Whether you like it or not, last mile delivery has an outsized impact on customer experience.
Customers expect cheap or free next-day delivery… even same day service and shrinking delivery windows. Except there is no expectation for recent increased delivery volumes to change. When surveyed, 75% of consumers intend to stick with their new purchasing behaviors even after COVID-19 is under control.
To flourish in this environment, you need to keep your last mile delivery fleet on the road running with optimal efficiency.
Every aspect of your delivery fleet needs to be monitored. Optimize performance for the vehicles that you currently have and know which ones drag your profitability down. Keep your drivers in your vehicles supporting the logistics that make it all run. To accomplish this, let’s take a look seven key areas of efficiency that have the potential to give you the most bang for your fleet dollars.
Ensuring that you have the right vehicle for the right job is the starting point in vehicle acquisition. The requirements of a last mile delivery fleet have changed as consumers now purchase items online that would have been unthinkable even 10 years ago. With demand for immediate delivery, orders ship in multiple boxes—again, increasing volume.
The growing variety of merchandise necessitates that last mile fleets be equipped to perform the delivery of anything from fragile items to refrigerated medicines to appliances that need a knowledgeable installation. When considering new vehicles, it may be time for an analysis of your current vehicles’ freight and routes. Your fleet management experts may need to do a site visit. Talk to your drivers and gain a full understanding of conditions unique to your business.
Look at your current vehicle cycling plan; in today’s pandemic world, you may need guidance in the challenges of acquiring vehicles and the optimal timing of your remarketing.
Interest in electric vehicles (EVs) is accelerating. Freight movement is a growing contributor to greenhouse gasses and in addition to government goals, your company may have its own sustainability goals. In October of 2020, Donlen experienced as many inquiries for fleet EVs as in all of 2019. The only factor holding many fleets from faster adoption is a lag in OEM development of larger EV vehicles.
With EVs there are factors to evaluate: the higher cost of the initial investment, access to a grid of charging stations, lack of availability in larger vehicles, downtime for charging, the daily range of each vehicle, high costs of depreciation, and understanding which routes will be adaptable to EVs. These factors, along with current low oil prices, may slow adoption for you. However don’t discount EVs, the trend is growing with expectations that EVs will have a TCO of 15-25% less than internal combustion engines by 2030.
A good fuel management program will provide a discount on fuel purchases, availability to a robust nationwide network of fueling sites, and the data that you need to see where your money is being spent. You don’t want deliveries delayed because of out-of-route fueling. You also don’t want to pay for 30 gallons of gas to fill a 25-gallon tank.
Fueling should be easy your drivers, while providing you with the reporting and analysis that lets you know when your current practices are costing too much. Your driver gets to fuel up without concern over receipts and reimbursement, finding the best on-route options via their smart phones — you get the data and the savings.
How much savings? For fuel discounts, take the example of a 1,000-vehicle delivery fleet with each vehicle driving 25,000 miles per year averaging 18 mpg. A 1.5 cent per gallon discount would save you more than $20,000 per year!
Maintenance is always about managing downtime. To repeat a recurring theme, a good telematics system coupled with a fleet management program is essential to measuring, controlling and proactively keeping your vehicles on the road. You may know the number of vehicles down, but do you know how many of the instances were avoidable? Well-designed maintenance dashboards can enable you to be more predictive and hands-on in management.
A maintenance management program schedules PMs that make sense for your business, negotiates costs on unscheduled work, checks warranty coverage, and directs vehicles to shops providing timely repairs. Access to a maintenance contact center 24/7/365 keeps both your vehicle and your driver safely and profitably on the road. Additionally, your time is saved through consolidated billing and constantly updated dashboards showing where you fleet stands at any given point in time.
Compliance keeps drivers and vehicles safe and on the road. Federal, state and fleet level compliance protect your drivers and vehicles in addition to avoiding company liability. A licensing program keeps an eye on changing regulations impacting your fleet.
Is the current state of your driver and vehicle compliance readily available on your fleet management dashboard? You should have an easily accessed view of pre-employment testing, registration expirations, annual inspections, violations, and driver behavior and training. Are you 100% compliant today? What about 90 days from today? With the right reporting and alerts in place you won’t be scrambling when each deadline approaches.
Today’s vehicles offer a variety of safety features such as rear view and driver facing cameras, lane departure warnings, blind spot alerts, and adaptive cruise control. Still, your drivers need company policies and safety instruction. The cost of a safety program is small in comparison to the cost of just one serious crash. Telematics, data, and reporting can assist in understanding driver behavior, but you must follow up with corrective measures and safety education for the information to be of value.
When your vehicle is involved in an accident, your name is attached. Collisions are costly, impactful to your drivers, and a company liability. Not to mention a potential negative impression of your brand.
The first step in accident management is prevention. Your safety program should be identifying high risk drivers, compiling the data that gives you an overview of your fleet’s risk level, and guide you in preventative actions. When all of this data is captured into your comprehensive fleet management program, you can view fleet and individual risk creating customized reports as needed. Identify your high-risk drivers and stay proactive in changing their behavior.
20% of fleet vehicles are in an accident each year. You need a program in place to handle towing, reporting, rentals, subrogation, vehicle disposal and the accompanying paperwork. Why should accident paperwork pull you away from managing your core duties—the logistics of your delivery fleet?
Timing is everything, especially when you want to get top prices for your vehicles. The pandemic has impacted every aspect of our lives (including delivery volumes on the plus side) and vehicle remarketing is no different. The springtime closures of the OEMs cut the supply of new vehicles. Consequently, fleet managers needed to hold on to their existing vehicles past anticipated replacement dates.
Remarketing, always a lagging economic indicator, was strong early in 2020 before the auction houses closed. Then values plummeted. When the auction houses reopened in the summer with low supply, there was a rebound. Another impact to supply is the fact that many fleets are in a holding pattern for selling, anticipating new electric offerings.
If your region is benefiting from high resale numbers, and the timing is right, should you discuss vehicle cycling with your fleet management professional for accurate view of current conditions? With so many unique market factors, it’s an important time to do a thorough analysis of your cycle planning.
Finally, let’s look at telematics and reporting—the key component in viewing and controlling your last mile service. You may have noted that each of our first six steps points to the need for accurate data, measurement, and analysis.
First, you need to capture your key metrics and then you need to understand them. Well-designed automated dashboards specific to your last mile fleet will give you a view into your vehicles, your drivers, fuel, safety, licensing & compliance, and potential opportunities.
Determine which KPIs need to be measured to support you in truly controlling your fleet. Data alone with not provide the answers; the professionals who can interpret the data and advise on its meaning are essential. A collaborative relationship with your fleet management company will find which of your current practices are costing too much.
You need to know how many vehicles are down at any given time, and more importantly why they aren’t on the road. How long have they been sidelined and is anyone working to resolve the issues? Can you prevent this in the future or do those vehicles need to be cycled out—and when?
It may not be a breakdown that has your vehicle sitting. Perhaps it’s a compliance problem, driver absenteeism, or poorly scheduled PM. Do you know what portion of your delivery vehicles may be coming due for maintenance during peak delivery times or if there is a recall that could impact a large portion of your fleet?
Maybe you need to be moving underutilized vehicles to a region where they are needed more—a review of current routes would guide you in those choices. Proper collection and analysis of data will show you a larger picture. A fleet professional will show you how to interpret that larger picture.
“I’m still surprised at how many fleet managers from prospective customers come to us utilizing so little of their data. Fleets should be using their KPIs effectively. Having a full picture of the fleet is where the biggest impact on efficiency and costs can occur,” said John Wuich, VP business analytics.
Online purchases now include items unthought of just a few years ago. This translates into a time of unprecedented opportunity for those delivery companies who can balance the demands, the economics and the opportunities of last mile delivery.
As with any other enterprise, last mile delivery will be profitable for those companies who leverage the technology, consultants and business acumen to make a competitive marketplace work for them. Is it time to use your own data to unlock additional profitability?