Global Logistical Firms Increasingly Reliant on Last-Mile Deliver Personnel

It is fair to say that the global logistics industry, doesn’t always have the focus it ought to with the final stage of the delivery process. For many in the sector, it is more about the cost of oil and the movement of shipping containers from the Far East to Europe and North America than it is about getting orders to customers. However, the recent upturn in so-called dropshipping businesses has caused some in the global logistical sector to readdress their relationships with last-mile delivery drivers.

This has been a feature of the coronavirus pandemic when so many bottlenecks were created at the world’s major ports where operations floundered under lockdown or partial lockdown conditions. With containers in the wrong part of the world and further problems caused by blockages in places like the Suez Canal, few would have thought that it would be last-mile delivery logistics that would have occupied the minds of senior executives so much over the course of the last twelve months or so. However, according to one influential operator in the industry, Brian Kempisty of Port X Logistics, the worldwide logistical sector is now focused on drayage more than ever before. To be clear, drayage is the term that the logistics sector uses to refer to last-mile delivery services. Any service provider that operates over a short distance will fall into this category and logistics firms use it to distinguish last-mile deliveries from long haulage routes.

According to an interview Kempisty gave in the United States, the pandemic generated new problems for the logistics sector, sometimes also highlighting pre-existing issues that the global supply chain faced already. Kempisty pointed out that this had been particularly evident at US ports where congestion and equipment shortages combined to make importing goods from places like China a greater problem than it had been for decades, one that cost the industry millions. Having identified these issues, Kempisty pointed out that the supply chain coped but only just. Therefore, he has called for the industry to take an entirely new approach. He said that logistics firms had traditionally thought of drayage – and other inland transportation services – as a low priority. Importantly, for courier firms and owner-drivers alike, he said that a sea change was required in the sector and that a shift of the ‘historic mindset’ was needed for the supply chain to go on and thrive in the current economic conditions.

Speaking to the US press, Kempisty said that all beneficial cargo owners (BCOs) must work within the constraints that are still in place due to container shortages and strained employee capacity. However, he claimed that more pre-planning would ‘go a long way’ to help supply chain-dependent business to avoid the most lengthy delays as well as the worst fees at ports. “Drayage, freighting and trans-loading are all things that have altered dramatically in recent years,” he said. Kempisty went on to add that since he founded Port X Logistics in 2017, onward, short-distance logistics was no longer an afterthought but an essential part of his firm’s operations. “If businesses are not planning drayage as part of their supply chain, then they are as good as cooked nowadays,” he said.

During his interview, Kempisty said that Port X Logistics’ successes during the pandemic and in the post-pandemic world had been down to his firm’s reevaluation of last-mile logistical operations. “We help our clients in a cut-throat environment,” he said, “by communicating with them at the very moment that the container starts moving.” According to him, the uptake of state-of-the-art tracking software is the key factor that allows customers to follow their container shipments whether they are being moved as part of a groupage delivery or a multi-container shipment. What he says is the key for maintaining customer satisfaction as goods move along the international supply chain si not simply that software can be sued to track consignments at sea and at port but also once they have loaded onto trucks and vans for the final stage of their onward journeys.

Kempisty said that Port X Logistics gets to work lining up all the various aspects of the inland movement of goods long before shipments are due at their arrival port. He said that this isn’t just about booking drayage drivers but of organising chassis availability and yard space, as well. In addition, he said that logistics firms that are handling trans-loading clients also need to spend more time and energy thinking about sourcing pallets for goods that will be transferred to different forms of transportation. This, in addition to finding suitable storage solutions where necessary, can be a time-consuming process he said but they are also important to have lined up so that goods are not stuck in a port somewhere with no onward plan for them. Although Kempisty certainly sees things through the lens of the supply chain industry in the US, he made it clear that he considers all these factors to be just as important in other markets, such as the UK.

One of the partners at Port X Logistics, Jill Rice, agreed with Kempisty’s analysis. According to her, last-mile planning is now ‘incredibly important’ for the global supply chain business. Rice said that her firm’s success has been down to the fact that they’ve been proactively communicating the need to plan with clients for a better level of coordination for all involved. “When there is a shortage of everything, you just end up just attempting to fill the void of all the lack of resources,” she said. Pointing out that the sector had faced a dearth of container yard space, warehouse capacity, pallets and warehouse employees, she made the point that even greater reliance on drivers was inevitable. Crucially, Rice also said that what this demanded was additional upfront payments. She said that paying a little bit more to a forward-thinking delivery firm could save tens of thousands, in the long run. This is because paying reliable drivers enough to handle the crucial final stage of a delivery in an efficient and planned manner helped to prevent problems with supply before they occurred. “[Our industry] should think of this as though it were preventative maintenance,” she said.

Overall, the point that the likes of Rice and Kempisty are making about the logistics of the modern supply chain sector is that the world has changed. Nowadays, many of the issues that have occurred in international shipping are attributable, at least in part, to the changes in consumer shopping habits over the last decade or so. International shipping used to be for big businesses and retailers who wanted their warehouses filled. However, more and more ordinary consumers think nothing of purchasing items individually from e-commerce platforms only for a door-to-door shipment to be made from manufacturing hubs in China, India and Indonesia, among others. The pandemic may have generated an unprecedented upturn in e-commerce sales but the trend was pre-existing and shows no signs of returning to pre-pandemic levels. Consequently, greater reliance on last-mile or drayage services is what the global supply chain sector needs to plan for. That has to be good news for all those working in domestic delivery services today but will it change the nature of the industry if global operators start to make more demands as firms like Port X Logistics suggest they should?

For the time being, last-mile delivery operators seem to be in the driving seat. If global shipping firms and international freight forwarders want high-quality services for the last mile of their operations, then they are going to have to pay for it in a competitive marketplace. They will certainly have to if they are to meet the modern consumer’s expectations when it comes to delivery times because these are ever more demanding. Bear in mind that average consumers want to get their purchases quicker and cheaper than ever before. The demand for speed and low cost does indicate that last-mile operators will be increasingly pulled in opposite directions by the supply chain sector, however. At what point the market coalesces is anyone’s guess from the viewpoint of 2022, of course.

According to Kempisty, this phenomenon was always going to happen. Referring to what he called the ‘Amazon effect’, he said that the pandemic merely catapulted forward what would have happened anyway. By his estimation, the industry is about four years ahead of where it would have otherwise been because of the global healthcare crisis. His main point is that inland point-to-point intermodal transportation is already being phased out, especially when it comes to container shipments making their onward journeys inland by rail. “[The sector]… will never go back to where it was,” he said. What this means for owner-drivers and courier firms is that there is likely to be a lot more work over the coming years with more and more investment coming into the sector. Although Kempisty concedes that his sector hasn’t always been good at adapting to changing economic circumstances, it is waking up to what consumers really want. “People are heeding the message,” he said.