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upply chain disruptions have had a positive impact on final-mile providers . Shipments that used to go LTL are now going to last-mile carriers . “ The delays in the supply chain mean that shippers can ’ t depend on LTL transportation to get things where they need when the customer needs them . In these cases , they are turning more and more to last-mile delivery partners ,” points out Tim Cocchia Chief Operating Officer ,
Xcel Delivery Services , Phoenix , AZ and Board Member of the Customized Logistics & Delivery Association . “ Before the disruptions , LTL could get products to their destinations in a timely manner . But with the disruptions that ’ s no longer the case , so they are turning to last-mile providers . We take delivery of the items , store them in our warehouses until they are needed and deliver them when it ’ s time . We have always done some of these deliveries , but the demand has dramatically increased .”
One industry that ’ s shifted to this approach is construction . “ Builders that need products on specific days have really felt the sting of supply chain disruptions ,” points out Cocchia . “ Today , they can order kitchen cabinets , and have no idea when they ’ re coming in . So , they are ordering them ahead of time and having members of our industry store them in our warehouses . That way , they know they are there when they need them . They can contact that last-mile carrier , schedule the delivery and we get it there right when they need it . This is fueled by a lack of trust in the supply chain . We heard that from a builder doing a remodel of an apartment complex here in Arizona . They were waiting to schedule the labor to do the installs until they had all the products . They didn ’ t want to start the installs and be missing one piece and have to reschedule all the labor to come back later . They worried that if they released those guys , and they started on other jobs they might not be able to get them back . People have been burned and so now they ’ re being more cautious .”
The delays in the supply chain mean that shippers can ’ t depend on LTL transportation to get things where they need when the customer needs them . In these cases , they are turning more and more to last-mile delivery partners ”
Impact on Just-in-Time
Supply chain issues have had a dramatic impact on companies that depended heavily on the just-in-time model . “ Right now , just-in-time doesn ’ t work ,” says Cocchia . “ In the past , just-in-time made economic sense . It worked because those in procurement knew they could wait until the last minute to order what they needed and get it right away . The customer could keep their money in their bank account , order at the last minute possible , and have it show up on the day it was supposed to without redelivery and warehousing fees . Not anymore . Today , companies must order products ahead of time because they ’ re not sure when they ’ ll come in . They ’ ll ship those products to last-mile providers ’ warehouses to hold them for as long as needed , and then deliver them exactly when they need them .”
A Change or a Temporary Reaction ?
Given that this is an offshoot of what most people think of as a temporary situation , does Cocchia believe it will result in a permanent change in the way companies do business ? Will it mean this new business for last-mile providers will disappear in the future ? Yes and no . “ There may be a small drop in business for these carriers , but it will not go back to pre-COVID , levels , even when the supply chain disruptions settle down ,” he says . “ I think there ’ s a trust factor there that will take a long time to return . Many businesses had to make huge changes . Some of them really got burned and they will probably never go back to the way it was . It will certainly get better . I just don ’ t know that it will be enough for people to trust in the old way of doing things completely ever again .” CLDA spring winter 2023 2022 I customized logistics & delivery Magazine 35