More reasons to take control of the last mile

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Penelope Ody:  With carrier capacity under pressure at peak times and a growing shortage of drivers, it is hardly surprising that major retailers are investing in their own logistics networks – there is the little matter of customer service to consider as well.

With Black Friday behind us, retailers and carriers will no doubt be hoping that the Christmas peak runs smoothly, with none of those media horror stories about presents that fail to arrive in time.
In future it may be an increasingly forlorn hope as labour shortages in logistics continue to grow.
With the majority of HGV drivers already in or approaching their 50s, a dearth of under 25s in the sector – not helped by the cost of insurance for this age group, and many EU workers deciding to head for home rather than wait for Brexit, finding qualified staff becomes ever more challenging.

Penelope Ody is a retail market specialist.

The FTA recently reported that driver shortage numbers had risen by 49 per cent in the year to Q2 2017 with the average age of drivers now 48.3 years, with 63 per cent of them aged over 45 and 14 per cent more than 60.
Van drivers may not be quite so old, but job shortages are just as severe in this sector with a significant number of Poles and Romanians among them.
It is perhaps not surprising then, that – as Malory Davies reported in November’s issue of Logistics Manager – retailers are increasingly eager to take control of the “last mile” and develop their own delivery networks.
It’s a major trend in the US, but we’ve already seen Amazon adopt this approach in the UK. And as far back as 2013, Dino Rocos, John Lewis’ operations director, admitted at a Descartes retail summit to being “uncomfortable about our reliance on the carrier network”.
As he said then: “We expect to bring operations in-house in time… We are aware that our carriers are not working uniquely for us and also that home delivery demand is outstripping capacity.
We don’t want to be in a position where we can’t honour our commitments to our customers.”
Running an in-house home delivery fleet is expensive – and the economics of supply and demand suggest that a shortage of drivers will inevitably push up wages: so it may be something that only larger retailers with deep pockets would contemplate.
But that last mile is a crucial component of the retail offer.
A report published this summer by Citizens Advice* quoted a study from Europe Economics that found almost seven in ten online shoppers (69 per cent) had experienced delivery problems – from 38 per cent citing late delivery and 28 per cent complaining of being “carded”, even though they were at home, to 5 per cent reporting unpleasant or intimidating delivery staff.
A study of more than 8,000 consumers published in October by JDA and Centiro†, suggested that 76 per cent of UK shoppers would switch to an alternative retailer if they experienced problems with home delivery; French, German and Swedish shoppers were all slightly more forgiving – between 54 and 68 per cent would take such similar draconian action.
Yet another survey, this time a You Gov study, found that 60 per cent of consumers questioned blamed the retailer, not the carrier, for any problems associated with delivery.
Good customer service is a key differentiator for retailers and one they take very seriously.
Poor carrier performance is thus clearly damaging, so – apart from assuring sufficient capacity to meet that consumer commitment that so concerned Rocos – bringing delivery operations in-house also improves control of service for that final last mile.
We all have our relevant delivery horror stories: mine is the UK Mail driver who persistently dumps parcels at the front door without either ringing the doorbell, or closing the garden gate after him (not good news when you have a dog running about in the garden).
The small independent nursery was most upset and offered a replacement when I reported their box of plants left upside down on my doorstep despite a large arrow and big black letters stating “this way up please”.
Marks & Spencer was equally apologetic last month when I complained that the same driver – this time I got to the door as he climbed into his van – had shouted back that “I’ll not deliver to you again, you’ll just have to collect your stuff”, when I politely asked him if, in future, he could ring my door bell and be sure to close the garden gate as he left….
“This is not the high standard that M&S deliver,” replied their customer service department, “we take this very seriously”.
Hardly surprising with service like this retailers want to take that last mile back under their own control.

This article first appeared in Logistics Manager, December 2017

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