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Home Special Topic

Route optimization in the context of last-mile delivery

by Tony Mulvey
Friday, August 28, 2020
in Special Topic, Technology
Reading Time: 2min read
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(Photo: FreightWaves / Jim Allen)

The idea of expedited delivery within the trucking industry has its roots in the constantly disrupted last-mile delivery segment. The “Amazon effect,” an e-commerce trend characterized by rapidly evolving delivery expectations of end customers, has overflowed to now envelop the trucking industry. 

 

This has led fleets to scurry for improving visibility into their operations, helping them haul more efficiently. In that context, data has now risen in prominence, with companies looking to leverage data to create actionable insights that can positively reinforce existing workflows. 

 

Primary among technologies expediting delivery is algorithmic route optimization, an operating model that aims to reduce vehicle usage, accurately predict estimated time of arrival (ETA) and create dynamic routing. With this, companies can lower delivery costs and ensure deliveries meet specific delivery time windows, increasing end-customer satisfaction. 

 

In the e-commerce market, expedited shipping has a meaty role to play with customer retention. Aside from being accustomed to next-day and two-day shipping, end customers also expect high transparency into their parcels as they move through the supply chain. Providing accurate ETAs will not only improve the customer buying experience. Dynamic routing can also help account for unexpected incidents in the driving environment, such as accidents or inclement weather. 

 

Route optimization can help companies deal with driver shortages, which can become more pronounced during black swan pandemic events like COVID-19, feeding the growing disconnect within the truck driving ecosystem. 

 

Though the demand for truck drivers keeps increasing every year, the average driver age remains over 50, coinciding with a lower uptake among the younger workforce in joining the professions. By optimizing routing, delivery companies can maximize the number of delivery trips that their drivers manage in a day.

 

Studies from Market Research Future indicate that the route optimization market will grow at a compound annual rate of 11.4% between 2018 and 2023. It estimates that the market will have a valuation of over $5 billion by 2023. In addition to the trucking industry, route optimization solutions will make deeper inroads across several last-mile segments like food delivery and ride-hailing

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Tags: Last mile deliverylogistic researchroute optimizationtransportation research
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Tony Mulvey

Research Associate, FreightWaves

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