Your Solution to the Last Mile Delivery Problem

Reviewed by
Vedant Khamesra
Published date:
November 15, 2022

Your Solution to the Last Mile Delivery Problem

As a product moves from A to B, it’ll often change hands at several stages en route to its terminus. The final leg of that delivery chain of custody is what’s known as the “last mile” delivery.

Even though this tends to be the shortest leg of the journey, it’s also the most important stage, as it involves transporting goods to their final destination — be it a residence or a business address. Brief as this may be, there are several significant last mile delivery problems a courier service must prepare for. To stay on top of your delivery management processes, consider strategies to help prevent the last mile delivery problem.

To help with that, we’ll review the more pressing last mile delivery logistics and challenges and propose solutions to address these common issues.

What Is the Last Mile Delivery Problem?

The last mile delivery problem isn’t so much a singular problem as it is a set of hurdles associated with this leg of the delivery process. 

The underlying issue is that it tends to be an inefficient, time-consuming, and cost-exorbitant process. According to Business Insider: “As a share of the total cost of shipping, last mile delivery costs are substantial—comprising 53% overall. And with the growing ubiquitousness of “free shipping,” customers are less willing to foot a delivery fee, forcing retailers and logistics partners to shoulder the cost.” 

When considering the specific challenges that contribute to this dilemma, two major issues stand out:

  • Inherent costs and inefficiencies
  • Customer service

Inherent Costs and Inefficiencies

Last mile delivery is the most expensive part of the fulfillment chain. According to a study from the Capgemini Research Institute, last-mile delivery costs the organization an average of $10.1. And here’s the rub, customers only pay an average of $8.08—and many are unwilling to absorb the total cost. As a result, the business is forced to shoulder the additional costs. 

But why is the shortest stage of the journey so expensive?

Common cost factors include: 

  • Inefficient routing – With last mile delivery, a driver may have to bounce all over a city or town, going house to house, business to business, and everywhere in between. Often, they may only be delivering a single item to each location. Naturally, the quality of your routing will impact the time and cost of delivery. 
  • Lower average speeds – Vehicles experience different fuel efficiency depending on how the driver operates the vehicle. Typically, they’re more efficient on the highway and less efficient in the city. That’s because city driving often involves lower average speeds, increased stopping, idling, accelerating, and other driving behaviors that burn fuel more quickly. Learn more about fleet fuel management to see how you can help reduce fleet expenses.
  • Failed deliveries – Seeing as the average cost per failed delivery to a retailer was $17.78, shipping accuracy matters deeply. Every package that doesn’t reach its final destination can eat into margins and negatively impact the customer experience.

How to Address These Issues

Technology can play an integral role in reducing your delivery management costs when troubleshooting these final mile delivery issues.

For example, fleet fuel cards can:

  • Help you reduce your total fuel costs
  • Monitor your delivery driver's behavior
  • Control your fuel spend

The right fuel card can help you save money and help keep your delivery driver staff happy and retain customer satisfaction. 

Similarly, route optimization tools can help you improve dispatching by finding the shortest and most cost-efficient route for your final mile deliveries, which can help refine your timely delivery standards. This isn’t necessarily the shortest, cheapest, or fastest route, but the one that averages all these variables to chart the optimal delivery route.


Customer Service

In the days of brick-and-mortar retail, managing the customer experience occurred predominantly in the store. But customer demands have changed with the times. Today, eCommerce consumers expect the same quality of service engagement from their online shopping experience. As a result, the last mile plays a critical role in fostering a positive experience, which can place significant pressure on last mile delivery logistics. 

Modern consumers don’t simply demand that their products are delivered quickly and arrive undamaged. They also expect a range of other services from the last mile delivery provider, including:

  • Multiple delivery options
  • Full visibility
  • Returns
  • Rescheduling
  • Delivery notifications
  • Route planning and rerouting
  • Fast delivery

How To Address This Issue

For this challenge, communication is key. Everything you can do to increase customer communication and manage customer expectations will improve the overall experience.  

Customers want visibility over the delivery. 

You can keep them informed by providing delivery time estimates and regular notifications throughout each stage of the delivery process, including when it’s en route, arriving, and delivered. Taking actions to increase transparency with real-time delivery tracking benefits both the customer and the driver.

AtoB — Working with You to Solve the Last Mile Delivery Problem

Understanding the last mile delivery problem is essential for supply chain process optimization for delivery fleet managers, especially if you’re learning how to manage a delivery business or determining how to start a delivery business with contract drivers. To properly address the problem, you must first understand the underlying issues.

That’s where AtoB can assist. Our fleet fuel cards offer exclusive discounts, saving you money with each gallon of fuel purchased. Additionally, the AtoB App can help drivers access the best discounts and prices at fuel stations along their routes.

If you’re looking for a company that’ll go the extra mile for you, get started with AtoB today.


Business Insider. The Challenges of Last Mile Delivery Logistics and the Tech Solutions Cutting Costs in the Final Mile.

PR Newswire. As eCommerce Thrives, New Loqate Study Reveals the Cost of Failed Deliveries.

Capgemini Research Institute. The last-mile delivery challenge

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Reviewed by

Vedant Khamesra

Vedant Khamesra is the driving force behind product management at AtoB. Specializing in strategic partnerships, SMB solutions, and new product development, Vedant seamlessly navigates P&L responsibilities while leading product execution and strategy. He is fueled by AtoB's mission to empower truckers and fleets with intelligent financial tools and services, making their lives easier and more rewarding.

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