Outsourced delivery networks increase delivery speed and reduce costs, FarEye reports

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FarEye has released the full findings of its Eye on Last-mile Delivery report, conducted with Researchscape International, which found that outsourced delivery networks have become a way for retailers to increase the speed of delivery (64%) and reduce the cost (37%) of last-mile delivery.

However, it also pointed out that outsourced delivery networks come with the sacrifice of less control of the consumer experience. FarEye’s initial report findings reveal that 84% of retailers that have outsourced their delivery networks want more control. According to the research, 33% of retailers are challenged by logistics providers’ inability to provide reliable information and they rank carrier performance as the top factor that inhibits delivery speed.

The report analyzed responses from 300 leaders across retail and logistics with responsibility for logistics and retail operations around the world (32% were in the USA, 36% in the Europe, the Middle East and Africa (EMEA) region, and 32% were in the Asia-Pacific (APAC) region).

Overall, the research found that logistics providers’ priorities for performance improvement differed by company size. The responses revealed that for providers over US$100m in revenue, on-time delivery (74%) and cost per delivery (62%) were their top two priority KPIs to improve. For providers under US$100m in revenue, their top two priorities were the cost of delivery (73%) and customer satisfaction (64%). The researchers surmised that as logistics providers grow, complexity and scale increase, on-time deliveries become more challenging to execute with precision.

The report found that 77% of logistics providers expect their budgets for last-mile delivery technology to grow over the course of this year. In particular, 82% of logistics providers claim they are likely to change or buy a new last-mile delivery solution in the next 1-2 years; and 40% of logistics providers expect to buy a last-mile delivery platform in the next five years, with 40% stating they are likely to build their own in-house. Similar to retailers, logistics providers are also evaluating electric vehicles (80%), autonomous vehicles (44%) and drones (38%) to make their fleets more sustainable and efficient, over the next five years.

Stephane Gagne, vice president of product at FarEye, said, “Unlike retail, last-mile delivery is the backbone of logistics providers’ operations and their goals will be focused on delivery performance and cost efficiencies, above all. While their priority improvement metrics don’t differ heavily from retailers’ priority improvement areas, the difference lies in the size of the logistics provider. With size comes complexity, but also efficiency, where the cost per delivery goes down, but the difficulty in managing and tracking orders goes up.”

For more key updates in the last-mile delivery sector, click here.

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