Today's Trucking

IN PRINT — The Last Mile: Companies from Amazon to Zootly are transforming trucking

Posted: March 30, 2017 by Peter Carter

The last mileConsumers are now a click away from just about anything they want to buy. But the story of convenience does not end there. These e-commerce transactions are also transforming the way goods are shipped from Distribution Centers, and even giving birth to new private fleet models.

Some call it the Amazon effect. Others refer to it as Uberization. And this A-Z guide offers a glimpse at the many factors affecting the business.

A: Amazon – From its origins as an online bookseller in 1994, Amazon has outgrown Walmart and is now the leading e-retailer in the U.S., and it has more than 304 million customers worldwide. “In a very short period of time, Amazon has been able to amass a simply astonishing level of market share,” says Ontario-based retail consultant Doug Stephens, author of the upcoming book Re-engineering Retail. “It’s really leaving its competitors in its wake.” In September, the Seattle-based retailer announced that certain Toronto and Vancouver customers known as Amazon Prime members would also be promised “same-day delivery.” Earlier, Amazon announced it would roll out “thousands” of Amazon-branded trucks, and is currently working on an Uber-style app that will eliminate freight brokers. In these situations, the retailer is competing with traditional couriers like FedEx and United Parcel Service.

B: Bowflex – Yes, as in the workout machine. Here’s why: Bob Gauthier of Cornwall, Ontario-based Seaway Express admits that as direct-to-home retailing expands, drivers are expected to develop a broader repertoire of skills. “Last month a lady berated our driver because he showed up alone for the delivery and she expected the Bowflex to be installed in her house, ready to go. There is sometimes a huge disconnect between what we are paid to do and what the buyer expects.”

C: Christmas – Holidays remain a good time to be in the business of last-mile shipments. Comments Lisa Lisson, president of FedEx Express Canada: “Each year we see strong evidence of the continued growth of online shopping throughout our FedEx network, especially during the holiday season where the number of packages making their way through our network continues to grow.” In its annual shopping survey, FedEx saw a 16% increase in the number of respondents planning to shop online in 2016, when compared to the number who said they did just that in 2014. Says Lisson: “E-commerce is now the new normal.”

D: Distribution Centers – When asked how trucking companies might profit from the trend in last-mile shipments, Jonathan Starks of transportation analysts FTR Associates refers to warehousing and Distribution Centers. “We’re seeing some wholesalers holding on to a lot more inventory than they used to. It’s what you call the Amazon Effect: More warehouses that are more centrally located in order to do quick local delivery. Understanding where DCs are is going to be vital to setting up your truck operations so you can serve them.”

E: E-commerce – It’s 2017. Time to view e-commerce as -simply another word for commerce.

F: Free – Consumers are increasingly expecting goods to arrive at their door for no extra charge. Katie Erb, accounts manager at refrigerated specialist Erb Group says, “New customers or households are sometimes naive about the fact that they have to pay for shipping in the world of ‘free-shipping-if-you-spend-so-much-money’ that Amazon has created.” These expectations of free shipments are going to be the undoing of Uber-like brokerages, argues Dick Metzler, Chief Marketing Officer at uShip, a sharing-economy-based company that focuses on delivering vehicles, furniture and other bulky goods. The former FedEx, DHL Express and APL Logistics employee predicts that services built on “ride sharing” platforms will not be able to meet on-demand orders for parcels or food in one to two hours. “What works is route density; short miles between stops. One-to-two-hour deliveries destroys the ability of a carrier to consolidate a route.  But consumers don’t want one day. And they want free deliveries.”

G: Garbage – Waste management fleets are responsible for the true last mile. If you think they’re immune from new business models, think again. Residential junk removal services now offer pricing and scheduling online, and customers often do little more than point at the trash they want to be moved. It doesn’t even have to be carried to the curb.

H: Home deliveries – They currently represent a fraction of trucking business, but that fraction is growing. Canada’s largest for-hire carrier, TransForce, recently expanded its last-mile delivery business in the U.S. by acquiring Hazen Final Mile from parent company Hazen Transport. The acquisition gives TransForce an owner-operator-based “white glove” delivery service that runs nearly 500 daily routes in 20 U.S. cities, from Boston to Atlanta, Detroit and Texas. Package and courier operations represent TransForce’s fastest-growing segment, comprising numerous prestigious North American brands.

I:  In-store retail – While e-commerce transforms many deliveries, it’s worth noting that more than 90% of shopping is still done in brick-and-mortar stores, according to Statistics Canada.

J: Just In Time – Retailers are looking to streamline warehousing operations, and consumers want goods when they want them. Sound familiar? The stresses are similar to Just In Time deliveries that emerged when automotive manufacturers wanted to reduce the number of parts they needed to keep on hand.

K:  Katz Moving – This New York-City-based household mover is now part of the Zootly organization (see “Z”). Katz president Mitchell Newman says Zootly’s vetting process helps counter the bad reputation that the moving industry has acquired over the years. The company reportedly gets about 15% of its jobs from Zootly, while crew downtime has decreased.

L: Last mile – This is the most inefficient and costly part of a commodity’s journey from manufacturer to end user. The phrase started life in the telecom industry but has migrated to transportation. This last leg of the supply chain sometimes comprises up to 28% of the total cost to move goods.

M: Millennials – This generation from 18-35 is a driving force behind the Uberization of freight, and has been raised on free music, free movies, and want furniture and toys delivered for the same price. (We hope they let us know how that works out for them.)

N: None – The exact number of goods and services that consumers can expect to be delivered at no cost to anybody. 

O: Online – Remember the millennials? A recent FedEx -survey of online shopping showed that they’re also far more likely to shop online than other consumers.

P: Projections – Toronto-based retail analyst Ed Strapagiel insists that getting a handle on online shopping is akin to herding cats because studies which measure online business are “based on projections rather than actual sales data from retailers, and many [market research firms] were including more than actual retail in there – a lot of them include travel, accommodations, entertainment, telecom services and even foodservice.” 

Q: Quarter – More than ¼   of the cost of getting an item to a customer involves the last mile, according to FTR’s Starks. 

R: Retailers – Legacy brick-and-mortar retailers are -taking the shifting buying and shipping patterns very seriously. Hudson’s Bay spent $60 million last year to discerns strategies that will help it compete with Amazon.

S: Skillsets – If drivers are entering consumer homes, they’ll have to bring new skills to the job, including above–average -communication abilities and diplomacy.

T: Transparency – There’s never been more demand for transparency in delivery models.  Here’s Nicolas Dorget, vice president of strategic alliances at UPS Canada: “If you order something using UPS My Choice, you get full control of the -delivery process.  You’ll get a text or an email telling you it’s on the way and you have an option to redirect that package or have it delivered to an access point.  If you talked to me about this back in, say 2000, I would have said that’s impossible.”

U: UberFreight – The company that revolutionized the taxi business is hoping to do the same to trucking. Uber’s newest brainchild, UberFreight, opened its portal two days after Christmas, accepting carriers and shippers alike. So far it appears Uber is trying to do away with freight brokers, but industry watchers
also suspect Uber will also spend -considerable energy developing and expanding the – autonomous trucking project known as Otto, which it bought for US $680 million.

V: Vans – Expect vans to become an increasingly familiar sight on the road. The Ford Transit Connect has become the top-selling van in the world. And Mercedes’ proposed new electric powered Vision Van will be the world’s first vehicle to digitally connect the shipper to the recipient. The van – currently a prototype -comes equipped with drones that grab parcels through a roof-mounted slot. Power is provided by 75 kW electric drive system with a range of 270 kilometers. Stefan Maurer, head of future transportation systems for Mercedes-Benz Vans, says you can load this van in five minutes. “The racks are already filled with the parcels in the order they need to be distributed according to the most optimized tour planning.”  

W: Wayfair – Niraj Shah and Steve Conine founded Wayfair in August 2002, and it’s now the largest online retailer for furniture in the U.S. and the 33rd-largest online retailer overall. In 2015, the net revenue of Wayfair increased to US $2.25 billion. And they started shipping into Canada in 2008. They have no branded vehicles, but rely on third-party contractors for delivery and offer free delivery on purchases over $75. “Over 80% of our small parcel shipments for Canada spend less than three days in transit,” Wayfair Canada’s spokeswoman Emily Moran told Today’s Trucking. 

X-factor – When goods are delivered direct to homes, drivers have more direct interactions with consumers. Customer service becomes the deciding X factor in whether contracts like those are retained and renewed.

Y: Yoga – What truck driver Walt Martin reportedly practised while his level-4 autonomous Otto truck delivered a load of Budweiser to Colorado Springs, Colorado, last fall. In another sign of its zeal to join trucking, Uber purchased Otto for US $680 million and Wired magazine reports that a fleet of six Ottos now operate in the San Fransisco Bay area.  

Z: Zootly – A Canadian-born, NYC-raised trucking app designed to find movers fast. Zootly contracts with existing licensed carriers. Traditional moving services require a multi-hour booking reserved days, weeks and even months in advance. By contrast, Zootly, launched in 2015, deploys vehicles and staff on short notice via the Zootly app. Residential or commercial customers can then track movers and trucks from their phones to get instant updates. Currently, Zootly moves within a 160-kilometer radius of Manhattan, and now Toronto. Chief Executive Officer George Colwell is Canadian, as are a number of the company’s major investors. Most of the development and technical work 

  • This field is for validation purposes and should be left unchanged.
Related Articles