First Mile vs Last Mile Delivery
What is First Mile vs Last Mile Delivery?
If you want to get into industrial real estate investing, understanding fire and last-mile delivery are key to success. What exactly are they? First Mile refers, not surprisingly, to the first point of the supply chain. During the First Mile, products and goods are transported from a manufacturer (say from the manufacture’s warehouse or production facility in Atlanta to the a holding center, typically a retailer’s warehouse (so, say Amazon’s warehouse in the suburbs of Chicago). The last mile is getting these goods to the consumer (or the final leg of the journey).
The focus in industrial real estate has definitely been last-mile delivery. Companies such as Amazon and Walmart have been investing significant amount of capital to optimize and make last-mile delivery as efficient as possible. Amazon, for example, has spent approximately $2.5 billion for its one-day delivery program, to get its products to consumers as quickly as possible (in this case–just one day).
There are many challenges to last-mile delivery:
Bulky items such as refrigerators are now ordered online, but getting those to consumers are very difficult because of the size of those items.
Retailers want to get their products to consumers as quickly as possible, which puts extreme pressure on the logistics and supply chain.
Traffic congestion results in delays and increased fuel consumption as delivery vehicles get stuck in traffic.
Some consumers homes or addresses tend to be in difficult-to-reach places (maybe off-road or the streets are unpaved or blocked). If the delivery address is incorrect, or not easily discoverable, that can further delay the delivery and increase costs. Sometimes the warehouse that holds the goods before they are finally delivered to the consumer may not be close by, which causes additional delays.
The inability to find parking for a delivery vehicle for delivery workers to actually grab the items and get them to the consumers’ homes or offices can slow down last-mile delivery.
Customers aren’t always available to pick-up their orders when the delivery is scheduled, which can result in delays, returns, increase in costs, and frustrated consumers.
Safety issues such as car accidents, inclement weather, and thefts impact deliveries.