery,” it is on its way to you. The delivery vehicle has to drop off other packages along the way.

It is also expensive because of the long routes that the delivery vehicle has to travel. It is especially hard in rural areas where the houses are few and far between. The route could be several miles apart to deliver two or three packages. It not only will take time, but it will also require gas. Cities, on the other hand, have traffic jams.

Even if there are more packages to drop off and the houses are right beside each other, fuel is still being burned and wasted. And, when no one is around to receive the package, the delivery vehicle will leave with it and come back another day.

So, do not be surprised if sending your balikbayan box takes a while and becomes expensive. The logistics service provider has to consider the last mile in addition to size for the price of the balikbayan box.

The Last Mile Problem in the Philippines

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The last mile is an even bigger challenge in the Philippines, an archipelago made up of over 7,000 islands. Moreover, the infrastructure needed to enable a smooth and easy last-mile delivery is nonexistent in many places.

The e-commerce market in the Philippines is on a steep incline. The pandemic only sped up the adoption of online shopping in the nation.

Before COVID-19, only 2 percent of all Filipino internet users were online shoppers. To compare, neighboring Indonesia and Thailand have a 5 percent and 10 percent online shopping penetration, respectively.

It all changed during the pandemic. Now, as many as 91 percent of internet users all over the Philippines searched for goods and services online in 2020. Of those internet users, 76 percent made a purchase.

The demand for e-commerce will only increase from there. By 2025, the market is expected to surpass $12 billion.

One survey found that nearly half of all Filipino consumers will continue to shop online at the same rate after the pandemic. The most preferred mode of payment is still cash on delivery, followed by credit cards and then digital wallets such as PayPal and G-Cash.

How to Solve the Last Mile Problem?

To solve the last mile problem in the Philippines will require the effort of many participants. The local and national governments will need to step up and provide the road infrastructure that will enable delivery vehicles to reach their destinations with ease.

The public sector can also enable smaller and local logistic players to increase capacity and help fill in the gaps where the bigger providers fail to address. They will need more, bigger vehicles. In addition, smaller logistics services will need to adopt a digital solution that will help optimize routes and make the last mile delivery more efficient.

Warehouses can employ advanced management systems to improve the allocation of loads to the right driver. Doing so will make fleet utilization more efficient and enable delivery vehicles to meet their schedule.

The last mile delivery matters because it can make the customer happy with the transaction or leave them frustrated from waiting too long. However, it is expensive and time-consuming. Multiple solutions are needed from multiple sectors to make last-mile delivery more efficient.

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