Is the last mile overheating?

News Technology

As with all other aspects of logistics, last mile operations also experienced change during the last two years. Seb Robert, CEO of the last mile specialist Gophr, however, is not ready to blame all changes on Covid. He spoke to The Logistics Point about how the last mile has transformed and what the future holds for one of the most challenging areas along the supply chain.

‘Having the ability to provide a solution that can deliver to all kinds of places and use any kind of vehicle really helped us to navigate what could have been really stormy waters,’ Robert begins. This is not a surprise as organisations quickly had to adapt to people working from home and a plethora of new safety regulations. Those who were able to provide a mixed solution that can quickly be adjusted, saw their volumes grow without the capacity struggle.

Robert believes that for many last mile startups being focused on just a single aspect like the express delivery, for example, was a hindrance. Gophr’s CEO observed that organisations struggled not only with their capacity but also on the manufacturing side.

A combination of Brexit and Covid was most likely responsible for some manufacturing problems. ‘Despite that, many of our clients who had no delivery options from store to home managed to get it up and running very quickly,’ he explains.

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Apart from grocery Gophr noticed an explosion in the pharmacy sector, as well as Covid-19 test kits. Other types of retail also became interested in last mile solutions as they saw their clients stay at home. ‘There was interest from fashion and jewelry shops, as well as DIY’ Robert adds. Gophr works with some well-recognised names like Co-op and Hello Fresh.

Model change

On the other side of the equation were travel agents whose volumes completely dropped. In addition, companies that would usually hire a courier to deliver documents between two office locations, moved a lot of that volume online. ‘Before the pandemic we worked with a lot of SMEs mainly in London but then we were approached by many larger enterprises, Robert says. ‘What they wanted was to get their operations up and running nationally and in a short period of time.’

As the pandemic has calmed down another trend is visible. While the UK was experiencing Covid’s peak, there was a surplus of drivers but many of them have now decided to go back to their original industries. Robert is not certain whether the rise in e-commerce and last mile fulfilment will keep up but he believes the overall market attitude has changed. ‘It would be naive to think that if you do not have a last mile solution in place it won’t negatively affect your business,’ he concludes. ‘We have seen an explosion in the ten minute grocery delivery solutions. That is interesting because it reminds me a lot of the hot food delivery market from 2007 and 2008.’ Looking back at that time Robert says many organisations couldn’t find a sustainable business model and some of the newly born last mile providers might follow their path.

The solution

So what should you do if you want to be profitable? For Robert one of the biggest drivers of inefficiencies in modern last mile deliveries is the requirement for speed, and for very specific use cases like restaurant or grocery delivery. According to him the way to success is to build as many opportunities to serve the widest number of customer types as possible. ‘It feels that prices for these are artificially going down as models are being subsidised by investors in startups, or public companies willing to lose money on deliveries like Amazon,’ Robert says. The answer is not easy as neither established logistics organisations nor newcomers can overcome market conditions quickly and painlessly. ✷

Join Seb Robert on the 12th October to talk about last mile fulfilment! Register now!

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