With the growing importance of the final mile, it’s hard to understand how large transportation companies can’t turn a profit in the space. Recently, several asset-based transportation companies announced they’re quitting the final mile after a substantial investment of capital.
These companies are large and well-established in the supply chain sector. If they can’t get final mile right, can anyone (other than Amazon)? Before you jump head first into the final mile, learn from their mistakes. Here is why the final mile fails…
High Risk Entrances
Many companies who flounder start the final mile process expending too much money up front, either when buying assets or acquiring a company.
When acquiring a company, it may initially seem like you’re purchasing an “in”, but you can be purchasing a nightmare. You’re investing a significant amount of capital into a company that you may not truly understand. It’s similar to deciding between building a new home or renovating a home: when the walls are peeled back, renovations can reveal many old, expensive issues.
Every company has some dysfunction, however some may have more than others. Expecting this company to be knowledgeable and proficient in the field you’re entering is extremely risky, especially when you do not have an adequate understanding of this company’s role or workflows. Their reputation in the market can also make or break your efforts.
Some companies also try to build out their assets to enter the final mile themselves. They expend much of their cash flow on purchasing trucks, leasing buildings, hiring drivers, etc. Then, they discover that they truly don’t understand the final mile… that the nuances of the market are too costly to make a profit or that they can not keep up with the fast paced changes of the market.
Building and utilizing a network of final mile carriers that can provide access to the final mile, you can take advantage of their experience and specializations without the initial expenses of acquiring and maintaining them. You can also pivot and make adjustments quickly, as the market requires.
Too Many Layers
Working with industry experts, such as a broker or 3PL may be of great benefit to your final mile business, but adding too many layers between you and the final mile carrier simply adds expense.
The fewer middle-men between you and the final mile carrier allows you to save money and communicate better with the carriers — both with expectations and technology.
Working with an organization who is an expert in the final mile field. This partner may be able to help you better understand the process and onboard new carriers when you’re starting out, without marking up the cost of every order.
Lack of Visibility
The final mile is full of obstacles — obstacles you may not know of if you can’t see them. Leaving things to chance when it comes to your orders is a recipe for disaster. Piecing together a final mile built on subpar technology or technology that does not seamlessly communicate with your platforms can be detrimental.
Utilizing integrations that allow you to locate exact packages, real time information, and review this information in hindsight is crucial to building a final mile experience that is both profitable but enjoyed by your customers.
The Final Mile is Unique
Formerly considered to be a standalone piece of the supply chain, serviced only by select few companies, the final mile can not be treated the same as your existing operations. Expansion into the final mile must be done with consideration and expertise.
Unlike the companies that have failed, you have eTrac.
A single point of integration to connect with you a network of thousands of final mile carriers. Our experienced and knowledgeable team is here to help educate you about the final mile, what you can expect, and strategies to ensure success. Schedule a demo to learn more.