Why are More 3PLs and LTL Companies Venturing into Last-Mile Delivery?

Last-mile delivery is the new frontier for many third-party logistics providers (3PLs) and LTL carriers. Thanks, in part, to the global COVID-19 pandemic and how it changed the way people and companies buy and consume goods and services. 

According to data from the US Census Bureau, ecommerce sales increased 32.4 percent in 2020, making up 14 percent of total retail sales and are expected to grow by another 4.6 percent this year. With all of those orders, last-mile delivery needs also skyrocketed, which meant shippers needed more diversity in their last-mile carriers. LTL companies and 3PLs knew it was time to take advantage of this opportunity, even though they are still constrained by the truck driver and equipment shortages.  

How LTL Fits in the Mix

It makes sense for 3PLs to join the fray of last-mile delivery because many of them already had parcel operations, but with the increase in ecommerce including larger items, LTL is now a much more attractive shipping mode for that final destination track.

For shippers with intermediate size and weight freight, LTL becomes the best option for last-mile delivery because their shipments are too big for parcel but too small for full truckload. LTL is more flexible with its freight than parcel, so companies shipping awkwardly shaped or packaged items may find LTL is the only way to go. This, of course, also opens up options for 3PLs now venturing into last-mile delivery, especially those that already work with parcel and LTL. They have a built-in network and solution for this new need. Additionally, there are now options for shipments to travel either by parcel or LTL and those that have a little extra leeway in delivery date can often save money shipping LTL.

However, using LTL is a learning curve for a number of retailers and shippers as they are accustomed to believing that LTL carriers can only deliver to warehouses with loading docks. But many LTL carriers now deliver to traditional docks, businesses and residential areas. Those same companies are expanding to additional final-mile services as well, including placement, packaging, removal and assembly, which would traditionally be done by white-glove delivery companies – not even parcel delivery companies, so this is opening the market even more for LTL.

Benefits of LTL in Last-Mile Delivery

Many LTL companies already have the technology available to them to provide real-time visibility and enhanced freight-rating accuracy that is becoming more desirable. The use of freight-pricing APIs in the LTL industry will help establish these companies in last-mile delivery because they provide better order tracking and shipment optimization. Through APIs, carriers can provide tracking data for multiple shipments in real-time in one easy-to-access platform. Additionally, with the API, the shipper can share the same tracking information with their end users. It also helps the LTL carrier, shipper or 3PL optimize the shipping process because they can use the data to determine best lanes, modes and times of day for transit.

For shippers, with the inclusion of LTL into last-mile delivery, they will need to do their due diligence to ensure they are getting the best rates for the transit time and routes that work best for their shipments. For the LTL companies, they will need to increase speed of delivery and rely on the technology to give the shippers – and end users – the visibility they are after.