Uber or Lyft for Last Mile Freight Delivery?
Long distance transportation of goods is a lot more cost efficient compared to the delivery of the last few miles when shipments arrive in cities, which are mostly congested areas.
With the adoption of omni-channel capabilities by an increasing number of traditional retailers, last mile freight delivery has become even more important for both small and big enterprises. Omni-channel fulfillment is all about last minute delivery, that is, from warehouse to store, from store to home, among others.
Can the Uber Model Apply to the Freight Industry?
Uber or Lyft are an exceptional choice for last mile delivery services. Uber has been creating buzz since 2009 when the company first came into being. Easy to use and cheaper compared to any other taxi ride, Uber offers a more pleasant experience for customers. Designed to help people leverage the sharing economy, Uber’s app can be easily downloaded to your smartphones and you can begin hailing your ride.
No, Uber does not own any vehicles; rather, it offers passengers a taxi ride in the vehicles owned by Uber drivers. Can logistics carriers follow the Uber model for last mile freight deliveries?
No carrier, including UPS, FedEx, or Amazon, has chosen to compete based on the Uber style model. These leading freight carriers have delivery drivers on every block in the United States so they are kind of content for now. Moreover, they have a low marginal cost to deliver one more parcel. With increased number of deliveries in the same area, the cost of delivery falls to almost zero.
Building an Uber like model for eCommerce may work in the long term, provided retailers make enough profit per transaction to subsidize the cost of delivery cost.
Uber has launched UberRUSH that integrates with eCommerce markets to accelerate booking of delivery at the time of purchase.
Is Lyft the New Uber?
But could Lyft achieve parity in driver downtime and pickup wait times? If this can be achieved, it can easily negate Uber’s route-density advantage and gain the latter’s market share.
However, new entrants are struggling to gain a foothold in the last mile freight delivery due to overwhelming route density.
Uber has an advantage, with a driver on every block every minute compared to the big parcel players that have a driver on every block every day. While UPS and FedEx offer scheduled pickups, they are not able to compete with Uber and Lyft, which is soon catching up, when it comes to offering real-time eCommerce experiences, with the density to offer instant pickups and deliveries.
In order for last mile freight to revolutionize, it needs to follow the Lyft and Uber example. The more the number of drivers, the faster the pick-up and quicker the last mile freight delivery, the better the customer experience.
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