What is 3PL Last Mile Delivery? Process, Challenges & Best Solutions

This blog explores the key 3PL last mile delivery challenges and their operational impact. We will also look at how smart delivery management software can optimize operations.

As ecommerce, retail and D2C brands continue to grow, managing last mile deliveries is becoming complex for businesses. Rising delivery volumes, high fuel costs, and route inefficiencies are pushing companies to optimize their logistics networks. Industry studies also found that last mile alone accounts for 50% of the total shipping expenses.

So, it becomes critical for 3PL companies to manage last mile better. Many logistics companies rely on 3PL last mile delivery providers to handle delivery execution at scale. These providers manage the movement of goods from distribution hubs to the customer’s doorstep. So that businesses can simplify their delivery operations. But for modern third party logistics 3PL companies, last mile delivery is not just the final step of logistics. It has become a critical factor that affects cost and delivery performance. At the same time, this has proven impact on client retention, and long-term business growth.

In this blog, we will explore what 3PL last mile delivery is and how the process works. Also, it explores the key challenges businesses face, and the best solutions to improve last mile efficiency.

What is 3PL  Last Mile Delivery and Why Its Needed?

3PL last mile delivery is the process where a third-party logistics provider manages the final step of delivery. It involves moving goods from local hubs or warehouses to the end customer.

For example, when an eCommerce or D2C brand gets an order, the product is first stored in the warehouse. Then, a 3PL partner like XpressBees picks up the shipment, assigns to a delivery agent, manages routes, and delivers it to the end customer.

With third party logistics last mile delivery, businesses can:

• Reduce transport and delivery costs through shared logistics networks.
• Improve delivery speed and on-time delivery performance.
• Enable real-time shipments tracking with reliable ETAs.
• Improve accountability with ePOD and status updates.
• Focus on core business areas like sales, customers, and product growth.

How 3PL Last Mile Delivery Works?

The 3PL last mile delivery process starts when an order is packed and ready for dispatch from the warehouse or fulfillment center. Here is a step-by-step process of how it works:

Step 1: Order Pickup and Processing

Shipment details are synced from the business system to the 3PL platform through API or software integrations.

Step 2: Dispatch Management & Order Allocation

A dispatch management software assigns orders to the delivery agents based on real-world factors. This includes location, distance, capacity, and skills to name a few.

Step 3: Route Planning and Optimization

A route optimization software helps 3PL providers to plan the most efficient routes for deliveries. It considers real world factors like traffic, weather, road conditions, and delivery locations.

Step 4: Real-Time Tracking & Visibility

Real-time shipments tracking allows managers to monitor delivery progress in real-time. At the same time, they can track rider movements. Also, live tracking links are shared with customers over SMS or emails.

Step 5: Proof of Delivery

Once orders are delivered, riders can collect ePOD through OTP, photo and signatures. So they can share delivery confirmation with their clients.

What Are the Benefits of Optimizing Last Mile Delivery?

Some of the key benefits of optimizing last-mile delivery are profitability and low delivery cost. Plus, it offers real-time visibility to managers. Read on to know more.

1. Low Operational Costs

Businesses can reduce overall logistic costs by grouping nearby deliveries. Managers can plan shorter routes, minimize idle time, and reduce unnecessary travel. This way managers can reduce fuel usage and overall, per delivery costs.

2. Better Visibility Across Shipments

Managers can track live delivery movement and route deviations. Also, they can track real-time location of every shipment. At the same time, 3PL providers can share tracking links with customers to reduce WISMO calls and manual follow-ups.

3. Better SLA Compliance

Consistent and on-time deliveries help businesses meet client expectations. Better control over last-mile logistics makes it easier to maintain SLAs for enterprise clients.

4. High Delivery Success Rate

Another key benefit of optimizing third-party logistics last-mile delivery is better first-attempt delivery success. When routes are planned well and ETAs are accurate, there are fewer missed deliveries. Plus, you can reduce repeated attempts. This saves fuel costs and time.

5. Competitive Advantage

3PL companies can provide faster, more reliable, and scalable delivery by optimizing the last-mile delivery. This helps them stay ahead in the market.

However, due to a lack of modern delivery management software like TrackoMile, 3PL providers often face common last-mile delivery challenges. They cannot achieve efficiency, visibility, and consistent performance across multiple clients.

Key Challenges in 3PL Last Mile Delivery

High cost, lack of visibility, unoptimized routes, and failed deliveries are some of the 3PL last mile delivery challenges. Continue reading to know in detail.

1. High Cost

Last mile delivery cost goes up to 53% of the total supply chain. Factors like:

• Inefficient routing,
• Vehicle idling,
• And delivery reattempts,

all lead to high per delivery cost. Together, these gaps directly reduce your overall efficiency and affect profit margins.

2. Lack of Visibility

In 3PL last mile delivery, managers often struggle to track deliveries and rider movements in real-time. This reduces control, slows decisions, and create gaps between planned routes and actual on ground execution.

3. Traffic and Congestion Issues

Traffic and congestion in 3PL operations are highly unpredictable. Social events, road work, peak-hour rush, and diversions often block or slow down planned routes. As a results riders end up taking longer routes or sit idle in traffic. Altogether, it increases fuel usage, delays, and delivery re-attempts.

4. Failed Deliveries

Failed deliveries are a common issue in 3PL last mile operations. Customers are often unavailable, or addresses are incorrect. Each failed attempt forces a re-delivery, which adds extra fuel, time, and effort. Over time, this reduces productivity and increases overall delivery cost per order.

How to Optimize 3PL Last Mile Delivery Operations?

By using advanced route optimization software, real-time tracking and ePOD, 3PL providers can improve last mile delivery operations. Here’s how:

1. Leverage Smart Dispatch Management

Dispatch management software allows 3PL managers to assign orders based on driver availability. It also considers factors like delivery location, and order priority. So, they can reduce manual errors, travel time, and overall fuel usage.

2. Plan Better Routes

Use advanced route optimization software that allows you to plan route based on real-world conditions. This includes delivery priority, weather, and location. So, you can reduce unnecessary travel, save fuel, and complete deliveries on time.

3. Track Deliveries in Real-Time

Real-time tracking allows managers to view delivery progress and rider movement in real-time. If a vehicle is stuck in traffic, taking longer routes, or delayed at a delivery point, teams can respond immediately and update customers on time.

4. Use ePOD for Delivery Verification

ePOD allows riders to record the proof of delivery by using OTP, photo, or signature. This reduces delivery disputes and prevents fake delivery claims. Plus, 3PL providers can share verified records with enterprise clients.

5. Improve Customer Communication

Today, customers expect real-time updates of their orders. In fact, around 78% of consumers expect delivery status updates. Also, they may prefer live ETA and tracking visibility during delivery. By sharing real-time order updates, managers can reduce WISMO calls and improve transparency.

How TrackoMile Solves 3PL Last Mile Delivery Challenges?

TrackoMile is a leading 3PL delivery management software. It is designed for companies looking for a unified platform to plan, track, and manage deliveries from a single platform. It uses a rule-based engine to assign deliveries based on 50+ factors such as rider shifts, capacity, skills, and location. So, businesses can reduce manual dispatch errors and handle large volume orders.

It allows managers to keep a bird’s eye view on multiple deliveries from a single dashboard. They can track route deviations, idling, and even access up to1 year of route history to prevent delays and ensure accountability. Along with that, riders can collect ePOD through OTP, photo, or signatures to prevent disputes.

TrackoMile offers a dedicated rider management system. It allows riders to securely mark-in and mark-out their attendance based on their shifts. Managers can quickly chat or communicate with riders over in-app chat for messaging or voice calling options.

It brings delivery planning, rider management, tracking, and communication into one platform. This makes it a complete delivery management solution for 3PL last mile delivery.

Frequently Asked Questions

• Why is last mile delivery expensive for 3PL companies?

  Last-mile delivery is expensive for 3PL companies as it involves different operational costs. This includes labor costs, fuel, route inefficiencies, and delivery re-attempts. In rural areas, riders take long routes to avoid poor roads. This increases the per delivery cost for companies. In the same way, in urban areas, traffic and social events can lead to delays and high operational costs.

• How does real-time tracking help 3PL companies?

  Real-time tracking allows 3PL providers to track delivery progress in real-time. Plus, they can also track order status. This allows managers to timely identify delays and route deviations and offer timely resolution to the riders. At the same time, it allows them to share real-time updates with their customers. This improves transparency, customer experience, and repeat business.

• Which software is best for 3PL delivery management?

  TrackoMile is the best last mile delivery management software for 3PL deliveries. It offers dispatch planning, route optimization, rider management, and ePOD in one platform. So that 3PL providers can ensure 100% visibility and control across their operations. Even managers can set geofencing around delivery locations to ensure better accountability.