Logistics firms must increase last mile spend

The growth in e-commerce has boosted the logistics industry and will continue to do so, with 92 per cent of companies seeing it as their largest area for growth over the next four years. But continued technology innovation and investment are critical in the face of increasingly demanding customers. That’s according to new research commissioned by Barclays’ Transport & Logistics and Retail banking sector teams.

Business might be booming, but delivering items to consumers is posing a significant challenge. Consumers not being at home to receive their delivery is the number one issue for logistics companies, listed by 63 per cent of firms as a cause for concern. This tops that of managing costs (57 per cent) and managing peak times (55 per cent). One in five consumers questioned stated that they needed to re-arrange delivery of a parcel in the past year. With 45 per cent stating they would order more products online if delivery services were improved, 61 per cent of logistics firms say that improved tracking (61 per cent) along with improved notification alerts (44 per cent) will be their top areas for future development. For 36 per cent adding the option for Sunday delivery is of interest for future service improvement, a move which will be surely welcomed by consumers as just under 70 per cent of them wanted deliveries on that day. At the same time, however, less than 12 per cent of logistics companies feel that this service will specifically drive the growth of their business in terms of sales or profits.

One area that both logistics firms and retailers are working on, according to Barclays’ report, is the size of packaging for deliveries. With letterbox sized packages set to see the largest increase of deliveries by 2018, increasing by 45 per cent, being able to fulfill delivery in the first attempt will lead to a reduction in costs associated with repeat delivery services and so has obvious benefits for the both the retailer and the consumer.

While the growth of online shopping will boost logistics companies’ business, 52 per cent say that having to cope with this increased capacity could also pose a challenge. An increasingly demanding consumer (35 per cent) and surge in the use of free delivery by retailers (32 per cent) along with the rise of click and collect schemes (31 per cent) are also deemed to be potential threats for logistics companies. Yet while click and collect offerings appear to be popular, consumers believe it’s an imperfect solution, with 23 per cent of those surveyed deeming it “inconvenient” and 78 per cent would prefer goods to be delivered direct to their homes instead.

Mike Rigby, head of manufacturing, transport & logistics at Barclays, comments: “A competitive and growing delivery market is an exciting place to be at present. Where there is growth, there is opportunity and the real winners will be those who invest in technology and innovation. The evolving dynamic between retailers offering a range of delivery options and consumers demanding more flexible delivery methods is an interesting one. However, the predicted growth over the next few years clearly highlights that the opportunities are there for those operators who carefully reassess their delivery strategy and continue to innovate and invest in fulfilling the all-important last mile.”

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