2017 is likely going to be a year of continued disruption of the traditional freight industry. As companies like Uber and Amazon (as well as startups like Convoy and CargoX) make inroads into freight and logistics with on-demand delivery models that pair available truck drivers with needed deliveries, traditional logistics players could face industry-changing competition and pressure to innovate.
On-demand delivery models can be beneficial for some companies from a labor cost perspective because of quicker turnaround time in locating a truck/driver, more efficient deliveries, and reduced labor hours in waiting for a new truck if there is a delay or service failure.
If your company is contemplating on-demand options as a viable means to meet your logistics needs, here are some of the factors you need to consider before jumping on board:
1. Assess your necessities
Before you use a third-party, on-demand delivery model, your organization must clarify the necessary pick-up/delivery factors. Do you need 24-hour pick-up and delivery options? Does your business close early on Wednesdays and deliveries need to be made by 3pm? Such details need to be identified and explained to on-demand drivers so that they can determine if they can fulfill the requirements.
2. Develop a pool of reliable drivers
Depending on the service you use, your delivery request will be sent to numerous drivers within your business’ vicinity. Since you may be working with drivers that you’ve never utilized before, it could be challenging to vet reliable drivers. Many apps will do a basic verification process to ensure that drivers have proper insurance and licensing, but there could be other factors that you only determine by working with a driver in real-time. Once you find drivers that meet your litmus of reliability, you can partner with them when they are in your area, via the app, to handle delivery requests.
3. Communicate throughout the process
When a driver is making a delivery, there also should be a communication process in place to ensure everything goes smoothly. In many on-demand delivery apps, a driver’s route can be tracked via GPS to verify he or she is making a delivery on time. But if a truck breaks down, or there is a delay, you should tell your driver how you would want such issues to be communicated. Each company has their own delivery expectations and you need to clearly communicate your company’s process to your drivers so that everyone is on the same page.
4. Make the process efficient
To truly reap the benefit of cost savings on your company’s logistics necessities, planning out multiple pick-ups/deliveries or coordinating with long-haul drivers who are heading back to the area that you need your product delivered can be an effective way to streamline costs. If a driver is able to make deliveries at multiple facilities in your local area in one day, that eliminates the need for multiple drivers. For example, if you need to send a delivery to Dallas, Texas and a long-haul driver in Cedar Rapids, Iowa is heading back to the Dallas - Ft. Worth area, it would be efficient for both you and the driver because it streamlines his travel costs and he may pass on the savings to you. By reducing the driver’s empty mile and time waiting for a load back home the carrier may be able to have a better rate then a carrier who does not have those advantages.
Although on-demand delivery models are in their beginning stages, 2017 may be the year that they start gaining traction as a viable delivery option for some businesses. If you plan on using their services within your business, creating a game plan ahead of implementation can help to streamline both the process and potential costs.