We recently discussed the innovations in last-mile delivery, but the final mile is just a tiny part of the shipping strategy used by third-party logistics (3PL). The boom of ecommerce has brought final-mile delivery to the forefront of industry news with heightened consumer expectations of fast and free shipping weighed against pandemic-related delays. However, middle-mile delivery is an equally crucial part of the supply chain and a vital component of a comprehensive omnichannel fulfillment strategy.
What Is Middle-Mile Delivery?
Last-mile (or final-mile) delivery refers to the last leg of a shipment from warehouse to end consumer. Middle-mile delivery comes just before that; it involves the delivery of goods from a warehouse to fulfillment facilities—including brick-and-mortar retail stores—where consumers will eventually buy these goods. Because the middle mile includes traditional distribution centers where inventories are managed and forecasted for stores and online, the middle mile is essential to omnichannel selling strategies. Ecommerce continues to grow, but omnichannel options like buy online pick up in-store (BOPIS) and curbside pickup make brick-and-mortar retail relevant in today's supply chain. Furthermore, with rebounding traditional retail sales, now is the time to invest in and perfect middle mile logistics, which has little room for error and ample opportunities for consolidation and optimization.
Although many fulfillment operations strive to cut costs through final-mile delivery, middle-mile logistics presents an opportunity for companies to get ahead of costs before they hit the consumer. For example, Walmart—which owns its distribution centers and brick-and-mortar stores—expects to cut middle mile logistics and delivery costs in half by using unmanned vehicles to transport goods along “milk runs,” routes that are the same every time.
But you don't need to own both ends of the supply chain to reduce costs in the middle mile. Third-party logistics (3PL) freight services are bringing more of the supply chain in-house, like expanding middle-mile configurations to include intermodal assets, to reduce costs. A significant benefit of tightening middle-mile logistics is adaptability; if Walmart owns its middle mile, it can adapt to change. So can third-party intermodal companies that control local drayage and long-haul trucking.
Ultimately, 3PLs need to manage their business in a way that facilitates diverse mid-mile logistics strategies. That can mean opening new facilities around major ports, rails, or airports. It can also mean forming strong relationships with cartage and drayage providers as well as with common carriers. Another great tactic would be partnering with freight forwarders that specialize in different trade lanes. Diversifying the mid-mile logistics network can also be a selling point for 3PLs that want to steal business from other warehouses on the other side of the country—it’s a good selling point for brands. There is also the possibility for warehouses to become foreign trade zones to help customers mitigate the cost of duties.
Why Is Middle Mile Logistics Important?
Often overlooked, the middle mile is also known as the invisible mile. Still, it's also where most of the logistics work happens, namely consolidations and de-consolidations, and where much of the delivery distance is covered. And with the growth of ecommerce, middle-mile logistics are changing, too. According to Freight Waves, “heightened delivery demands of ecommerce users are forcing participants to shed models built around a ‘straight-forward’ first, middle, and last-mile supply chain in favor of ‘fragmented’ networks supporting the positioning of inventory near the final destination.” This mirrors the growth of 4PL networks across the country as businesses look to position inventory closer to their consumers.
Middle-mile logistics becomes even more important with ongoing disruptions in the transportation sector. Earlier this year, truckers protested in Ottawa for two weeks against a mandate that they be vaccinated against COVID-19 to cross the border. This protest created a ripple effect with similar blockages in Washington D.C. and Sacramento in the following months. Although there was a 28% increase in last-mile parcel delivery time for a few days because of the protests in Canada, the effects were relatively minor compared to other disruptions like those at the ports in Southern California.
However, the protests point to dissatisfaction from truckers—during a trucker shortage nonetheless—that could re-emerge in the future to cause more problems. According to experts, if the current shipping and labor shortage trends continue, Forbes states the trucking industry could need more than 160,000 drivers by 2030. Linked to the pandemic, the trucking issues stem from labor shortages, supply shortages, and sharply climbing prices that all combine to create major bottlenecks in delivery, especially middle-mile delivery.
The answer to this predicament is the same as with all the disruptions so far: technology. Increasing visibility across the supply chain with an order management system (OMS) and in warehouses with warehouse management system (WMS) software are just two solutions that would streamline order fulfillment and shipping. Investing in technology that helps make drivers’ jobs easier, like fleet management and route optimization software, is also essential to retaining the workforce and keeping them happy.
Supply chain disruptions are here for the foreseeable future, but implementing innovative technologies in different sectors of the industry will help. To learn more about industry trends, download the 2022 State of the Third-Party Logistics Industry Report.